1980 Silver Market Crash

From MarketsWiki
Jump to navigation Jump to search

The 1980 silver market crash occurred when the price of silver plummeted from a high of $50.35 per oz. in January, to $10.20 per oz. in March.

The cause for a rise in silver prices from $6 per oz. in early 1979 to $50 per oz. in January 1980 was largely attributed to the actions of the Hunt brothers, W. Herbert Hunt and Nelson Bunker Hunt. The Hunt brothers began buying silver in the early 1970's as a hedge against inflation. In 1979 however, they began to purchase the metal in much larger quantities in an attempt to corner the market, and by 1980 the Hunt brothers controlled about 200 million oz. of silver, worth billions of dollars. This accounted for over half of the world's privately owned supply at that time.[1] In late January, officials at COMEX raised margin requirments and placed and limits on the amount of silver futures contracts they could hold in order to check this cornering in the markets, and the Hunt brothers were forced to sell, causing prices to plummet.

Silver's dramatic fall also impacted a number of other commodities. Panic spread to other metals and stock prices fell dramatically before staging a rebound.[2]

The most infamous day in the silver crash of 1980 is referred to as 'Silver Thursday'[3] which occurred on March 27, 1980 when the price of the white metal fell from $21.62 to $10.80 per ounce.[4]

The Hunt brothers were reported to have lost over $1 billion in March of 1980, and by 1988, were forced to declare bankruptcy.[5]