On Thursday, silver futures hit the highest level the white metal has seen since 1980, which is remembered by some metals futures brokers as the year the Hunt brothers allegedly attempted to corner the market.
At that time, silver prices increased ten times over to nearly $50 per troy ounce. Demand for silver was rising, as fuel costs increased during the oil crunch and the U.S. experienced one of its worst bouts of inflation. This may sound familiar to today's commodity brokers, who are facing some similar circumstances.
Nelson Bunker Hunt and William Herbert Hunt began buying up large amounts of silver during the 1970s, with prices climbing up from $6 per troy ounce to the record $48.70 per troy ounce.
At one point, the brothers were estimated to hold about a third of the world's silver supply outside of the metal in central banks – on paper, of course.
On January 7, 1980, the Comex exchange adopted new, stringent rules about trading commodities on margin – which is precisely what the Hunt brothers had done. The price of silver plummeted and the Hunts were issued a margin call for over $100 million, which they were unable to meet. The brothers went bankrupt, and ended up in court.
As far as anyone knows, no one has tried to corner the silver market recently. Rather, the white metal may simply be riding the coattails of its more valuable brother – currently, the gold-silver ratio is around 1:65, a far cry from its historical average of 1:16.
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