This Day in History: March 27

By Jeff Starck

Published: Mar 27, 2016, 4 AM

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Workers used tongs to handle crucibles containing molten gold and silver and to pour the metal into molds to form ingots. Untold numbers of coins were melted regardless of their numismatic value during the fall of 1979 and early part of 1980 before “Silver Thursday” saw the largest decline in the precious metal's price.

Historic image courtesy of SilverTowne.

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Silver Thursday, the steepest drop in value of the silver market, occurred March 27, 1980. Coin World reported about the event in its April 9, 1980 issue.

Coin World file photo.

For the first few months of 1980, the silver market had been slipping as newly enacted rules began tightening their grip on the Hunt Brothers’ silver scheme.

On March 27 (known as “Silver Thursday”), silver opened at $15.80 and closed at $10.80 as the Hunt Brothers reportedly initiated a massive sell-off of silver and contracts to meet their obligations.

Commodities and the futures market crashed on these reports, but rallied somewhat, bringing silver to $12 an ounce within a few days.

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But the futures contracts owned by the Hunts were predicated on silver at $35 an ounce. What had been a $3.5 billion profit on their efforts to corner the silver market evaporated, replaced by a reported $1.5 billion debt.

Silver Thursday went down as the single greatest reduction of wealth and value of the metal in market history.

Beginning in the early 1970s, Nelson Hunt and his brothers William Herbert and Lamar Hunt began accumulating large amounts of silver. By 1979, they had nearly cornered the global market. Prices of silver futures contracts and silver bullion rose from $11 an ounce in September 1979 to $50 an ounce in January 1980. Silver prices ultimately collapsed to below $11 an ounce two months later.

During the rise, dealers and the public were caught up in the fervor, trying to cash in before the price moved too far either direction. Stories of fortunes made — and lost — are the truest versions of fairy tales and nightmares, numismatically speaking. Places like SilverTowne in Winchester, Ind., were melting silver and reselling it as fast as possible, while collector coin prices spiked as dealers and collectors had newfound wealth to reinvest in rarities.

In February 1985 the Hunt brothers were charged, by the United States Commodity Futures Trading Commission, with manipulating and attempting to manipulate the prices of silver futures contracts and silver bullion during 1979 and 1980.

In September 1988, the Hunts filed for bankruptcy under Chapter 11 of the Federal Bankruptcy Code, largely due to lawsuits incurred as a result of the silver speculation.

Their famous ancient coin collection was sold in a series of auctions in 1990 and 1991.