Hunt Brothers Saga With Silver Is an Indicator of the Bull Market That Is Coming for This Metal
As an investor, you should not overlook the silver market.
We are in the middle of great monetary inflation. Period.
All eyes are logically turned to gold, which has been the reference store of value for centuries. More modern, some are already thinking about the future and are looking closely at Bitcoin, which seems likely to become the reference store of value for new generations.
Meanwhile, everyone is forgetting to look at what is happening with another precious metal: silver.
Silver first came to prominence in the late 1970s with a saga involving two brothers: Nelson Bunker Hunt and William Herbert Hunt. This extraordinary story is however unknown to the general public.
The Hunt brothers decided to take on the silver market in the early 1970s with a simple but effective plan
The year was 1971. The industry has consumed 351 million ounces of silver while the miners have only been able to produce 271 million ounces. The industry had therefore consumed all its reserves. Faced with this situation, the Hunt brothers saw an opportunity to be seized: there was a very large gap between supply and demand.
Nelson Bunker and William Herbert intend to take advantage of it. To do this, they will artificially dry up the market. They will join forces to buy as much silver as possible and put even more pressure on demand so that the price of silver will explode.
Once the price of silver explodes, the Hunt brothers can then sell at a huge profit.
In 1978, at the Prix de l'Arc de Triomphe in Paris, the Hunt brothers met with Lebanese intermediaries who helped them meet with Saudi princes. With the latter, the Hunt brothers were able to buy all the silver ounces available, but also on the market for "future" silver ounces not yet mined.
One year later, in 1979, the Hunt brothers and their allies held 80% of the world's silver stocks. You read that right! That's 3,000 tons of silver or 100 million ounces of silver.
The shortage artificially created by the Hunt brothers allowed them to have a fortune of nearly 4 billion dollars in early 1980
The Hunt brothers thus artificially created a shortage, until the day when the price of silver logically began to explode:
The Hunt brothers' plan worked perfectly. They find themselves at the head of a fortune estimated between 2 and 4 billion dollars.
Unfortunately for them, it was the beginning of their descent into the underworld. In 1980, the New York Commodity Exchange, supported by the Fed, decided to change the rules of the game because they had understood the Hunt brothers' scheme ten years earlier.
The result was catastrophic for the two brothers as the price of silver began to fall violently.
Unable to meet their financial obligations, the Hunt brothers found themselves ruined. Declared bankrupt, they were finally convicted in 1988 for market manipulation.
While the Hunt brothers' saga ended badly for them, there is a great lesson that can be applied today for the silver market
The reason I told you this little-known story is not to tell you that as long as you don't get caught, you can do anything to win big. No, that's not my philosophy of course.
But this story does highlight a universal truth: when demand keeps increasing and supply doesn't keep up, prices will eventually skyrocket. And where things get extremely interesting for investors is that this scenario with demand far outstripping supply could well be repeated in the coming months and years for silver.
The Silver Institute predicts that industry demand for silver will increase by 9% per year in the coming years. The reason is simple: silver plays a crucial role in the energy transition. It is essential to the manufacture of batteries for electric vehicles, solar panels, ...
While the demand for silver will increase considerably, the supply is stagnating. For the last 10 years, we have seen a plateau in production at around 1,000 million ounces per year. Mine production has even been declining for the past 4 years, falling to 784 million ounces in 2020.
Final Thoughts
Silver is therefore in an ideal situation to experience a Bull Market in the coming years. As always, you have no guarantee that this will happen. That's the magic of life with its share of uncertainty.
Nevertheless, as an investor, you can't afford to ignore a market like silver at a time when we're facing a lot of monetary inflation. So my advice is simple: do your research on the silver side to make the best decision for you and not miss out on a promising opportunity for the future.
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