Precious metal price takes largest tumble in history on ‘Silver Thursday’ [March 27, 1980]

Coin World ^ | 3-27-16 | Jeff Starck

[smokingfrog]

For the first few months of 1980, the silver market had been slipping as newly enacted rules began tightening their grip on the Hunt Brothers’ silver scheme.

On March 27 (known as “Silver Thursday”), silver opened at $15.80 and closed at $10.80 as the Hunt Brothers reportedly initiated a massive sell-off of silver and contracts to meet their obligations.

Commodities and the futures market crashed on these reports, but rallied somewhat, bringing silver to $12 an ounce within a few days.

But the futures contracts owned by the Hunts were predicated on silver at $35 an ounce. What had been a $3.5 billion profit on their efforts to corner the silver market evaporated, replaced by a reported $1.5 billion debt.

Silver Thursday went down as the single greatest reduction of wealth and value of the metal in market history.

Beginning in the early 1970s, Nelson Hunt and his brothers William Herbert and Lamar Hunt began accumulating large amounts of silver. By 1979, they had nearly cornered the global market. Prices of silver futures contracts and silver bullion rose from $11 an ounce in September 1979 to $50 an ounce in January 1980. Silver prices ultimately collapsed to below $11 an ounce two months later.

During the rise, dealers and the public were caught up in the fervor, trying to cash in before the price moved too far either direction.

[montag813]

Oh man, what an awesome shorting opportunity that was

[Tilted Irish Kilt]

montag813 :" Oh man, what an awesome shorting opportunity that was "

If you control the market , you can also control the fall
by shorting yourself and making more money.

[Attention Surplus Disorder]

Mention the word “silver” to any group of ten people over 35 years old and at least 3 of them will immediately chime in “The Hunt Bros”.

If people are interested, they should do better research than this skimmiest of superficial articles on the topic.

[Attention Surplus Disorder]

Mention the word “silver” to any group of ten people over 35 years old and at least 3 of them will immediately chime in “The Hunt Bros”.

If people are interested, they should do better research than this skimmiest of superficial articles on the topic.

[blam]

Doctor Copper is feeling perky lately.

"Market lingo for the base metal that is reputed to have a Ph.D. in economics because of its ability to predict turning points in the global economy. "

[niteowl77]

I remember those days well. Various photo labs/film processors were installing silver reclamation systems at the time, and it wasn't just because of pollution concerns!

Right at the time the price of silver peaked, I had to buy some silver "shot" for a project that never came to completion; I kept that loose conglomeration of silver in a box until about two years ago when I traded it to a coin dealer for a couple of "silver eagles."

Mr. niteowl77

[Big Red Badger]

Dang,

Thought I’d missed a current plunge !!!

Heart Meds ,Please.

[Sasparilla]

Silver closed this weekend at $15.18.
Common Silver Eagles are retailing at about $2.80+- over spot price. One large metals buyer is now offering $16.56 for your common Silver Eagles. Dealers are bidding $17.20 for common dates on the silver market.

[sparklite2]

I was at Fotomat Labs in Dallas at the time and we had already been running silver reclamation equipment. To not do so was to throw money away even at four dollars a troy ounce. But as the price rocketed up, we did put chain locks on the paper and film desilvering units. Even though the price went back down, for years afterwards the trucks that came by to pick up our harvested silver for refining had armed drivers.

There probably are still some wild-eyed hoarders out there waiting for the return of fifty-dollar silver so they can cash out at last.

[SAJ]

Sorry, m'FRiend, but it was NOT, repeat NOT, a shorting opportunity.

The COMEX, where the bulk of US silver futures were traded in 1980, had previously declared trading, as of Wednesday, to be for "liquidation only". This means (meant) that existing positions, long or short, could be freely closed when and as desired, BUT NO NEW POSITIONS OF ANY TYPE COULD BE ESTABLISHED. Want to buy some silver futures? Tough; the exchange wouldn't allow it. Want to sell some short? Tough; same answer.

Not nice? Nope, but the exchange was under the gun bigtime. Had they not done this, there would have been -- very likely -- insufficient stocks to settle the vastly expanding number of open contracts. MORE than likely, there would in short order have been NO EXCHANGE; it would have gone out of business after such a huge default.

Don't believe it? Well, all you have to do is look at the COMEX exchanges own figures of open interest (the number of existing contracts now in effect at the end of trading each day) from 2 January through the end of the month. If you don't have them, you can get them -- likely free -- from a quote service. In extremis, I have them and can send them to you.

Your comment is a classic case of what Paul Harvey used to broadcast the sequent as "The Rest of the Story". Nice pipe dream, of course, but not doable in the real world. As I recall, the COMEX exchange cancelled the "liquidation only" order after silver had dropped about $23/oz., but I will freely admit that, after 35 years or so, my memory may be in error. At any rate, silver prices had fallen a hell of a lot before "normal" trading was restored.

FReegards to you!

[PA Engineer]

If people are interested, they should do better research than this skimmiest of superficial articles on the topic.

I remember it well. I was working in Saudi at the time and would travel to a Aramco construction camp a couple of times a month during that year.

One of the camp administrators was pushing buying silver on margin. He was in for 10% and the interested rates were pushing 19%. Even then I knew it was a bubble and I warned him to sell. He would have none of it.

I ran into him the following year during commissioning of my project. He had extended his contract 5 years to pay for the call.

Many people were ruined by this. Myself, I was playing currencies and did quite well in Swiss Francs.

[fella]

I was in the industrial x-ray business at the time. The cost of film went way up but it never came down.

[niteowl77]

It wasn't until the late 1970s when my alma mater finally installed reclamation equipment (or possibly completed the task); the supervisor at my first job had been there at the time and talked about it a bit. I don't remember if my first employer was running reclamation equipment when I was hired, or if it showed up after we started processing a lot of imagesetting film (as opposed to what the stat camera had generated). I do know that by the time I left, they had something installed. We eventually installed a setup at my next employer, but by then it was just a part of the pollution control setup.

(I seem to recall that the company reclaimed just over $5.00 worth of silver when they decided to shut down in-house imagesetting and the entire installation was taken out.)

Mr. niteowl77

[sparklite2]

I was running a pro photo lab in Canada during the seventies when silver recovery cartridges were introduced. Nothing electrolytic at that point. I got a phone call from a guy who claimed to be a student at one of the universities who said they would like to come around periodically and collect our overflow film fix for free and dispose of it.

I told him I’d be glad to save it for him and they could come get it ... after it had be desilvered. Never heard from him again. Heh.

[montag813]

As I recall, the COMEX exchange cancelled the "liquidation only" order after silver had dropped about $23/oz., but I will freely admit that, after 35 years or so, my memory may be in error. At any rate, silver prices had fallen a hell of a lot before "normal" trading was restored.

Yep...no surprise there. I wasn't really serious anyway. I regularly trade COMEX gold futures, but if it fell from 1219 to 800 they would clamp down the same.

[minnesota_bound]

The Hunts brother next tried to corner the orange juice futures........ : )

[SunkenCiv]

The Hunt brothers had a brilliant plan — they were using money they got from those shorting silver to buy more silver, thus driving the price up, which meant that shorting it looked like an ever-better idea. So they did it again and again, and were financing the cutting of their own throats. Eventually, two things happened...

1) the “shorts” ran out of money, classic, basically, the Hunts ran out of other people’s money, and...

2) gov’ts around the world, not understanding what had moved the price up so hard, figured (rightly) that it would never be that high again, so they sold large chunks of their silver reserves, tens of millions of ounces per day.

The Hunts had to keep buying silver to keep the price going higher to finance their market corner, but eventually no one was interested in shorting it, and gov’ts were dumping tens of millions of ounces. This triggered their planned endgame, which was, sell bonds against their silver assets, making it the only so-called hard currency in the world. Trouble is, they waited too long, and the silver price bubble had popped, and the price was on a slide that neither they nor anyone else could stop.

The silver exchange never closed on Silver Thursday, because they anticipated that shutting down for the night would mean they’d never reopen.

[Therapsid]

And that comes to about $1 per. oz in 1980 dollars....”Factoring in money printing.....”

$1 per. oz