Gold vs. silver chart about price, performance and risk

Both gold and silver are precious metals and both are often mentioned as some kind of safe haven – especially in a financial crysis. On the other hand both the application and the production of silver and gold are more or less different.

However risk and potential return carried by them was also different in the past 5 year, as it can be seen on the charts below:

Gold vs. silver price chart about the past 5 years*

The chart below shows by how many percents the price of precious metals has increased or decreased, as compared to the point on the left side of the screen.

Gold vs. silver relative price change chart about the past 5 years

If one invested in gold 5 years ago, his largest drawdown was approximately -35%, and he could have earn only 8% of profits.
Largest drawdown (compared to the price in 2010) was nearly -58% in case of silver, but top profit could only be cca. 8% – with perfect timing.
However, perfect timing is quite hard to achieve so the potential profits mentioned above are rather theoretical. If there is one thing that is sure, then it is that silver carried higher risk in the past 5 years.

Gold vs. silver risk-reward chart*

In the risk-reward chart (see below) one can see the 1 year average return (reward) on the vertical axis and on the horizontal axis you can find the standard deviation showing the risk of each investment for long period of time. (Standard deviation measures the average deviation of return from the average return.)

Gold vs. silver risk-return comparison chart

This chart also reflects that silver yielded higher profits but it also carried higher risk, since its average return and its standard deviation are both higher than in case of in the past.

Long term outlook?

Both gold and silver have yielded very limited profits in the past 5 years, but is the trend going to continue?
As you could see on the right edge of the price comparison chart, price of both has been decreasing for a while. Sounds like both were overpriced during the financial crysis breaking out in 2008. Find out more about gold’s historical peaks and silver’s historical peaks here.

*charts have been created by using Chartoasis Sesame. If you feel like analyzing silver’s historical price, you can do that for free at www.chartoasis.com/sesame .