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As an example, silver took a 9.4% hit on 9/22/2011, which was a bad market day -- the Dow dropped over 3.5%.

The conventional wisdom is that precious metals like silver are a hedge against a falling market. What are the factors that would make it swing so wildly in value?

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    Reopened based on edits to make this a viable question and 3 votes to-reopen subsequent to those edits. Cleaned up prior comments.
    – Chris W. Rea
    Commented Oct 11, 2011 at 13:06

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The S&P 500 represents a broadly diversified basket of stocks. Silver is a single metal. If all else is equal, more diversification means less volatility. A better comparison would be the S&P 500 vs. a commodities index, or silver vs. some individual stock.

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Silver is a commodity. It's valuable for certain kinds of manufacturing, jewelry, and as a speculative financial instrument or hedge against the dollar.

The S&P 500 includes companies which make money off of mining, manufacturing, medicine, media, technology, banking, dining, agriculture... There's a lot more variety there.

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  • Thanks. This question was edited / changed from the original. My original question was why silver dropped 3 times as much as gold in the recent sell-off (gold drop from summer high of $1900). More recently comparing the two, I imagine it is because silver got more ahead price-wise than gold did, but am not sure. In any case, thanks for your comment.
    – Ray K
    Commented Oct 12, 2011 at 3:24

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