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Inside Story of Silver Crash: There has been tremendous turmoil in the commodity market. The biggest fall in silver prices in history was seen. The shine of silver, which was growing at rocket speed for the last few weeks, faded in a flash. The same metal which had given profits to the investors, broke their hopes in just 24 hours. This is considered to be one of the biggest falls in the history of silver. A decline was also recorded in gold prices. Gold futures prices were seen trading down by about 9 percent.

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Huge fall of Rs 96,000 in one day

On Friday, there was a huge fall in the prices of silver on the Multi Commodity Exchange (MCX), which surprised the investors. Silver with March expiry fell by about 24 percent from its highest level, i.e. about Rs 1 lakh per kg.

After the fall, the price of silver came to around Rs 3 lakh per kg. This fall is also scary because silver came down faster than it went up.

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The ‘Hunt Brothers’ incident of 1980 and today’s market

Market experts are comparing this decline with the period of 1980. At that time, there was a huge jump in the prices of silver and then a huge fall was seen. This entire game was to two American billionaire brothers, Herbert Hunt and Bunker Hunt, who are called Hunt Brothers.

What was the Hunt Brothers’ ‘Silver Game’?

In the early 1970s, when the US dollar lost its relationship with gold and the gold standard was removed, inflation and economic instability increased. During this period, Hunt Brothers started buying silver in large quantities considering it a safe investment.

Gradually this investment turned into speculation. Between 1973 and 1979, the Hunt Brothers purchased so much physical silver and futures contracts that they controlled nearly one-third of the world’s total silver supply. The result was that silver, which was $1.95 per ounce in 1973, increased to around $50 per ounce by January 1980.

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March 27, 1980: Fear of ‘Silver Thursday’

When American regulators became aware of Hunt Brothers’ market manipulation, the rules were tightened. Margin rules became so tight that Hunt Brothers could not make new deals.

On March 27, 1980, the price of silver fell by almost 50 percent in a single day and the price fell below $ 11 an ounce. This day is still known as ‘Silver Thursday’.

Why did silver prices fall?

Market experts say that silver has always been a high-bitta commodity, which means its prices fluctuate rapidly. After reaching the record level, investors booked profits heavily, which put pressure on prices.

Apart from this, the dollar strengthened after US President Donald Trump announced the name of the new Federal Reserve Chairman. A strong dollar impacts precious metals like gold and silver and their demand becomes weak.

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