That is what Cassandra Does Tokyo was getting at in this morning's "In Memorium: Nelson Bunker Hunt":
I've written dribs and drabs of my own, admittedly idiosyncratic, take on the events of early 1980....Your catchphrase
should
have been:
"Never squeeze
the people
that can
change the rules.
July 2009
How to Break a Market Corner: Breeding Breakthrough Helps Sushi Baron Create Sustainable Tuna
...*In January 1980, as the Hunt Brothers were gunning the price of silver toward it's historic high, the CEO of one of the world's largest trading firms said "Those boys don't know what deep pockets are", rather an amazing statement when talking about billionaires.
Within 48 hours both U.S. silver futures exchanges had gone "Liquidation only", the corner was broken and the Hunt's had lost their fortunes.August 2010
I'll leave it to you to guess the CEO.
"Wheat prices ease after Russia predicts stable exports" and "...Speculators ‘Hunt What’s Moving"
...Should prices see $8.50 the opportunities on the short side would almost be a lock.I say almost because the serious money in commodities can pretty much get prices to where they want them, at least for short periods.When the Billionaire Hunt brothers were attempting to corner the silver market in January 1980 the head of one of the world's largest grain traders said "Those boys don't know what deep pockets are".
The "commercials" had been shorting into the Hunt bros. buying and the grain trader was at the top of the "commercial" heap.On January 21 the COMEX went "liquidation only".On January 22 the CBOT went "liquidation only".On Tuesday the 22nd silver closed at $34, down 27% from its close the previous Friday.The Hunt's still had enormous paper profits but any attempt to book them would smash the markets even further.Prices declined to $17 by March, down 66% from the January high and the Hunt's were receiving calls of $60 Million per day in variation margin. On March 27 the price dropped from $21.62 to $10.80 and one of their brokers, Bache was in violation of net capital requirements and another, Merrill Lynch was on the brink.
There have been a few others over the years.As the attorneys got involved over the next few years, oil prices headed south, destroying the value of Daddy's creation (and the brother's piggybank) Placid Oil.Bunker Hunt filed for bankruptcy in September 1988 as did his brother and Placid.At the time the grain trader spoke it is probable that the various branches of the Hunt families comprised the wealthiest "family" in America.That's why I say "almost" a lock.
"Still humping the American Dream, that vision of the Big Winner somehow emerging from the last minute pre—dawn chaos of a stale Vegas casino. Big strike in Silver City. Beat the dealer and go home rich. Why not? I stopped at the Money Wheel and dropped a dollar on Thomas Jefferson—a $2 bill, the straight Freak ticket, thinking as always that some idle instinct bet might carry the whole thing off. But no. Just another two bucks down the tube. You bastards! No. Calm down. Learn to enjoy losing....
-Hunter S Thompson
Fear and Loathing in Las Vegas
For another very idiosyncratic view of the silver action read "Henry Jarecki: Jarecki’s law", an interview with the owner of London based Mocatta & Goldsmid who "helped to unwind" the Hunt Bros. positions.
