Silver's industrial uses separate it from gold -- and from stocks
Although silver is a precious metal like gold, it also has a variety of industrial applications, including in electronics, solar energy, automotives, and as a brazing alloy. Roughly 58% of global silver demand was industrial in 2025, according to the Silver Institute 2026 World Silver Survey.
Industrial demand leads to stark differences in how silver, gold, and stocks perform. Gold has little industrial demand. Instead, most gold demand comes from its role as a monetary asset in central bank reserves and as an investment that can retain its value during market downturns. Stocks represent ownership in a business, and stock demand comes from a business's earnings performance and growth prospects.
The end result is that silver has far more volatility than stocks and gold. Silver's annual returns from 1972 to 2024 had a standard deviation of 30.8%, meaning that was the average year-to-year swing in returns. Gold's standard deviation was 23.3%, and the S&P 500's was 16.9%.
Silver also had several extreme years of massive outperformance or underperformance, which sometimes occurred in close proximity to each other. In 1979, silver appreciated 127.7% due to the Hunt Brothers' silver squeeze, when two billionaires reportedly acquired about one-third of the global silver supply. Following the collapse of the silver squeeze, the price fell 48.6% in 1981.
Silver's record as a hedge against stocks is weaker than gold's
Gold exposure in an investment portfolio helps protect against declines in equities, but the case for silver isn't as clear. Silver's annual return correlation with the S&P 500 was -0.13 from 1972 to 2024, compared to -0.22 for gold over the same period.
A negative correlation indicates that one asset tends to rise when the other falls, and vice versa, with the amount signifying how strong the trend is. For example, a correlation of -1 means they move in completely opposite directions. Gold's return correlation with the S&P 500 is only weakly negative, and silver's negative correlation is even weaker. Both precious metals tend to perform well in years when stocks decline, but it's not reliable year to year.
Because gold doesn't rely on industrial demand, it's a purer hedge than silver. Although some investors debate gold vs. stocks, gold's role as a hedge can make it a good complement to stocks in a way that silver isn't. Industrial demand slows in economic downturns, and with over half of global silver demand coming from industrials, silver often sells off alongside stocks. This reduces silver's value as a hedge, as its price is connected to economic conditions.
Silver also produces no income, which is also true of gold. Stocks, meanwhile, can generate income for investors through dividends.
