Guest Post: A Brief History Of Silver Manipulation
Submitted by Sudden Debt
A Brief History of Silver Manipulation
The silver fairy tale of the brothers Hunt
In the early 80’s the attempt of the Brothers Hunt, Nelson Bunker and William Herbert Hunt, to fully clamp down the silver market was one of the most spectacular but at the same time also one of the most unsuccessful financials plans within the then fair world. Despite that the brothers failed in their attempt to clamp the silver market, they have succeeded to make a outright mess of the precious metals market and lose one of the largest fortunes in the world in no time.
The expansion of the Hunt Empire
Nelson Bunker Hunt and William Herbert Hunt were born in one of the richest American families. Their father Haroldson Lafayette (also known as H.L. or Arizona Slim), had acquired a fortune during the 20s and the 30s in the Texan oil industry. By investing these oil revenues in successful companies, the Hunt family grew into one of the most prosperous families from all over America. When H.L. died in 1974, he left his next of kin therefore an immense capital. H.L. Hunt had 14 children at three different women, 6 with his legal wife, 4 from a bigamist marriage and another 4 at one of his mistresses. Bunker and Herbert were two full-fledged brothers, namely the second and the third son of H.L. Hunt and his first wife Lyda Bunker Hunt. When Bunker and Herbert just started to get a grip on the silver market the 70’s, their capital was estimated around 13 billion dollars. H.I. Hunt’s logical successor and next boss of the Hunt Empire was originally his eldest son Hassie. However, his plans were thwarted when the same Hassie during his twenties had to do to with psychiatric problems and underwent various treatments without success. H.L. therefore had no choice but to name his second son as successor to lead. In the beginning, however, Bunker showed not the gift of his father in order to locate new oil fields. Bunker lost in his early years millions of dollars by error self-rated and fruitless attempts to find new oil fields for the Hunt Empire Carlo. But once Bunker learned how to do it after a few year, he did it immediately with verve and with style. He found an immense Libyan oil field, Sarir Field, which turned out to be one of the largest oil fields in the world. The discovery of this oil field swept into a seesaw the losses which he had piled up in the previous years from the table. In the early 70’s, he and his brother Herbert took over the Empire forever on.
Silver times glimmer on the horizon
By mid 1970s Hunt developed systematically an obsession for silver. When he went looking for a source of stability in a world that was currently very unstable and subject to inflation was and influences was the fear of international communism, he came out on the magic word silver. He saw not only future in silver but he was also convinced that silver was undervalued and that the silver value could not otherwise than rise. Supported by the opinion of their financial advisors locks he joined the investment group Bache investment house and they put their first steps in the silver world. Middle 1970s the brothers Hunt dominated for almost 10% of the entire silver stock and their increasing impact on the silver market made sure that the silver prices within a few years of $ 2 per ounce increased to more than $ 6 per ounce. They invested not only their entire own capital in silver but they tried also others to convince others to do so. In this way, they found support with a group of Arabian investors who where able to buy huge volumes of silver with their endless supplies of money and propel the price of silver into the skies. The Hunts, backed up by the Arabs, increasingly got more influence in the silver market by which their holding grew out of proportion and which supplied them the means to loan more money and buy more silver and increase the price even more. And the plan seemed to be working! At the end of 1979, after years of price increases, the price for silver was 35$/ounce, a unseen price. Other investors where atracked by these price increases and also started to invest in silver what gave the price a even bigger boost. In the 80’s, the plan of the Hunt brothers seemed to have worked and the market was on his head. In less then a decade they where able to inflate the price from 2$ per ounce in the beginning of the 70’s to 50$ per ounce at the beginning of the 80’s. It even seemed realistic by then that silver would go to $200/$300.
The end was near. The prices of silver stopped rising and started to go down. They weren’t able to attract enough funds anymore to influence the price and the price started to went down. The price of silver and gold started their seemingly endless drop because investors started to invest their money in bankcertificats for higher interests. Not only the value of the precious metals plummeted but also the fortune of the Hunts went up in smoke. The brother took on massive loans to fund their silver quest and couldn’t repay their debts anymore which they made with brokers like Bache, A.G. Edwards, Merrill Lynch en some others who had to be repaid when the silver market crashed. These brokers started to protect themselves against these drops and made fortunes when the silver went down. The Hunts were confronted by margin calls from their brokers to repay them in the next 5 days or there would be a liquidation.
And when a broker demanded $100 million dollars as payment, the largest margin call until then, and the Hunt couldn’t pay up it was the end for them.
In a last attempt to turn the tide, the Hunt brothers tried fabricate paper obligations backed by their 200 million ounces of silver. But in reality they tried to create a international curreny that would have a silver standard. The plan failed and even pushed down the silver price even more because silver by then was linked with the failure of the Hunts and their unstable situation. The price got to a all time low on march 27 1980, a date still known as Bloody Thursday.
Old habits die hard
The banks involved in this silver play actually got big thanks to this silver play in the 80’s and learned how to suppress the price of silver whenever it went up. It was just a routine game which they played over and over again. Supply/demand didn’t even matter in this play and the game attacked so many players that every big bank in America went along the game from the mid 80’s until now. This was simply one of the biggest money generator of all time and this game is much bigger then J.P. Morgan.
But like any other casino game : You need to quit while you’re still ahead. For them 2007 should have been a warning light but by then it was already to late to unload their silver derivatives.