American History Silver Thursday Scam 1979

Good morning colleagues. Today am going to talk about so called Silver Thursday scam, which was happened in the USA in 1979. The oilmen were among the richest people in the world in the early 1960s and by 1970 their asset growth was exponential. Unable to own gold due to President Franklin Roosevelt’s 1933 law against U.S. citizens owning the precious metal, Nelson Bunker Hunt and William Herbert Hunt, the sons of Texas oil billionaire Haroldson Lafayette Hunt  decided to use silver, at the time roughly $1.50 per ounce, as their speculative hedge.

Brothers had for some time been attempting to corner the market in silver. Cornering the market implies buying up all deliverable securities so investors with short position cannot obtain these securities from anyone else. As a result a person who has cornered the market sets exorbitant prices and makes a fortune while investors suffer a terrific loss. By giving bribes and using swindle techniques, Hunts purchased close to 300 mln ounces of silver in the form of either actual bullion or silver futures contracts.

As a result, the price for silver jumped from $6.08 per troy ounce on January 1, 1979 to a record high of $49.45 per troy ounce on January 18, 1980, which represents an increase of 713%.

Film companies such as Kodak were forced to raise prices, and the British film producer Ilford fired all workers. People searched for any items with silver content (10-cent coins, "quarters", dishes), and then melted them. Dramatically increased the number of burglaries, the purpose of which was silver.

Due to insider information from whistleblowers, regulators got the wind of what the Hunts were up to, and eliminated the possibility of a corner by limiting to 2000 the number of contracts that any single trader could hold. It was equivalent to 10 mln ounces which was only a small fraction of what the Hunts were holding and so they were forced to sell.