The Effect Of Economic Contraction On Silver I think the issue of the effect on the price of silver, if there is a worldwide economic contraction, is fairly complex.
Primary silver mine production accounts for 29% of global silver supply, which leaves 71% for other sources.
https://www.silverinstitute.org/site/supply-demand/silver-production/
Scrap supplies about 20% of silver.
That would leave about 50% of supply coming as a by product of gold and base metal mining.
https://www.silverinstitute.org/site/supply-demand/silver-supply/
Industrial applications accounted for 54% of silver demand or use.
https://www.silverinstitute.org/site/supply-demand/silver-demand/
So, I would think that a global economic slow down or contraction would effect both mining supply and industrial consumption.
Supply from by base metal mining and consumption from industrial applications appear to be fairly equal.
Both would tend to diminish with an uncertain, but not obviously bullish, effect on price.
Another factor to consider is that industrial demand can fall very rapidly in an economic downturn, while mines would probably try to keep producing because of the high expense involved in shutting down mines and then starting them up later.
Mine production might continue fairly strong, at least for some time, while industrial consumption could drop sharply.
This kind of action would put downward pressure on the price of silver.
As noted by other posters silver has a dual purpose in that many people consider it as real money and a storehouse of wealth.
If an economic contraction was accompanied by world wide increased monetary inflation (money printing) that would tend to put upward price pressure on silver similar to gold.
An inflationary depression would tend to boost the prices of gold and silver.
However, an economic depression that is caused by, or accompanied by, large amounts of debt destruction and money supply contraction, would put downward pressure on the price of gold and silver.
That would be a true deflation and in a true deflation gold and silver would probably both decline in price.
However, gold, which is more of a monetary metal than silver, might gain in purchasing power even if it has a declining nominal price. Silver might also gain purchasing power, but this is less certain, to me.
The bottom line, for me, is that it is probably unwise to be too complacent in the expectation that silver (and gold) will see large price increases in every economic outcome.
In a true deflation, I would want to hold no mining shares and would want a significant amount of gold bullion and coins and maybe some silver coins.
I would also want a large portion of assets in cash that was diversified in several strong currencies.
goldguy