Silver Prices Collapse As Hunt Brothers Currency Fails On This Day In Market History By Benzinga
Benzinga – Benzinga takes a look back at a notable market-related moment that occurred on this date.
What Happened?
On March 27, 1980, the price of silver collapsed by 33% in a single day after the Hunt brothers’ plan to corner the global silver market failed.
Where The Market Was
The Dow finished the day at 759.98. The S&P 500 finished at 98.22. Today, the Dow is trading at 32,376.48 and the S&P 500 is trading at 3,978.24.
What Else Was Going On In The World?
In 1980, Beatle John Lennon was shot and killed in New York, and Mount St. Helens erupted in Washington, killing 57 people. The average annual income in the U.S. was $19,500.
Silver Crash
Starting in 1979, Nelson and William Hunt, two of the world’s wealthiest men, had been buying up every ounce of silver they could get their hands on in an effort to gain control of the global silver market. The plan was to launch a private currency, not unlike bitcoin and other cryptocurrencies, except the Hunts’ currency would be backed by physical silver.
Prior to 1971, every U.S. dollar could be redeemed for its value in gold, but the U.S. went off the gold standard in 1971. The Hunt brothers wanted to create their own rival to the U.S. dollar that was backed by silver, an appealing idea for investors who were seeing double-digit depreciation in the value of the dollar throughout the 1970s due to inflation.
The Hunt brothers eventually acquired roughly half the global supply of silver, but the surge in silver prices they created resulted in a flood of new supply to the market. When the price of silver started to drop, the Hunts were forced to liquidate their holdings, and the entire plan collapsed along with the price of silver.
On March 27, 1980, silver lost a third of its value in a single day, plummeting from $16.25/oz to $10.85/oz.
Related Link:
This Day In Market History: OPEC Raises Crude Oil Prices By 9%
Photo via Pixabay.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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