In our last blog post, we laid out the set up for Silver Thursday. In 1979, the Hunt brothers successfully cornered the silver market by voraciously buying up silver futures. By owning so much of the commodity, the brothers were able to influence the pricing. The price of silver jumped from $6 per troy ounce to an astounding $48.70 per troy ounce.
The Hunts got what they wanted, but it didn’t last. The US government and federal commodities regulators stepped in to return balance to the markets. COMEX instituted new restrictions against the purchase of commodities on margin – practically targeting the Hunt brothers outright. The Hunts had borrowed heavily to finance their silver purchases, so their capital was stretched thin. The pressure mounted until the Hunts finally missed a margin call for more than $100 million on their silver futures.
On March 27, 1980, panic sales were so rampant that the price of silver dropped to less than $11 per troy ounce. The day went down in financial history as Silver Thursday. In the aftermath, the government refused to bail out the Hunt brothers, who arranged one last private loan from a consortium of banks and companies – which helped prevent widespread bankruptcies and failures throughout the market. In the end, the Hunts lost more than $2 billion, were convicted of fraud in civil court, and banned from commodities trading.
Since Manhattan Gold & Silver wasn’t founded until 1985, our records of historical silver prices don’t go back to the infamous Silver Thursday. But, it’s still a great example of why it’s important to keep your eye on the market. Try using our precious metals prices app to stay on top of the latest price fluctuations.