An investor told me he only buys gold. No silver. His reason?
“Silver spiked in 1980 only because the Hunt Brothers were trying to corner it.”
It’s true the Hunt Brothers bought a lot of silver back then. And it’s hard to imagine their involvement didn’t impact the price. If you recall, silver rose a whopping 3,105% from its 1970 low to 1980 high.
But were the Hunt Brothers the primary reason for such a dramatic spike in price? This is an important topic, because if silver’s biggest modern-day mania was the result of a one-off event, then maybe we shouldn’t expect it to rise like that again.
In my opinion, the investor is wrong. And there are three core reasons why.
But first…
Just How Much Silver Are We Talking About?
It’s true the Hunt Brothers were literally hoarding silver (along with their Saudi business partners), both physical metal and futures contracts. At their peak, they controlled about 250 million ounces of silver – 100 million in physical and 150 million in futures contracts. That’s a lot, and most reports conclude this is why silver skyrocketed in the 1970s.
How much of the silver market did they control? Several reports estimate the Hunt’s stash equaled 20% of silver supply. One account claimed it was one-third of global supply. Really?
According to the 2018 Silver Yearbook from CPM Group, there was roughly 2.8 billion ounces of above-ground investable silver in 1980. So the Hunts controlled about 8.9% of investable silver at their peak.
That figure, however, excludes rare coins and all silver used in jewelry, silverware, decorative items, etc. – throw all that in and we’re probably looking at something like 12 billion ounces of total above ground...