Silver Thursday
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Silver Thursday was an event that occurred in the financial markets on Thursday 27 March 1980. A steep fall in silver prices led to panic on commodity and futures exchanges.
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[edit] Background
Nelson Bunker Hunt and Herbert Hunt, the sons of Texas oil billionaire Haroldson Lafayette Hunt, Jr. had for some time been attempting to corner the market in silver. In 1980 the price of silver reached a spectacular all time high ($48.70/oz. COMEX Spot) and the brothers were estimated to hold one third of the entire world supply. But as the price began to fall again, they were unable to meet their obligations, causing panic in the markets.
[edit] Silver Thursday
The Hunt brothers had invested heavily in futures contracts through the brokerage firm Bache Halsey Stuart Shields, now Prudential-Bache Securities. When the price of silver dropped below their minimum margin requirement they issued a margin call for $100 million. The Hunts were unable to meet the margin call and the ensuing panic was felt in the financial markets in general as well as commodities and futures.
To save the situation, a consortium of US banks provided a $1.1 billion line of credit to the brothers which allowed them to pay Bache which, in turn, survived the ordeal.
[edit] Aftermath
The Hunts lost hundreds of millions of dollars through this incident but the family fortunes survived.
Nelson Hunt declared bankruptcy and was convicted in 1988 for trying to corner the market in silver through International Metals Investment Company Limited
[edit] See also
[edit] References
- ANZ Financial Dictionary
- Fay, Stephen. Great Silver Bubble (1982).
