Did silver pull gold in the 1980 run-up?

Weiss

I don't remember: Did the Hunt's quest to control silver pull gold up, too, was gold going up already, or were both metals already advancing by the time the Hunts got involved?

ttown

Yes and if I remember correctly Platinum and Gold sold for about the same money at the peak or course it wasn't used near as much then as today.

cladking

Gold road silver's coattails in high inflation enviroment.

CaptHenway

Definitely. People came into coin shops to sell junk silver and used the money to buy gold.
TD

Weiss

Thanks, guys.

I don't think I've seen many editorials on that phenomenon (gold on silver's coattails as cladking put it) in regards to this new run up.

It seems that you could argue that run-up was "artificial", for lack of a better word. Someone actually cornered the market on silver and squeezed it, and gold had nowhere else to go but up. High interest rate was clearly a factor, But silver's move had a much greater impact, and silver rose because of a cornered market.

This time gold is up for the reasons that is *should* be up: weak dollar, political turmoil, government spending.

Thoughts?

MoneyLA

actually, two separate markets. gold had its own strength, silver (the poor man's gold) was carried to a "particular level" on its own, but then the Hunt's sent silver to the moon.

I wish I had charts from that far back, because then I could take a "guess" as to what the "true price" of silver would have been without the Hunts.

If anyone has a link for charts from the period starting in 1975 please post.

thanks.

jmski52

It seems that you could argue that run-up was "artificial", for lack of a better word. Someone actually cornered the market on silver and squeezed it, and gold had nowhere else to go but up.

They wanted to squeeze the silver market, and they wanted to take delivery. They didn't quite make it, because significant parts of their position was leveraged. Even so, they were serious about taking delivery and holding physical silver.

High interest rate was clearly a factor, But silver's move had a much greater impact,

The high interest rates were Volker's remedy to combat inflation. The combination of much higher rates and newly-enacted limits on margin accounts were the only things that knocked silver back down. It was mostly political, from the Hunt's perspective.

A similar remedy is needed right now, but the current bunch in Washington has no intention of having their plans derailed by a little thing like solvency or finance.

roadrunner

No. Gold usually does all the early pulling.

Gold did indeed pull silver from 1967-1975. Then silver started to get stronger as the Hunts went into full swing. Silver intially made some moves in the 1966-1967 era as silver coinage was retired and the London Gold Pool worked to keep gold down. But from 1967 it's all gold for 9 years with the avg. yearly GSR rising from 17 to 39. The GSR really didn't visit the sub 30 range for any length of time until very late in the cycle (1979). So to say that 16:1 is the ideal ratio might be stretching it since that may have only been hit in 1967 and then again in 1979-80. Gold took a severe 50% hit during Aug 1974 - Dec 1976 while silver came through that period rather well....probably because of the Hunts' influence. The Hunts didn't enter into silver until 1973 when it was around $2-3 per oz. By 1974 they had established a huge position in the future's market. In early 1979 when silver was still only around $5 per oz. the Hunts created a silver pool to try and corner the physical market. Within a year the price was up 10X. Earlier this year Martin Armstrong had a very detailed and fascinating history about what the Hunts were doing in the 1970's. Jim Sinclair was brought in to advise the Hunts on winding down their positions after they got tangled up with the Feds.

The data I used came from the Kitco charts section - annual gold and silver averages. They don't have any shorter term data prior to 1975 on gold. This was a commodity bull market from the mid-1960's to 1980. Silver would have rose to new heights without the Hunt's. Maybe not to $50/oz but certainly to around $30 (a GSR of 29).

roadrunner

ksammut

<< <i>actually, two separate markets. gold had its own strength, silver (the poor man's gold) was carried to a "particular level" on its own, but then the Hunt's sent silver to the moon.

I wish I had charts from that far back, because then I could take a "guess" as to what the "true price" of silver would have been without the Hunts.

If anyone has a link for charts from the period starting in 1975 please post.

thanks. >>



Here are some charts.

Silver/Gold Charts

MoneyLA

ksammut, thanks for the charts. the one I was looking for was for the period of the late 1970s. That chart shows a gold to silver ratio of about 30 to 1. so if I can extrapolate that, with gold at 850 silver should have been at 28 dollars. My "guess" is that this means the Hunts MAY have been responsible for doubling the price of silver when they were trying to corner the market.

But I am just guessing.

For the record, guys, I was the reporter who broke the story about the Hunts failing to meet their margin call. I was a reporter and assignment editor at CBS network news in New York, and I was tipped off by a "big name" (can't mention, I keep my promise and my source confidential after all these years) that the Hunts were in trouble. I was the one who interviewed the Hunt's broker, the chairman of Bache and that interview was on the Cronkite show that night.

I did not do the report -- and this is what made me leave CBS and return to local news (I left for WTVJ in Miami a few weeks later).

According to my bosses, I was "too young" to appear on the Cronkite show with such as important story. I was 27 at the time and had no gray hair (LOL). I had to turn over my tapes and brief Ray Brady. I did the reports for CBS Radio, however, because no one could see me on the radio (LOL).

Prior to the Hunt story, I was the producer of the Cronkite story about the big run up in silver -- while everyone was fixated on gold. Part of the story was about how hospitals and doctors were forced to cut back on xrays, and I even included how the Mint had stopped selling the bicentennial silver three piece proof sets because they were now worth more than the mint's selling price. That and 3 Mile Island were some of my big reports.

My other big reports forced the bureau of labor statistics to alter the way they count and report the unemployment rate, and how the consumer price index was formulated.

Yikes, those are fond memories. Too bad I haven't done anything important since. LOL

secondrepublic

MoneyLA, that's a very cool story! I think there are moments in our lives (usually only a few, for most of us) where we're really in the center of something big. What you described is one of them.

Weiss

That is a pretty cool story.

I was young--early teens. But I was buying and selling. Paper route money went to PMs like an addiction. Just like today