What Could Silver Be Worth If the US Economy Collapses?

While the US economy remains the world’s largest and strongest economy, fears of an economic collapse remain in the minds of many Americans. With memories of the 2008 financial crisis still fresh in many people’s minds, the fear of another similar crisis is growing.

More and more Americans are worried, not just about the future of the US economy, but about their own financial well-being. And they’re looking for ways to help protect themselves against the possibility of an economic downturn.

One way they’re doing that is by looking for safe haven assets, like silver, that can help safeguard their assets. But is silver the best choice? And how much could silver be worth in the event of an economic downturn?

3 Key Points

1. Uncertainty and fear surrounding the economy is causing many people to look for safe haven assets
2. Silver has a history of performing well during economic crises
3. Silver can be a useful asset in a portfolio, with many different ways to purchase silver, including buying silver through a silver IRA

The Potential for Economic Collapse

How likely is it that the US economy could collapse? Honestly, it’s probably not likely at all.

What most people are worried about is the possibility of a stock market downturn, which could decimate their savings.

During the 2008 financial crisis, for instance, stock markets lost over 50% of their value, wiping out trillions of dollars of savings from Americans’ retirement accounts.

But the US economy? The economy only contracted 4.3%.

While that may not seem like a lot, it still should serve as a warning that even a small contraction in economic growth could have an outsized impact on your retirement savings.

Could the US Dollar Collapse?

Another concern that many Americans have is the potential for a US dollar collapse. The US dollar index has fallen nearly 10% so far this year, leading to fear that the dollar could fall even further.

The UK pound sterling used to be the world’s reserve currency, until the US dollar dethroned it after the end of World War II. But can the dollar sit atop its perch forever?

Continuous inflation has eroded the dollar’s purchasing power. Most people forget that the dollar used to be defined as a weight of silver, but a silver dollar today contains nearly $30 of silver.

Compare that to a dollar bill, which has lost 87% of its purchasing power since President Nixon severed the dollar’s last ties with gold in 1971.

While the dollar is still the dominant world currency today, we can’t take that for granted. Slow, steady currency devaluation is eroding not just the dollar’s purchasing power, but also its position as a desirable world currency.

More and more central banks and governments are looking to move away from the dollar in the future. This could hasten the dollar’s demise.

While the dollar likely won’t collapse suddenly, as for instance has happened to currencies in hyperinflationary crises, its ultimate fate could end up being just to slowly fade away into irrelevance.

Silver’s Performance During Economic Crises

With the continuing devaluation of the dollar being much discussed, one of the questions many Americans have is how they can help safeguard their financial well-being in the face of the devaluation of the currency in which all of their financial assets are denominated.

As many people have done throughout history, many people today are choosing precious metals like silver to help protect and hedge against this currency devaluation.

Silver, like gold, tends to maintain its purchasing power over the long term. And during crises the silver price can make significant gains.

During the aftermath of the 2008 financial crisis, for instance, the silver price more than quintupled from November 2008 to April 2011. Percentagewise, those gains were higher than the largest rise in the gold price, which only nearly tripled.

Then during the 2020 COVID recession the silver price rose over 50% from March 2020 to June 2020. Compare that to gold’s 18% increase during the same time period.

Finally, during the 2023 banking crisis, silver rose almost 19% in the months after Silicon Valley Bank and First Republic Bank were closed.

Silver clearly has the ability to do well during periods of crisis and uncertainty, which is why it is one of the safe haven assets people choose to help safeguard their wealth during economic crises.

Silver as a Safe Haven Asset

Silver, like gold, serves as a trusted safe haven asset. Many people forget that it was silver, not gold, that was the metal of choice for everyday commerce for most countries.

The terms dollar, mark, and pound sterling for major currencies are all derived from terms used to describe weights of silver. And silver coinage circulated in the US until the mid-1960s and in parts of Europe until the mid-1970s.

When people think of safe haven assets, they think of assets that go up in price when other assets are going down. Safe haven assets are those that can help hedge against the risk of loss, helping minimize overall losses to an asset portfolio.

Given silver’s performance during and after the crises of 2008, 2020, and 2023, silver certainly seems to fit the bill as a safe haven asset. But would silver fare similarly in the event of a more severe economic collapse?

Factors Impacting the Silver Price

Like other metals, the price of silver is driven by the interplay between supply and demand. So let’s look at some of the factors that drive that supply and demand.

Silver Demand

According to the Silver Institute, silver demand is broken up into six different categories:

• Industrial
• Photography
• Jewelry
• Silverware
• Net Physical Investment
• Net Hedging Demand

Industrial demand is normally the dominant source of silver demand, accounting for more than 50% of overall silver demand (58% in 2024). A growing source of industrial silver demand is demand from the photovoltaic industry for solar cells.

Silver is the necessary metal required to convert light to electricity, and with growing demand for solar energy, demand for silver has grown too. Since 2021, total demand for silver from the photovoltaic industry has more than doubled, now accounting for 17% of total silver demand.

The next biggest drivers of silver demand are Net Physical Investment and Jewelry, each accounting for roughly 15-20% of silver demand (16% and 18% in 2024 respectively.) Net Physical Investment includes the purchase of silver coins and silver bars.

Silverware and Photography are far back, accounting for 5% and 2% of silver demand respectively. Net Hedging Demand refers to the use of financial instruments to mitigate the risk of silver price fluctuations, and its impact on silver demand is largely negligible.

Silver Supply

The Silver Institute lists five factors that influence silver supply:

• Mine Production
• Recycling
• Net Physical Disinvestment
• Net Hedging Supply
• Net Official Sector Sales

Of these five categories, the two major drivers are Mine Production and Recycling, accounting for 81% and 19% of silver supply respectively.

Silver is most often produced as a byproduct of mining for other metals, such as gold, nickel, lead, or copper. There is a risk, therefore, that if mining for those other metals were to fall as a result of an economic downturn or severe financial crisis, mining production of silver could fall as well.

But that didn’t happen during the 2008 financial crisis, when silver production actually increased, although it couldn’t keep up with silver demand.

Silver vs. Other Precious Metals

When looking at silver as a safe haven asset to help safeguard wealth in the event of an economic collapse, the metal it is probably most often compared to is gold. Gold is arguably the “gold standard” when it comes to safe haven assets.

So how does silver compare?

If we look at price performance, silver’s growth in the aftermath of the 2008 financial crisis was far higher than that of gold, with the silver price peaking at 534% from its 2008 lows versus 266% for gold.

Silver is a little different than gold in that the silver price is normally impacted by industrial demand more than safe haven demand. But during times of crisis when the economy is threatened, safe haven demand for silver can increase significantly.

How Economic Collapse Could Impact Silver

If the dollar were to collapse, or were otherwise to be dethroned as the world’s reserve currency, it could cause economic pain and hardship for Americans. We have become so accustomed to the dollar’s acceptance around the world that a world without the dollar as king would require some difficult adjustments.

In an absolute worst case scenario for the economy, such as the Yellowstone supervolcano exploding and covering half the United States in ash, or an exchange of nuclear missiles wiping out electronics across the world, there’s a very good chance that silver could once again become the preferred everyday medium of exchange, as electronic payments become unfeasible and tangible physical currency would become more useful.

Such scenarios are far-fetched and unlikely, however, and the more realistic threats are those of a 2008-style financial crisis or a massive series of bank failures. These are the cases that are probably more concerning to silver owners and potential silver buyers.

As we’ve seen from silver’s performance during previous crises, there’s a very good chance that people would once again demand silver in greater quantities during a potential future financial crisis, which could lead to a rise in the price of silver.

Data from the Silver Institute shows that silver coin and silver bar demand increased 319% from 2007 to 2008 as the financial crisis took hold. And that demand continued to grow over the next several years, even as the price of silver kept rising and hit near-record highs.

If the US economy were to collapse, or if the dollar’s reign as the world’s reserve currency were to collapse, how much more might Americans demand silver coins and silver bars as safe haven assets?

Silver in Your Portfolio

If you’re considering silver as a safe haven asset, one question you might have is how to get your hands on that silver. For that, you have numerous options available.

1. Silver ETFs

One popular option today is to purchase shares in silver exchange-traded funds (ETFs). This doesn’t actually get you physical silver, just shares in a fund that owns silver.

You can’t actually redeem your ETF shares for silver, just for cash. And you don’t have to look hard to find internet message boards with people discussing some of the drawbacks of silver ETFs.

Still, silver ETFs are easily purchased, easily sold, and are available through most major brokerages. But would they benefit you in the event of an economic collapse?

In a severe collapse, in which the entire financial system is teetering on the brink, would owning shares in a fund that owns silver benefit you? Or would you rather have ready access to physical silver that you can hold in your own two hands?

2. Silver IRA

Silver IRAs are another popular option today, as they offer the advantage of ownership of physical silver coins or silver bars as well as the same tax benefits as any other IRA account.

You can even fund a silver IRA with a tax-free rollover from your existing 401(k), 403(b), TSP, IRA, or similar retirement accounts, allowing you to bypass the normal IRA contribution limits when funding your IRA.

The downside to a silver IRA is that your silver has to be stored at a bullion depository. But unlike a silver ETF, you actually own physical silver within your silver IRA and you can take physical delivery of the silver in your IRA when you choose to take a distribution of assets.

3. Buying Physical Silver

If you’re really worried about a major economic collapse or devaluation of the dollar, there’s always the option of buying physical silver coins or silver bars and storing them yourself.

Direct cash purchases remain a popular option for those you think that if you can’t hold it, you don’t actually own it. While you have to figure out storage, security, and insurance on your own, for many people there’s no substitute when it comes to being able to put their own hands on their silver.

Help Protect Yourself Against Economic Collapse

No matter which way you choose to buy silver, Goldco has options available to you. We’ve helped thousands of Americans benefit from owning precious metals, and we’re committed to helping all of our customers take advantage of the benefits of owning gold and silver.

Whether you want to purchase silver directly with cash or start a silver IRA, our specialists can help you navigate the silver purchase process. With over 7,000 5-star reviews from our customers, you can rest assured that we’ll do everything we can to make the silver purchase process go smoothly for you.

With over a decade of experience and over $3 billion in precious metals placements, we have worked hard to make ourselves one of the best gold and silver companies in the country. Give Goldco a call today and learn more about how you can put silver to use in helping to safeguard your financial well-being against economic calamity.