“Silver Thursday” is the name for March 27, 1980, when a steep decline in the price of silver occurred.
At the end of the 1970s, the Hunt brothers created a bubble in the silver market, almost cornering the silver market. In December 1979, the price of silver more than doubled. Silver prices peaked in January 1980 at about $50 (London fix). However, when the COMEX adopted “Silver Rule 7” which tightened margin requirements for silver futures, the price of silver started to fall. The sell-off put the Hunt brothers in a very difficult situation, as they had to borrow short-term capital to pay margin calls and stay afloat. On March 27, 1980, they finally missed a margin call of $100 million, which led to massive panic in the markets. The price of silver led the way and plunged from $21.62 to $10.80.
Chart 1: The price of silver (London Fix) from 1979 to 1980
Silver Thursday and Gold
The price of gold followed its cheaper cousin and fell more than 40 percent in the first quarter of 1980, as one can see in the chart below.
Chart 2: The price of gold (London P.M. Fix) from 1979 to 1980.
Whether the Hunt brothers wanted to manipulate silver prices or not, they fueled a bubble in the silver market, which burst at the beginning of 1980. It is just another example that manipulative influence on prices may only be short-lived.
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