Silver, Revisited

A year and change ago, we wrote a little article called “Silver Still Isn’t a Store of Value.” Since then, Ag is up a rollicking 53.5%.^[i] Naturally, some of our delightful readers have asked the entirely logical question: Has our view on silver changed? It hasn’t. We will show you why.

That article, similar to our April 28, 2011 piece titled, “Not So Sterling Silver,” made the point that silver is a very boom-and-bust-prone commodity. Those booms can be lovely, as this year has shown. But the busts can be horrific. Last September’s piece preceded a boom. Our 2011 article published one day before silver’s peak, preceding a big, years-long bust. Yet: Neither article was a short- or long-term forecast for silver prices. Rather, we showed that because silver is prone to big busts as well as booms, it doesn’t qualify as a store of value. We didn’t attempt to forecast because we think doing so is impossible. Sentiment has too much influence on price movement of such commodities.

For an asset to be a store of value, you need to have reasonable certainty that you will be able to sell it at any time for a price roughly matching your purchase price. It needs to be liquid and stable, with basically no price movement. The universe here is very small, amounting to cash and cash-like securities. They aren’t inflation-adjusted stores of value, because interest rates always tend to lag inflation. But you will get nominal capital preservation, more or less.

People think silver (and gold) have store-of-value properties because they occasionally functioned as money. We have also seen movies where villains demand vaults full of these precious metals as payment in a heist. And outlets that sell both have a lot of glossy marketing preaching their store-of-value properties. It all plays on reputation and emotion and doesn’t go into the boom-and-bust of it all.

So when we write about gold and silver, our purpose is to cut through that emotional haze with some cold, hard facts and remind you of the boom and bust. Not because we are anti-gold or silver-hating fuddy duddies, but because we think anyone making an investment decision should do so with logic and all possible facts in hand.

This is counterintuitive, but stick with us: Silver’s latest boom proves our point. Even with the 53.5% return since last September 30, and even with the 65.5% year-to-date return, silver remains down a smidge since April 2011.^[ii]

Exhibit 1: Silver’s Wild Ride

Source: FactSet, as of 10/8/2025. Silver spot price (New York), 12/31/2009 – 10/7/2025.

Typically, people seeking to keep their portfolio value stable do so for two reasons.

1. They have a short-term purpose for that money, like a down payment, and need it to be there soon.
2. Their goals require no risk of loss (which is rare and often at odds with other goals).

Silver doesn’t fit either criteria. If you bought silver as a “store of value” at pretty much any point in 2011, you had to wait almost 15 years to be able to sell and get your money back. That would not have fit the bill for someone who was trying to make a down payment or who couldn’t absorb market volatility for whatever reason. This isn’t new for the last 15 years, either. Silver is only now getting back to its January 1980 high, too. Since 1970, we are basically talking about three massive boom periods with a lot of pain in between.

While this isn’t store-of-value behavior, it is typical commodity behavior. Boom-and-bust cycles are normal in that world as supply and demand play leapfrog. In the metals world, it generally goes like this: Rising prices incentivize investment in new mines; prices keep rising as construction takes a while; investment in new mines continues; mines start opening and supply rises; eventually there is too much supply, tanking prices; companies stop investing in new mines as they focus on repaying debt and recouping initial investment costs; eventually supply wanes and prices resume rising, starting the cycle anew.

Silver’s cycles look exaggerated because it—like gold—gets occasional sentiment-induced booms. This is all feelings, which are impossible to predict and time. An actual store of value shouldn’t be subject to cyclicality or mood swings. Price movement, up or down, doesn’t change that at all.

So we still see this as we did last September and in 2011. And at all points in between. Silver is simply too wild to be a store of value. And despite its occasional booms, the fact that it is recapturing highs of 14 and 45 years ago tells you it isn’t a great long-term investment, either. Instead, it is a commodity that can deliver nice gains by happenstance if you get the timing exactly right. If you struggle with stocks’ volatility and the urge to buy and sell at the wrong times, chances are you won’t find glittering success with shiny precious metals, whether that is Au or Ag.