Hello Silver & Gold stackers! Today I thought we'd do a little history for those new to silver. Many of you have probably heard that the price of silver went completely nuts in the late 1970s, reaching a high of $49.45 in January 1980. Adjusted for inflation, that is $187.44. Nearly $200 for an ounce of silver! It was a pretty nuts time. People were gathering any silver they could find to melt down and profit from this massive pump.

But what was the reason for this? What sparked this bubble and why did it end? Let's look.

The Hunt Brothers

As many of you may know, the 1970s were challenging times for the US dollar. Inflation was rampant. Federal Reserve Chairman Paul Volcker took drastic measures to rein it in, but these changes took time to implement.

That brings us to the Hunt brothers: Nelson Bunker Hunt and William Herbert Hunt. Coming from a wealthy Texas oil family, they saw silver as the perfect hedge against inflation. At the time, there were widespread fears that the US fiat dollar might hyper-inflate and become worthless. Not entirely different from now, although the inflation of the 1970s was arguably worse than today's inflation.

Starting in the early 1970s, the Hunts began buying large amounts of silver. By 1980, their aggressive purchasing had led them to control a substantial portion of the market, driving the price from around $6 to the near-$50 high I mentioned earlier. In their attempt to corner the market, it is estimated that they owned 1/3rd of the entire world supply of silver not held by a government.

That $6 figure is equivalent to about $22.74 today when adjusted for inflation, which is not far from today's silver prices. So, to better picture things, imagine the price of silver today shooting up from twenty bucks to two hundred! Incredible!

The Fall

What goes up must come down. While normal people were overjoyed with the high prices and were collecting anything with silver to have melted down and sell, others were less than pleased. Tiffany's, for example, took out an ad in The New York Times, criticizing the Hunt brothers for hoarding silver and driving up prices, making it unaffordable for others. Their ad declared:

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.

Regulators, too, were alarmed. Concerned about potential market manipulation, they began to scrutinize the Hunts' activities closely. They imposed new rules. One thing led to another and it all collapsed spectacularly in March 1980, in an event that became known as "Silver Thursday".

As the market collapsed, so did the Hunt brothers' fortunes. For awhile they held on, but then they were charged with market manipulation and conspiracy to corner the silver market, and this eventually resulted in them declaring bankruptcy.

Since that time, with the exception of another spike in 2011 (up to $48), silver has been low, mostly just keeping pace with inflation. Many people have since blamed market manipulation on the other end, at keeping prices low, so there is that. You can decide on your own if that's the case or not, I'm just giving info about this event only.

So yeah, there is the silver bubble for you. Be sad for anyone who bought in on top. Even after 44 years we still haven't matched that high (especially when adjusted for inflation), so they are still out that money!

Maybe someday we'll return to that $50 price. This year? We'll see!

【Note: All inflation adjustments taken from The Inflation Calculator】

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David LaSpina is an American photographer and translator lost in Japan, trying to capture the beauty of this country one photo at a time and searching for the perfect haiku. He blogs here and at laspina.org. Write him on Twitter or Mastodon.