Silver Thursday

Short description: 1980 crash in the U.S. commodity markets for silver

This article has multiple issues. Please help improve it or discuss these issues on the talk page. (Learn how and when to remove these template messages)

This article may be confusing or unclear to readers. In particular, the article jumps around chronologically and the description of events is vague. Please help us clarify the article. There might be a discussion about this on the talk page. (May 2024) (Learn how and when to remove this template message)

|

(Learn how and when to remove this template message)

Silver price history in 1960–2020 showing the Silver Thursday event in 1980 Gold price history in 1960–2025 showing the Silver Thursday event in 1980

Silver Thursday was an event that occurred in the United States silver commodity markets on Thursday, March 27, 1980, following the attempt by brothers Nelson Bunker Hunt, William Herbert Hunt and Lamar Hunt (collectively known as the Hunt Brothers) to corner the silver market. A subsequent steep fall in silver prices led to panic on commodity and futures exchanges.

## Contents

* 1 Background
* 2 Climax
* 3 Stock market reaction
* 4 Aftermath
* 5 See also
* 6 References
* 7 Further reading

## Background

In 1979, the price for silver (based on the London Fix) jumped from $6.08 per troy ounce ($0.195/g) on January 1, 1979, to a record high of $49.45 per troy ounce ($1.590/g) on January 18, 1980, an increase of 713%, with silver futures reaching an intraday COMEX all-time high of $50.35 per troy ounce and a reduction of the silver/gold ratio down to 1:17.0. On that day, gold also peaked at $850 per troy ounce.[1][2] In the last nine months of 1979, the Hunt brothers were estimated to be holding over 100 million troy ounces of silver and several large silver futures contracts.[3]

The brothers were estimated to hold one-third of the entire world supply of silver not held by governments. The situation for other prospective purchasers of silver was so dire that on March 26, 1980, the jeweller Tiffany's took out an ad in The New York Times, condemning the Hunt brothers and stating "We think it is unconscionable for anyone to hoard several billion, yes billion, dollars' worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver".[4]

On January 7, 1980, in response to the Hunts' accumulation, the exchange rules regarding leverage were changed; COMEX adopted "Silver Rule 7", which placed heavy restrictions on the purchase of commodities on margin. The Hunt brothers had borrowed heavily to finance their purchases, and, as the price began to fall again, dropping over 50% in just four days, they were unable to meet their obligations, causing panic in the markets.

## Climax

The Hunt brothers had invested heavily in futures contracts through several brokers, including the brokerage firm Bache Halsey Stuart Shields, later Prudential-Bache Securities and Prudential Securities. When the price of silver dropped below their minimum margin requirement, they were issued a margin call for $100 million. The Hunts were unable to meet the margin call, and, with the brothers facing a potential $1.7 billion loss, the ensuing panic was felt in the financial markets in general, as well as commodities and futures. Many government officials feared that if the Hunts were unable to meet their debts, some large Wall Street brokerage firms and banks might collapse.[5]

To save the situation, a consortium of US banks provided a $1.1 billion line of credit to the brothers which allowed them to pay Bache which, in turn, survived the ordeal. The U.S. Securities and Exchange Commission (SEC) later launched an investigation into the Hunt brothers, who had failed to disclose that they in fact held a 6.5% stake in Bache.[6]

## Stock market reaction

This day marked the end of a large stock market correction that year.

## Aftermath

The Hunts lost over a billion dollars through this incident, but the family fortunes survived. They pledged most of their assets, including their stake in Placid Oil, as collateral for the rescue loan package they obtained. However, the value of their assets (mainly holdings in oil, sugar, and real estate) declined steadily during the 1980s, and their estimated net wealth declined from $5 billion in 1980 to less than $1 billion in 1988.[7] By 1982, the London Silver Fix had collapsed by 90% to $4.90 per troy ounce.[8]

In 1988, the brothers were found responsible for civil cases of conspiracy to corner the market in silver. They were ordered to pay $134 million in compensation to a Peruvian mineral company that had lost money as a result of their actions. This forced the brothers to declare bankruptcy, in one of the biggest such filings in Texas history.[9]

## See also

* List of trading losses
* Silver as an investment
* State Reserves Bureau copper scandal
* Sumitomo copper affair
* Trading Places, a 1983 comedy film whose plot is partially inspired by Silver Thursday

## References

1. ↑ "Price: UK". http://www.silverinstitute.org/hist_priceuk.php.
2. ↑ Nguyen, Pham-Duy; Larkin, Nicholas (September 24, 2010). "Silver Futures Jump to 30-Year High: Gold Is Steady After Topping ,300". Bloomberg. https://www.bloomberg.com/news/2010-09-24/silver-climbs-to-30-year-high-beating-gold-with-its-26-advance-this-year.html.
3. ↑ H.L. Hunt and the Circle K Cowboys
4. ↑ "He Has a Passion for Silver". TIME Magazine. April 7, 1980. http://www.time.com/time/magazine/article/0,9171,921964-2,00.html. Retrieved August 6, 2009.
5. ↑ "Bunker's Busted Silver Bubble". TIME Magazine. May 12, 1980. http://www.time.com/time/magazine/article/0,9171,920875,00.html.
6. ↑ "The Hunts are on the Hunt". TIME Magazine. April 14, 1980. http://www.time.com/time/magazine/article/0,9171,923970,00.html.
7. ↑ "Big Bill for a Bullion Binge". TIME Magazine. August 29, 1989. http://www.time.com/time/magazine/article/0,9171,968272-1,00.html.
8. ↑ "London Silver Market: 1600-2000". http://www.silverfixing.com/timeline.pdf.
9. ↑ "Billionaire Bankrupts". TIME Magazine. October 3, 1988. http://www.time.com/time/magazine/article/0,9171,968554,00.html.

## Further reading

* Fay, Stephen (1982). The Great Silver Bubble. London: Coronet, 1983. ISBN 978-0-340-33033-3.
* Jerry W. Markham (2002). A financial history of the United States: From the age of derivatives into the new millennium: (1970–2001), volume 3, M. E. Sharpe, ISBN 978-0-7656-0730-0

* v
* t
* e

Financial bubbles

* Commodity booms
* Credit cycle
* Diamond rush
* Gold rush
* Irrational exuberance
* Oil boom
* Real estate bubble
* Stock market bubble

1000–1760|

* Tulip mania (1634–1637)
* Mississippi bubble (1684–1720)
* Brazilian Gold Rush (c. 1690–1760)
* South Sea bubble (1711–1720)

1760–1840|

* Brazilian Gold Rush (1760–1840)
* Canal Mania (c. 1790–c. 1810)
* Carolina Gold Rush (1802–1825)
* 1810s Alabama real estate bubble
* Georgia Gold Rush (1828–c. 1840)
* 1830s Chicago real estate bubble
* Chilean silver rush (1830–1840)

1840–1870|

* Chilean silver rush (1840–1850)
* Railway Mania (c. 1840–c. 1850)
* Brazilian Gold Rush (1840–1870)
* California Gold Rush (1848–1855)
* Queen Charlottes Gold Rush (1851)
* Victorian gold rush (1851–c. 1870)
* New South Wales gold rush (1851–1880)
* Australian gold rushes (1851–1914)
* Fraser Canyon Gold Rush (1858)
* Pike's Peak Gold Rush (1858–1861)
* Rock Creek Gold Rush (1859)
* Pennsylvania oil rush (1859–1891)
* Similkameen Gold Rush (1860)
* Stikine Gold Rush (1861)
* Colorado River mining boom (1861–1864)
* Otago Gold Rush (1861–1864)
* Cariboo Gold Rush (1861–1867)
* First Nova Scotia Gold Rush (1861–1874)
* Wild Horse Creek Gold Rush (1864–1865)
* Leechtown Gold Rush (1864–1865)
* West Coast Gold Rush (1864–1867)
* Big Bend Gold Rush (c. 1865)
* Vermilion Lake Gold Rush (1865–1867)
* Kildonan Gold Rush (1869)
* Omineca Gold Rush (1869)

1870–1914|

* 1870s Lapland gold rush
* Coromandel Gold Rushes (c. 1870–c. 1890)
* Cassiar Gold Rush (c. 1870–c. 1890)
* Brazilian Gold Rush (1870–c. 1900)
* Black Hills Gold Rush (1874–1880)
* Colorado Silver Boom (1879–1893)
* Western Australian gold rushes (c. 1880–c. 1900)
* Indiana gas boom (c. 1880–1903)
* Ohio oil rush (c. 1880–c. 1930)
* Tierra del Fuego gold rush (1883–1906)
* Cayoosh Gold Rush (1884)
* Witwatersrand Gold Rush (1886)
* Encilhamento (1886–1890)
* Cripple Creek Gold Rush (c. 1890–c. 1910)
* Klondike Gold Rush (1896–1899)
* Second Nova Scotia Gold Rush (1896–1903)
* Kobuk River Stampede (1897–1899)
* Mount Baker Gold Rush (1897–c. 1925)
* Nome Gold Rush (1899–1909)
* Fairbanks Gold Rush (c. 1900–1918)
* Texas oil boom (1901–1918)
* Cobalt silver rush (1903–1918)
* Porcupine Gold Rush (1909–1918)

1918–1939|

* 1920s Florida land boom (c. 1920–1925)
* Fairbanks Gold Rush (1918–c. 1930)
* Texas oil boom (1918–1945)
* Cobalt silver rush (1918–c. 1930)
* Porcupine Gold Rush (1918–1945)
* 1930s Kakamega gold rush
* Third Nova Scotia Gold Rush (1932–1942)

1945–1973|

* Texas oil boom (1945–c. 1950)
* Porcupine Gold Rush (1945–c. 1960)
* Poseidon bubble (1969–1970)

1973–1982|

* Mexican oil boom (1977–1981)
* Silver Thursday (1980)
* New Zealand property bubble (c. 1980–1982)

1982–2007|

* 1980s oil glut
* New Zealand property bubble (1982–)
* Spanish property bubble (1985–2008)
* Japanese asset price bubble (1986–1990)
* Dot-com bubble (1995–2000)
* Baltic states housing bubble (2000–2006)
* Irish property bubble (c. 2000–2007)
* 2000s commodities boom (2000–2008)
* 2000s Danish property bubble (2001–2006)
* Indian property bubble (2001–2007)
* United States housing bubble (2002–2006)
* Romanian property bubble (2002–2007)
* Polish property bubble (2002–2008)
* Canadian property bubble (2003–2008)
* Chinese property bubble (2005–11)
* Lebanese housing bubble (2005–2008)
* Bulgarian property bubble (2006–2008)
* North Dakota oil boom (2006–2008)
* Chinese stock bubble of 2007
* Uranium bubble of 2007

Post–2008|

* North Dakota oil boom (2008–2012)
* 2000s commodities boom (2008–2014)
* Canadian property bubble (2008–2019)
* Lebanese housing bubble (2008–)
* Australian property bubble (2010–)
* Cryptocurrency bubble (2011–)

* AI winter
* Carbon bubble
* Chaotic bubble
* The Green Bubble
* Social media bubble
* Unicorn bubble
* U.S. higher education bubble

0.00

(0 votes)

Original source: https://en.wikipedia.org/wiki/Silver Thursday. Read more

|

Retrieved from "https://handwiki.org/wiki/index.php?title=Chemistry:Silver_Thursday&oldid=3847080"
*[v]: View this template
*[t]: Discuss this template
*[e]: Edit this template