Gold Outperforms Silver and Cash as Crisis Hedge Over Past 50 Years

The respite between global crises that affect your finances seems to be getting shorter. Savvy investors are looking for an answer to the problem of inflation, and a safe-haven from the next inevitable downturn.

Three popular assets are gold, silver, and cash. They all have upsides, but they behave differently under stress. Let's take a look at how each has stood up against crises over the last 50 years.

The article defines a crisis hedge as a safe-haven asset that historically stands up to economic downturn. It may not gain in value (or even stay flat), but compared to alternatives, it tends to lose less and limits your damage. A good crisis hedge helps you ride out rough market stretches with minimal effect on your finances.

Gold and other precious metals have shown a great store of value over centuries. They aren't tied to any single currency, making them a popular option among investors. Cash is the opposite: It's easy to spend, but it's designed to lose ground to inflation over time.

A good hedge should be something you can actually sell in a hurry. Cash is the obvious winner when it comes to liquidity; you can withdraw and use it instantly. Gold and silver aren't extraordinarily tough to sell through dealers and trading platforms, but you'll deal with spreads, fees, and considerably more wait time than cash.

A more 'scientific' way to analyze which asset is the best hedge is to look back at past crises to find patterns. The article looks at three major crises: 1970s stagflation, the 2008 financial crisis, and the 2020 COVID-19 recession.