For those of you who don't know the cornering of a market is the attempt to acquire a vast amount of a commodity and then control the price of it. Imagine buying all of the gas available in the entire country and sitting back as the world grinds to a halt and then telling people, " if you need gas you will need to come to me and we will find out just how bad you need it". There have been many attempts to corner markets around the world but one of the most infamous was in the late 70's by two very wealthy brothers from Arkansas.
Nelson and William Hunt were two brothers who acquired a billion dollar fortune in the oil business and lost the bulk of it in their attempt to manipulate the price of silver. Throughout the 1970's the two went on a purchasing spree that by the end of the decade totaled an estimated 100 million ounces. At one point they had a profit of between 2 and 4 billion dollars. Prior to this silver had been a pretty sleepy commodity trading at about $6 dollars per ounce. Much like today, the decaying value of the dollar convinced the two that silver would rise in price tenfold. They took their entire fortune and started buying. When they ran out of money they heavily borrowed and continued buying. At one point silver rose to a record $50 per ounce. This is still the all time high, and if you adjust for inflation, $50 in 1980 would be almost $130 today!
They went around the globe preaching their doctrine of silver being a safe haven for the weakening dollar convincing many investors to pile into the market. Among some of their allies were Saudi investors. It wasn't long before their efforts were discovered by the federal government which quickly stepped in and took action to prevent any new buyers from entering the market. They then soon took further action and prevented lenders from making loans to anyone who planned on using the funds for market speculation. The word quickly got out and as the Hunt brothers ability to borrow dried up and the sellers came in droves.
A day that has come to be called Silver Thursday will live in infamy. Thursday March 27th 1980 saw silver fall from almost $50 per ounce to $11. Soon banks swarmed on the Hunt brothers. They all clamored to demand repayment of their loans (this is known as a margin call). The brothers were then charged with market manipulation, fined, dragged in front of congress and forced into bankruptcy. It took over 10 years to completely unwind all of their silver position. This left them billions of dollars poorer. Their attempts shook the entire financial system to its core.
Nelson Hunt went on running his oil exploration business and got active in many conservative political organizations. He is currently a member of the John Birch society and the Western Goals Foundation. He also continued on with his love of horse racing and in 1999 purchased 51 yearlings for over 2 million dollars. At 84 he continues to go to the race track and tries his luck there instead of in the commodity markets. As a result of his actions in the silver market he has a lifetime ban from trading.
Article Source: http://EzineArticles.com/?expert=Christian_Koch
Nelson and William Hunt were two brothers who acquired a billion dollar fortune in the oil business and lost the bulk of it in their attempt to manipulate the price of silver. Throughout the 1970's the two went on a purchasing spree that by the end of the decade totaled an estimated 100 million ounces. At one point they had a profit of between 2 and 4 billion dollars. Prior to this silver had been a pretty sleepy commodity trading at about $6 dollars per ounce. Much like today, the decaying value of the dollar convinced the two that silver would rise in price tenfold. They took their entire fortune and started buying. When they ran out of money they heavily borrowed and continued buying. At one point silver rose to a record $50 per ounce. This is still the all time high, and if you adjust for inflation, $50 in 1980 would be almost $130 today!
They went around the globe preaching their doctrine of silver being a safe haven for the weakening dollar convincing many investors to pile into the market. Among some of their allies were Saudi investors. It wasn't long before their efforts were discovered by the federal government which quickly stepped in and took action to prevent any new buyers from entering the market. They then soon took further action and prevented lenders from making loans to anyone who planned on using the funds for market speculation. The word quickly got out and as the Hunt brothers ability to borrow dried up and the sellers came in droves.
A day that has come to be called Silver Thursday will live in infamy. Thursday March 27th 1980 saw silver fall from almost $50 per ounce to $11. Soon banks swarmed on the Hunt brothers. They all clamored to demand repayment of their loans (this is known as a margin call). The brothers were then charged with market manipulation, fined, dragged in front of congress and forced into bankruptcy. It took over 10 years to completely unwind all of their silver position. This left them billions of dollars poorer. Their attempts shook the entire financial system to its core.
Nelson Hunt went on running his oil exploration business and got active in many conservative political organizations. He is currently a member of the John Birch society and the Western Goals Foundation. He also continued on with his love of horse racing and in 1999 purchased 51 yearlings for over 2 million dollars. At 84 he continues to go to the race track and tries his luck there instead of in the commodity markets. As a result of his actions in the silver market he has a lifetime ban from trading.
Article Source: http://EzineArticles.com/?expert=Christian_Koch
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