Volatility, Drawdowns & Beta vs. Gold
Data-driven reference for serious stackers and allocators. Updated for 2025.
Introduction: What the data actually says about silver
Silver’s reputation is simple to state and hard to quantify: it moves more—often a lot more—than gold. That extra torque can be thrilling in rallies and brutal in corrections. If you’re sizing silver as part of a precious-metals allocation (or just want receipts for the “silver is the Devil’s metal” meme), this guide compiles what the evidence shows on volatility, drawdowns, correlation, and beta versus gold, with links to primary sources you can check yourself. We’ll also translate those stats into portfolio implications—how much silver to hold, when to expect pain, and why discipline matters more here than anywhere else in your metals stack.
A few scene-setters:
- Volatility: Across long samples, gold’s realized volatility typically sits in the mid-teens (annualized), while silver is commonly in the 30%–40% range, i.e., roughly 2× gold.
- Drawdowns: Silver’s biggest busts have been far deeper than gold’s (e.g., 2011–2015 and 1980–1991).
- Gold–silver ratio (GSR): The GSR hit record extremes in 2020 (~120–125:1) before snapping back—evidence that relationships can stretch far beyond “averages.”
This isn’t marketing. It’s the data—so you can calibrate position size, rebalancing rules, and expectations.
Methodology and data sources
Time periods analyzed (1975–present, plus sub-periods)
Analysts often start modern free-market price histories in the mid-1970s (post-Bretton Woods), then slice the data into relevant sub-cycles: the late-1970s inflation spike, the long disinflationary era, the 2000s commodity boom, the 2008–2011 bull market, the 2011–2015 bear, COVID-era extremes, and the 2021–2025 inflation regime. Using those windows lets you compare silver’s behavior across different macro regimes rather than just one long average that hides the stress points. For context, we reference LBMA/WGC histories for gold and Silver Institute research for silver, plus reputable price archives.
Price data sources (London Fix, COMEX)
You’ll see gold and silver quoted as LBMA spot/fix, COMEX futures nearby, or vendor-compiled spot prices. Directionally they tell the same story—but use consistent sources when you compute ratios/volatility so you aren’t mixing methodologies. The World Gold Council’s data center is the cleanest hub for gold charts; Silver Institute’s World Silver Survey aggregates silver series and structural metrics. For long-range daily series and visual sanity checks, many practitioners also reference public charting archives. World Gold Council+1
Comparison benchmarks (gold, stocks, bonds)
Silver sits in a weird middle ground—part monetary hedge like gold, part industrial commodity. To understand it, compare:
- Gold (monetary hedge baseline),
- Equities (risk asset), and
- Bonds/real rates (opportunity-cost anchor).
Academic and sell-side work examining volatility transmission and correlation regimes helps frame how silver reacts when macro drivers flip. - Tax friction shapes net returns—see EU/UK VAT specifics.
Historical price performance
Long-term annualized returns (silver vs gold)
Over full cycles, silver’s point estimates for compound returns can look tempting, but the path is the story: higher dispersion (big up years, deep slumps) versus gold’s more measured climb. That dispersion is why silver’s risk-adjusted returns (Sharpe/Sortino) are typically lower than gold’s even when raw returns are similar in select periods. Institutional sources repeatedly note gold’s lower realized volatility compared with both stocks and silver; qualitative conclusions are robust across windows even as exact numbers vary with the timeframe.
New to silver? Start with bullion vs numismatic basics.
Best years (1979, 2010, 2020)
Silver’s blockbuster years typically coincide with inflation scares, liquidity waves, or speculative surges—late-1970s inflation, the 2010 post-GFC run-up, and 2020’s policy shock. Those periods also saw the gold–silver ratio compress dramatically as silver “catches up” to gold’s earlier safe-haven bid. In 2020, that compression came off an all-time-high GSR above 120:1 at the COVID panic extreme.
Worst years (1981–1982, 2013, 2015)
The inverse is also true: when real rates rise, growth slows, or risk de-gears, silver’s industrial and speculative components bite. From the 2011 peak to the 2015 low, silver fell roughly −71%, while gold dropped about −42%, illustrating the asset’s asymmetric downside.
Performance by decade
Decade views show silver’s boom-bust personality: explosive late-1970s, long 1980s/1990s malaise, strong 2000s, then a punishing 2010s drawdown. The 2020s (so far) mix inflationary tailwinds and industrial narratives (solar, electrification), producing sharp swings and fresh cycle highs in 2025.
Volatility analysis
Standard deviation: silver typically 2–3× gold
Multiple institutional sources converge on the same takeaway: gold’s realized annualized volatility often runs ~15%–20%, silver ~30%–40%. A 60-day or 1-year rolling window will wiggle, but the level difference is persistent. Why? Silver’s smaller market, thinner liquidity, and heavier industrial exposure amplify moves.
Annual volatility comparison (ballpark ranges)
- Gold: ~15%–20% annualized in many samples.
- Silver: ~30%–40% annualized; some studies cite long-run averages near ~29% vs gold ~16%.
Those are ranges, not constants—expect regime shifts around policy turns, inflation spikes, and credit events.
Intra-year swings (how wild can it get?)
It’s normal to see 30%–50% peak-to-trough moves in silver within a year—even when gold looks sleepy. When liquidity dries up, silver can gap violently (both directions). That’s the price of torque. CME research and practitioner notes repeatedly highlight how shifts in industrial demand and speculative flows create abrupt accelerations and reversals.
Volatility clustering (hot and cold streaks)
Silver exhibits volatility clustering—extended stretches of high (or low) vol—often led by gold shocks. Academic work finds unidirectional volatility transmission from gold to silver over multi-month horizons, meaning turbulence in gold tends to spill over more than the reverse. Practical takeaway: when gold starts to shake, tighten silver risk.
Drawdown analysis
Maximum drawdowns compared
The two canonical episodes:
- 1980 peak → 1991 low (silver): From the early-1980 bubble peak near ~$49 to lows near ~$3.5, silver lost roughly −90%+ at the trough—an order of magnitude collapse over the decade. Gold’s bear market was shallower.
- 2011 peak → 2015 low: Silver fell about −71% (from ~$48.70 to ~$13.58). Gold dropped about −42% over a similar window—painful, but far less brutal than silver.
1980 peak to 1991 low: the outlier
The 1980s bust matters because it shows the left tail silver can generate after speculative blow-offs and policy regime changes (Volcker disinflation, higher real rates). The lesson: position sizing and liquidity planning are non-negotiable if you hold silver through cycles.
2011 peak to 2015 low: the modern reality check
Even in our era of ETFs and better market plumbing, silver’s 2011–2015 drawdown dwarfed gold’s. If you bought near the 2011 top and didn’t rebalance, you wore multiple years of deep underwater exposure—evidence that discipline beats conviction.
Recovery time from major drawdowns
Silver’s time to recover peaks can be measured in years. For allocators, that argues for satellite sizing (not core), defined rebalance bands, and a willingness to trim strength/add weakness systematically rather than trying to nail tops and bottoms.
Beta to gold
Definition: silver’s sensitivity to gold moves
“Beta to gold” measures how much silver tends to move for a given move in gold. It’s not the same as the gold–silver ratio; it’s a regression-based sensitivity. Academic research shows that silver’s beta isn’t constant—it moves with regimes and can dip below or rise above 1.0.
Historical beta: often >1.0, sometimes <1.0
Practitioners speak of silver as “gold on steroids.” In many windows, silver’s beta to gold lands around ~1.5–2.0 (i.e., a 1% gold move maps to ~1.5–2% in silver), but studies also document stretches where the beta fell toward 1.0 or lower when silver decoupled due to industrial or idiosyncratic factors. Treat beta as state-dependent, not a fixed law.
What this means in practice
If you hold both metals, silver will amplify portfolio outcomes in both directions. That’s useful for tactical tilts (e.g., late-cycle inflation bursts) but hazardous if you let it swell beyond target weights during rallies and then refuse to cut when momentum fades.
Beta instability (changes over time)
Because beta changes with macro conditions (inflation, real rates, risk appetite) and micro drivers (industrial demand, positioning), your rebalancing rules must be robust: calendar + bands, not vibes.
Correlation analysis
Silver–gold correlation: strong, but not perfect
On a rolling basis, 1-year correlations between gold and silver have ranged roughly 0.68–0.95—solidly positive, yet meaningfully variable. Periods of policy stress can break the relationship (e.g., 2017–2019), and COVID extremes showed the ratio and correlation can both behave unusually.
Silver–stocks correlation: higher than gold–stocks
Compared with gold, silver has tended to show a bit more linkage to equities/industry cycles, reflecting its industrial demand share. That increases its cyclical exposure and partly explains the deeper drawdowns when growth or liquidity stalls. (See Silver Institute surveys and academic work on co-movement and spillovers.) The Silver Institute+1
Industrial component impact
When industrial demand accelerates (solar, electronics, EVs), silver can outperform gold even if monetary conditions are mixed. When industry contracts, silver can underperform despite gold’s haven bid. This dual nature is the reason silver behaves like an amplifier in a metals sleeve.
Correlation breakdown during crises
In shock weeks, microstructure noise and deleveraging can overwhelm fundamentals. In March 2020, the GSR blew out above 120–125:1 as silver lagged gold’s panic bid, then snapped back as liquidity returned—textbook correlation instability.
Risk-adjusted returns
Sharpe ratio: silver typically lower than gold
Given similar long-run nominal returns in some windows but much higher volatility, silver’s Sharpe (return per unit of risk) tends to trail gold’s. Institutional notes from State Street and others consistently frame gold as the steadier hedge; silver is the higher-beta satellite. SSGA
Sortino and max drawdown views
If you focus on downside deviation (Sortino) or max drawdown, silver again looks harsher: the tails are fatter. That doesn’t make silver “bad”—it just demands tight sizing and pre-agreed sell rules.
Conclusion: riskier per unit of return
If you’re paid primarily for convex upswings but must bear violent downswings, the only winning playbook is systematic: set targets, rebalance, and let process—not emotion—drive actions.
Silver during different economic regimes
Inflation: strong performance (but choppy)
Silver often shines in inflationary waves, especially when they coincide with commodity-wide squeezes and easy liquidity (e.g., 1970s, 2009–2011, 2020–2021). But it still whipsaws more than gold around policy surprises (rate hikes, QT).
Deflation: poor performance
In disinflation/deflation scares, industrial metals underperform. Silver’s mix leaves it vulnerable to demand slumps, explaining many of its harshest drawdowns.
Stagflation: good but erratic
Stagflation pits haven demand (bullish) against weak industry (bearish). Expect choppy trends and regime switches.
Economic growth: industry-led
When growth and capex run, silver’s industrial tailwinds (solar, electronics, electrification) can power outperformance versus gold—as seen in 2024–2025 narratives. Reuters
Gold–silver ratio (GSR) historical analysis
Modern averages and extremes
Since the 1970s, the GSR tends to mean-revert around ~60–70:1 but can spend months above 80–90 or below 50. The pandemic spike to ~120–125 set a modern extreme—then reverted as conditions normalized.
Mean reversion… eventually
GSR timing signals are weak tactically (they can stay stretched), but they’re useful for tilting a metals sleeve over multi-quarter horizons—e.g., overweight silver when the ratio is extremely high, normalize when it compresses. Barron’s
Don’t confuse ratio with beta
A falling ratio (silver outperforming) doesn’t specify how much silver will move relative to gold on any given day—that’s beta’s job. Treat them as separate lenses.
Translate data into action with our allocation framework.
Industrial vs. monetary demand impact
Estimating contributions
The Silver Institute and CME research highlight multi-driver demand: jewelry, investment, and—crucially—industry (solar, electronics). Shifts in these slices explain why silver overshoots in both directions relative to gold.
2008 example: industrial collapse
In 2008, industrial demand cuts and deleveraging hammered silver worse than gold. That playbook can re-appear whenever growth shocks collide with liquidity squeezes.
Liquidity analysis
Market depth differences
Silver’s market is smaller than gold’s, with wider spreads and more price impact from large orders. That lower depth magnifies volatility and slippage—especially in stress. Practitioner and industry commentary consistently flags this. sprott.com
Liquidity during stress
Expect gaps and fast books around news. If you must transact size, plan to work orders or accept bigger slippage than you would in gold.
Portfolio implications
Silver as volatility amplifier
In a metals sleeve, silver acts like an amplifier. Use it to boost upside when the macro winds align—but cap the dose so a rough patch doesn’t hijack your whole portfolio.
Position sizing based on volatility
A simple way to size: risk-parity-style—target equal volatility contributions (e.g., hold ~½ the dollar value in silver you’d hold in gold for similar risk budgets, adjusting for current vol). Re-estimate periodically.
Risk parity approach (vol-adjusted allocation)
If gold’s 1-yr vol ≈ 16% and silver’s ≈ 32%, then a $10k “gold risk unit” corresponds to roughly a $5k silver weight to equalize vol. Track rolling vol—don’t set and forget. BullionVault
Expected drawdowns: prepare psychologically
Expect silver to overshoot both ways. If a −40% to −60% swing would force you to sell at the worst time, your sizing is too big.
Statistical relationships (quick hits)
Silver vs USD (dollar index)
Both metals show inverse relationships to the dollar over time, with silver typically more sensitive thanks to its higher beta and industrial linkages.
Silver vs real rates
Rising real yields pressure both metals by raising opportunity cost; silver’s response tends to be more elastic.
Silver vs industrial production
Cyclicals matter: stronger production often correlates with better silver relative performance, especially when it tightens supply/demand balances in solar/electronics.
What the evidence supports
- Silver is more volatile. Long-run realized vol ~2× gold; big intrayear swings are normal.
- Silver tends to outperform in gold rallies (beta >1 in many regimes)—but not always and not linearly.
- Silver suffers more in corrections. Drawdowns are deeper and longer.
- Silver is higher risk/reward than gold. That’s why it belongs in satellite sizing, with rules.
What the evidence doesn’t support
- “Silver always beats gold.” No—periods of underperformance can last years.
- “The GSR predicts timing precisely.” It’s a blunt tool; useful for tilts, weak for short-term trades.
- “Beta is fixed.” It changes across regimes; don’t anchor on one number.
Practical takeaways (cheat sheet)
- Size small, think satellite. Let gold be the core; deploy silver for tactical oomph.
- Pre-commit to rules. Calendar + rebalance bands (e.g., ±5%) beat gut feel.
- Use liquidity. Enter/exit in tranches, especially around macro events.
- Mind the GSR—but don’t worship it. Use extremes to tilt, not to YOLO.
- Expect big drawdowns. Plan psychologically and financially for “it drops more than you think.”
FAQs
Is silver a good inflation hedge like gold?
Over long horizons, gold is the cleaner inflation hedge. Silver often performs well during inflationary spikes, but its industrial side introduces extra noise.
Why does silver sometimes lag when gold rips?
When fear drives a pure safe-haven bid, gold can lead while industrially sensitive silver waits for growth confirmation—hence episodes like March 2020 when the GSR blew out before mean-reverting.
What’s a sensible silver allocation?
Many allocators cap silver at ~25% of the precious-metals sleeve (often less), adjusting by the GSR and current vol. That keeps risk concentrated where you intend—in gold. (See our separate strategy note on satellite sizing.)
Is there a “right” beta to use?
No. Treat beta as regime dependent. Re-estimate periodically or use volatility targeting instead of a fixed beta assumption.
Mini-table: Landmark stats to remember
| Metric | Gold | Silver | Notes |
|---|---|---|---|
| Typical realized vol (annualized, long-run) | ~16% | ~29% | Directionally consistent across studies. |
| 2011 → 2015 drawdown | ~−42% | ~−71% | From post-GFC peak to mid-2010s trough. |
| 1980 → 1991 drawdown | Shallower | ~−90%+ | Magnitude illustrates tail risk. |
| GSR modern average | ~60–70 | — | Wide distribution around mean. Barron’s |
| GSR pandemic extreme | — | ~120–125 | March 2020 spike. |
Disclaimer: Markets change. Numbers vary with methodology and sample windows. Always verify with the linked primary sources and your own calculations. This article is educational, not investment advice.
