THE events of recent weeks have echoes of the infamous Bunker Hunt era that saw scrap silver prices spike during an era of high oil prices and revolution in Iran.
Nelson Bunker Hunt and his brother William Herbert Hunt began accumulating large amounts of silver in the early 1970s and by 1979 had nearly cornered the global market, with estimated holdings of 100 million ounces.
The period between September 1979 and January 1980 saw the price of silver bullion rise from $11 an ounce to a fraction under $50. Silver prices ultimately collapsed to below $11 an ounce two months later, with the largest single-day drop occurring on what has become known as Silver Thursday.
While Nelson Bunker Hunt profited by an estimated $2 billion during the speculation period, he ultimately filed for bankruptcy in 1988 under a deluge of market manipulation lawsuits.
The market considers $50 an ounce as the record nominal high for silver, although veteran dealers say that in the chaotic trading of January 18, 1980, some small amounts changed hands in the physical market at higher prices.
While no one can be sure which way the market will turn in 2011, bullion dealers make important distinctions between the Bunker Hunt bubble and currently strong price levels that have improved steadily over a much longer period of time and reflect wider economic conditions.
Certainly if prices were to go even higher, more and more antique silver would be scrapped.
Links: Tonnes of antique silver scrapped after bullion hike