Once again, it is my great pleasure to set the record straight on the Hunt silver squeeze.
And Gary North is still a nut. If GATA nuts need to understand ole Gar' is NOT an asset to their cause. Y2K, Gary North's last "cause" didn't happen for the most part, and he made a killing on prognosticating its terrors and end of the world. Now he's cause celebere is taking delivery of gold by Chinese.
Well, here's a newsflash for ole Gar'...
China has been taking physical delivery of USA gold since the 3rd year of the Panda coin program, which would make it 1985 or there abouts. USA current account deficits with China would have been mucho worse had it not been that China allowed the USA to settle some of these by furnishing millions upon millions of ounces for their panda coin program from USA coffers, a fact put into evidence by the Wall Street Journal at that time. It was a cute tit for tat swap---but back to my Hunt debunking.
Here's what ole Gar' wrote acc'd to Richard's quote from the nonsensical Lew Rockwell, who wouldn't know a gold soverign from a panda if the panda bit him on the arse.
OPEN QUOTE:
Throughout 1979, there was also Bunker Hunt's squeeze on silver, which drove up the price to $50/oz from under $5 a year earlier.
He had been taking delivery of silver contracts all year, terrifying the shorts. Poor Hunt. He was about to lose his second fortune.
The first had taken place in 1971, when Qadaffi had nationalized Hunt's oil holdings. As soon as the Gulf sheikhs saw that Qadaffi had gotten away with this massive theft, they decided to squeeze the West.
That fabulously successful oil squeeze began in 1973, the same year that Hunt began buying silver futures at $1.95/oz.
What stopped Hunt in 1980 was two-fold: Volcker's tight money policies and the COMEX, which changed the [future's contract] rules.[similar to the LME changing the rules just last week but on a lesser advertised scale.] No further purchases of future contracts were accepted by the exchange except for shorts who were covering their positions.
By March, 1980, the price of silver was at $11. Hunt lost a billion dollars.
He had to borrow from the FED to cover his position.
He then uttered those memorable words, "A billion dollars just doesn't go as far as it used to." Silver never has recovered.
CLOSE QUOTE
Point #1:
Hunt had not been taking delivery of silver contracts all year!!! Furthermore, COMEX silver futures contracts, even back then only went out two years, not 6 and there was NO silver leasing game either since that hadn't been invented yet by JP Morgan Backroom Boys, one of whom hung out here on SI a few years back and bragged about his part in cooking up the original leasing/deriv scheme for precious metals.
ny check of the physical trading in Comex silver futures show that silver was range bound in the 6 years between 1973 and 1978-79, which are the years of Hunt's supposed coup on taking delivery of silver futures....NOT!
The price fluctuated between $1.95ish and $2.25ish...yeah, a real delivery squeeze, HA!
What HUNT TRULY DID WAS THIS: Hunt took delivery of the 90% Bullion Silver Bag Contract Physical delivery all that year. This contract was a little known item which used to be quoted on the futures commodity page back in '79, and was only available on the Chicago Mercantile back then. Hunt Broke the Contract by taking delivery of the coins and hiding them in caves in the Cayman islands, where according to my man on the scene who watched their offloading via half-tracks, they still reside to this day. My contact was invited as an observer/witness and business associate of Bunker himself.
Point #2:
Yes, the Comex changed the rules and only allowed shorts to get out. That part is true.
However, the part that isn't reported is the following. Hunt was long 1 contract on the NY COMEX allright, but he was simultaneously SHORT TWO contracts on the LME. The man made a killing in both directions. Same source as above. My man on the scene was a physical London Floor Trader on the Sugar Exchange at the time. That front row seat was how he got his invitation to the Cayman's to watch the off-loading of the 90% USA silver bullion coin bags in the Caymans. It was one "sweet" deal...<---sorry, I couldn't resist the opportunity to pun.
Point #3:
Yes, Hunt's oil was nationalized like all the big oil companies' oil development was nationalized in 73. So?
What does that have to do with the silver squeeze now? NADA!
Point #4
Hunt did NOT "have to borrow from the Fed" as erroneously reported. Why would someone with a 2:1 ratio of shorts to long need Fed money. That is a myth. What IS true, is that Hunt took advantage of the US govt in 2 very unique ways...
One: if US govt offer you free money, then take it. Hunt did. I would also, and suspect all readers here would as well. But MY govt free money offer must have gotten lost in the mail...
Two:The US govt conducted AT TAXPAYER EXPENSE a massive asset liquidation of Hunt Boy's unwanted assets. These included rare pattern coins' auctions, complete with glossy, full-color auction catalogues, etc., rare paintings, porcelains, furniture, The govt also auctioned unwanted real-estate both in Texas and elsewhere in the USA, and all the UNPROFITABLE oil properties that were NOT a part of the Hunt boy's original inheritance from their deceasd parents.
My point: what a great way to jettison at NO COST, non-performing assets and capitalize on those appreciated assets as their rare artifacts in numismatics, art, and other matters, with OUT tax consequences of the sale, and repay the generosity of the US Govt for the free loan. It was damn clever, AND IT WORKED!
Check out what the govt agreed not to touch in the Hunt saga of the original inheritance. It's all a matter of public record in Westlaw for anyone interested in reading the case through to its conclusion.
The boys kingdom was left in tact, their non performing assets were sold and free money returned, and they still have their silver hoard in the Caymans. And I know for a fact, they are still very busy investing in mining businesses because I'm invested currently in one of the equities they are currently partially funding out here in the great Northwest. All it took was a phone call and a little wining and dining of Bunker's rep, and the cash register rang for my associate.
Point #5
Silver has never recovered? Oh, that part is true but purely coincidental to the Hunt story. The PRICE of silver has never recovered because there's so damn much of it around, above ground already, and more stacking up by the day. To deliberately explore and develop silver mining properties as a pure play on silver's supposed shortage is both foolish and an exercise in stupidity.
The only exception to justify playing in the silver sector currently would be and is to to scalp for pennies and and all Canadian micro-craps on Pump & Dump schemes---which CAN be very profitable for the nimble such as dudes on here who use monikers such as "little joe" and "value trade.r" Those who lather up the stupid and excitable with stories of silver plum fairies dancing on the head of a pin in stocks such as BAY.T and other silly silver producers on the come may or may not make a silver lined buck on their latherings and blatherings. It depends upon if they believe their own newsletters and....and if they ever sell what they bought before their subscribers and customers do. Several SI [sic]"notables" come to mind.
Point #6:
Paul Volcker had NOTHING to do with the end of the Hunt silver story: That is an urban legend to promote the mystique of the World Bank's current central banker. And it is a crock!
So, there...I feel better...
Ya'all now know the rest of the story.
Oh, and Lew Rockwell is a nut as well. He and North are a pair, and with GATA nut Murphy, create a 3 of a kind, which is only good in a gin rummy hand.
I'm out. Count'em up, boys...I just won the game. GIN!!! |
