Silver’s price collapse helped trigger the 1980 Silver Thursday market crisis.
The Hunt brothers, Nelson Bunker Hunt and William Herbert Hunt, attempted to accumulate a huge position in silver through physical metal and futures contracts. Their purchases helped drive silver prices dramatically higher during the late 1970s. In January 1980, silver reached a record price near $50 an ounce.
Exchanges changed margin and position rules, making the strategy more difficult to finance. The Hunt brothers could not meet a margin call after silver prices fell, and the resulting forced selling accelerated the decline. On March 27, 1980, known as Silver Thursday, silver fell sharply and the crisis threatened brokerage firms and banks connected to the trades.
The episode was not a conventional broad stock-market crash. It was a commodity and credit-market crisis whose effects reached equities and financial institutions. The Hunts later faced bankruptcy proceedings, and regulators and exchanges strengthened rules concerning leverage and concentrated positions.