Silver market rush: what the story of the Hunt brothers, who brought it down 45 years ago, teaches us

The silver market experienced a record shortage of the metal and prices soared to an all-time high in 1980. A similar jump to $50 an ounce 45 years ago was also the result of an unprecedented shortage caused by the billionaire Hunt brothers. Today, to make money, traders are flying bullion from New York to London by airplane, although back in January they were flying it in the opposite direction.

Since the beginning of the year, silver in London has risen in price by 87.8%. By this indicator, it has overtaken even gold, which sets record after record - its price rose by only 65.6%.

The silver market is "less liquid and about nine times smaller than the gold market, exacerbating price volatility," Goldman Sachs said in a report(quoted by Bloomberg): "In the absence of central bank demand to support silver prices, even a temporary reduction in investment flows could trigger a disproportionate correction, as it would also reduce the shortage in the London market that has largely driven the recent rally."

London and New York are the two largest gold and silver markets. The first one specializes in bullion transactions and determines the spot price of metal at the auction every day. The bullion is then moved between bank vaults in the city based on the results of transactions. The second one trades exchange-traded futures - contracts that can be used to make a transaction in the future at a price fixed today.

The amount of silver in London's vaults has been declining in recent years. In particular, because production, which peaked in 2017, has not kept pace with the growing needs of industry (silver is used extensively in solar panels and electronics, for example). Another factor that has greatly reduced the availability of silver has been the growing popularity of exchange-traded funds (ETFs) backed by silver, which use investors' money to purchase the physical metal.

According to Bloomberg calculations, total silver stocks in London have fallen by a third since mid-2021. A significant part of the remaining metal is accounted for by exchange-traded funds.

As a result, the "free float" volume that provides market liquidity has declined 75% since mid-2019, from more than 850 million ounces to 200 million ounces.

Silver also appreciates on concerns about the growth of government debt and budget deficits in Western countries, devaluation and decline in purchasing power of currencies, primarily the U.S. dollar.

Several years of tight supply combined with growing demand from industry and investors has led to a shortage, Randy Smallwood, CEO of Wheaton Precious Metals, told the Financial Times, "There is a serious shortage, and you can't buy a significant amount of physical silver, it's just not available."

On Monday, the UK's Royal Mint website said it had run out of 1 oz Britannia silver coins, which are popular with retail investors, the FT notes.

The rapid rise in silver prices coincided with the traditional fall surge in demand in India - ahead of festivals and weddings. It also helped to reduce inventories in London, Suki Cooper, an analyst at Standard Chartered, told the newspaper.

An additional factor may have been the high cost of gold, causing buyers to switch to "gold for the poor," as silver is often called. Investor frenzy was also superimposed: according to Indian media reports, at least five management companies temporarily stopped accepting new funds into silver ETFs, explaining it by the shortage of physical silver and the resulting premiums of 5-10% in the unit price against the silver price.

Early last week, the silver price broke 45 years of record highs. In January 1980, the spot price in London peaked at $49.45 per ounce, in New York on the Comex exchange (now part of the CME Group) the futures rose to $50.36, and the maximum price was $52.5 on the now defunct Chicago Board of Trade.

In trading on Friday, October 17, 2025, the spot price in London was $53.8 and the futures price in New York was $52.6 per ounce.

In 1980, the skyrocketing stock prices were also the result of a deficit created by the actions of the American billionaires, the Hunt brothers. Many believed that they manipulated the market in an attempt to control it by creating a deficit. Subsequently, the brothers lost several courts on charges of manipulation and went bankrupt.

However, Tim Knight, author of Panic, Prosperity and Progress: Five Centuries of Market History, assures that the chief of them - Nelson Bunker Hunt - truly believed in silver, not trying to drive up its price for profit.

"Hunt had a paranoid view of the world, so he saw the point in hoarding silver and storing it," Knight told Bloomberg.

For Nelson Hunt, silver was a response to the high inflation of the 1970s, the loss of oil fields in Libya that Muammar Gaddafi simply took away from his brothers when they refused to pay him half of the profits, and the raising of business taxes in the U.S. to fund social spending. So he and his two brothers started buying up physical metal as early as 1973. They eventually accumulated more than 200 million pounds of silver, and by early 1980 there was a shortage on the world market.

At the beginning of 1979 silver was $6, and at the end it was already $32 an ounce. Then by January 18-20, the price soared to $50. People began to scrap family silver en masse, and jewelry thefts skyrocketed.

In today's money, a then $50 ounce would have been worth $195.5, according to the Federal Reserve Bank of Minneapolis' inflation calculator.

It came to the point that the jewelry house Tiffany placed an advertisement in The New York Times with the following text: "We believe that it is not fitting for anyone to accumulate several billion - yes, billions - dollars worth of silver and thereby raise its price so much that others are forced to pay artificially high prices for silverware - from children's spoons to tea sets, as well as for photographic film and other goods".

The Hants also had large positions open in futures, and their counterparties were desperate to find metal to deliver to their brothers in those contracts.

The exchanges decided to take action. Comex and Chicago Board of Trade actually prohibited buying new futures - only to close the existing ones. And they raised the guarantee greatly.

The Hants had $4.5 billion in silver, $3.5 billion in accumulated paper profits, but couldn't find $134 million to pay the security on time, and the broker began forcibly closing their positions. By the end of March, the price of an ounce fell to $10.8.

"For six days in late March 1980, it appeared to government officials, Wall Street and the general public that one family's default on its obligations in the declining silver market could seriously undermine the U.S. financial system," the Securities and Exchange Commission noted two years later in a final report.

Today's events are different from what happened during the time of the Hunt brothers, but in some respects the situation is even more extreme, Bloomberg writes, citing traders and analysts. "I've never seen anything like this, it's completely unprecedented," Anant Jatia, chief investment officer at hedge fund Greenland Investment Management, told the agency. - Liquidity is completely absent."

Although traditionally silver in London is slightly cheaper than in New York, since the beginning of October the situation has been the opposite. On October 10, the London premium reached $2.92 per ounce, or about 5.5% of the metal price.

Such was seen only in the Hunt Brothers story. The premium then began to shrink in anticipation of bullion arriving from New York in the coming days and weeks, traders told Bloomberg, but still remains extremely high, at more than $1 an ounce.

To reduce the shortage in London, traders began booking planes to bring bullion from New York.

However, in January, when Donald Trump took office, the situation was the opposite. In January, when US President Donald Trump took office, the opposite situation was observed. This primarily concerned gold, as silver was too cheap to transport by airplane. But then arbitrage (futures in New York were more expensive than gold in London by almost $1 per ounce) allowed to send and some amount of white metal, especially since it does not need to be melted down: unlike gold, both markets use the same ingots of 1,000 ounces.

A top logistics company executive told Bloomberg on Oct. 11 that traders are now trying to move 15 million to 30 million ounces from New York to London. Joseph Stephens, director of trading at MKS Pamp, which provides trading and financial services to the precious metals market and owns one of the world's largest refineries, said, "There will be a natural incentive to bring metal back to London, and hopefully the situation will normalize."

Traders, however, are being deterred from mass export of silver from the US by the Trump administration's audit of the critical minerals sector. There are concerns that silver, which also has industrial applications, will still be subject to duties.

"The metal is not in the right place [where it needs to be] right now, it's been taken to New York," Adrian Ash, director of analytics at online trading platform BullionVault, told the FT. With a decision on critical minerals expected in the coming weeks, "if you have silver in New York, it's unlikely you want to take it out of there," he added.

A week ago, Bank of America raised its silver price forecast for the end of 2026 from $44 to $65 an ounce, citing persistent shortages, growing government budget deficits and falling interest rates.

In addition, silver is still relatively cheap relative to gold, and in past long-term bull cycles it has narrowed the gap a lot, points out Jon Treacy, editor of investment newsletter Fuller Treacy Money. But in the short term, he worries about "growing competition among those who want to look like the biggest bull."

"Overly bullish forecasts are usually more of a good indicator of what people have already done with their money than an indication of what levels the price could rise to. This is especially important to remember after the spectacular rally that has already taken place," he said.

This article was AI-translated and verified by a human editor