Silver Prices During Stock Market Downturns: Why Now is the Time to Buy Silver

The Great Recession has already faded from many investors’ memories despite being less than seven years behind us, but the more financially savvy among us know that a repeat “market correction” could be just around the corner. Even worse, we could be due for a decade-long period of stock market stagnation like what occurred between 1910 and the close of World War I, during the 1940s, and through the 1970s and early 80s—if this cycle of a downturn every thirty years or so hold up, we’re just about due.

Though it has a volatile price history, silver has consistently proven a great way to shore up your portfolio during these times of a bearish stock market. Buying silver now, when the stock market is riding high, is a great way to protect yourself against future losses and to lock in some substantial gains, assuming history will repeat itself the way it has consistently done in the past.

Let’s take a look at two simple charts that clearly illustrate silver’s profit potential during times if stock market unease. First up is an inflation-adjusted chart of the S&P 500 index over the past 130 years, courtesy of multpl.com:

S&P Inflation Adjust

Next, an inflation-adjusted chart of silver prices covering roughly the same period from macrotrends.net:

Silver Price Inflation Adjust]

Note the major spike in silver prices that takes place during the depths of each long-term downturn in the stock market, especially during the 1970s-80s and during the recent Great Recession. When stocks go down, interest in precious metals skyrockets, creating significant gains for anyone who gets into silver early and patiently holds onto their shares in the commodity.

Why Now is the Right Time to Buy Silver

I can feel some of your hesitation as you look at these charts. At the moment, silver is on a steep downward trend while the stock market is setting record highs. The immediate impulse is to put your money where the hot action is—i.e. stocks—and avoid the ride to the bottom that silver looks like it’s enjoying.

That’s the “buy high, sell low” mentality that leads to so many investors losing their shirts when the stock market goes awry. A more informed look at these charts spells out the reality: silver is cheap when the stock market is expensive; when the bottom falls out of the latest stock bubble, silver will skyrocket. Buying silver now, when most investors are only looking at tomorrow’s stock gains, will give you a huge advantage in a few years’ time when the tables have turned.

Going against the crowd is often sage investing advice, and it works with silver as well as it does anywhere else. Assuming the historic pattern continues to repeat itself, we’re due to see a major and sustained stagnation in the stock market start within the next few years, and we’ll see silver start a steep climb up in price shortly thereafter. Get in on the ground floor, not the top of the mountain, and you’ll make a tidy profit instead. Transfer from stocks to silver when it’s already too late, and you’ll simply be trading one burst bubble for another at exactly the wrong time.