In a fascinating new book an experienced trial attorney tells the story of the turmoil in the silver market in 1979-80. Mark Cymrot’s account makes points pertinent to subsequent crises as well; points worth careful consideration going forward.
In 1979, the Hunt brothers sought to corner the market in silver. The price of silver more than quintupled from September 1979 until January 1980 due to their buying activity. They were borrowing so heavily they inspired COMEX, then the dominant metals exchange, to adopt new rules limiting leverage on silver positions.
That January rules change was the beginning of the end for the “corner.” The Hunts’ position unravelled, in a way scandalous and expensive for them, as well as dangerous for the broader economy.
The Thing to Know:
Cymrot, in his book, Squeezing Silver, contends the Hunt saga inaugurated the era of bailouts for business interests deemed “too big to fail,” an era still very much with us.