Gold, Silver and Bitcoin Show Different Patterns During Recessions

U.S. recessions while the S&P 500 declined, according to Schroders research. Silver and Bitcoin have recorded larger price drops and recoveries in the same periods. Gold prices rose from $35 to $850 an ounce during the 1970s stagflation period. 50 to around $50 an ounce over the same stretch.

Gold returned positive results in most recent downturns, including the global financial crisis, the sovereign debt crisis, the COVID-19 period and the Silicon Valley Bank collapse. Its price correlation with equities has remained near zero since the United States left the gold standard in 1971.

Gold fell about 30 percent during the 1980-1982 recession when the Federal Reserve raised interest rates sharply.

Silver demand comes 59 percent from industrial uses such as solar panels, electronics and automobiles, according to The Silver Institute. This industrial component causes silver prices to fall more sharply than gold when factories reduce output. Silver lost about 50 percent of its value in the 2008 crisis before rising from roughly $9 to $49 an ounce by 2011.

Bitcoin fell about 50 percent during the March 2020 market decline and about 65 percent during the 2022 rate-hiking period. Its annualized volatility averages 60 to 70 percent, compared with 12 to 15 percent for gold and 25 to 30 percent for silver. Bitcoin has existed only since 2009, limiting the number of recessions available for comparison.

Gold trades in deep global markets nearly around the clock, providing greater liquidity than silver or Bitcoin during periods of market stress. Investors have historically shown stronger willingness to hold gold through downturns. Bitcoin and silver trade in smaller markets where selling pressure can drive prices lower more quickly.