Gyroscopic Investing

Some of you may have seen this over on Zero Hedge yesterday, but it is a fascinating 1980 article about Nelson Bunker Hunt's efforts to corner the silver market in the 1970s.

LINK TO STORY

The whole story is a lot wackier than you might think (a LOT wackier).

Note, too, how the idea of sustained inflation and the world ending turned out to be wrong, and the 1980s unfolded in a very different way than many of the people in the article were thinking.

FWIW, Nelson Bunker Hunt is still alive (he's 85 I think) and still lives in Dallas.  From the tone of the article, I assumed he would have died long ago (he was overweight, terrible diet, lots of stress, etc.).

19 pages?  Is there a Cliffnotes version??

I don't have enough focus to finish a two column People magazine article while I'm in the can, let alone this.
Instead of the PP, maybe I should invest in Adderall?

Coffee wrote:
19 pages?  Is there a Cliffnotes version??

Nelson Bunker Hunt was an eccentric billionaire who became convinced (by a silver salesman) that inflation was going to become a huge problem in the 1970's.  He started buying silver futures and taking actual delivery of the metal itself, to the point where the COMEX began to fear that there would be a "squeeze" (where there is not enough metal available causing a run on the exchange), so they started to try to regulate him out of the market.  He eventually lost a lot of money.  

It's an interesting look at how bizarre these interactions can be wherein someone with the resources to nearly corner a market still winds up losing.  

Reminds me of one of my favorite Harry Browne anecdotes:

Although we'll never know, I suspect that more money has been lost with inside information than gained. Many times in my investment career, someone has told me about information that came from a special source — none of which ever proved to be worth anything.

My favorite example was the head of the precious metals department at a "Big 3" Swiss bank, who guaranteed to a friend of mine in 1970 that gold would never go above $40. Asked how he could be so sure, he said, "Because we control the market."

Excellent.  Thanks. 

Later testimony would reveal that nine of the 23 Comex board members held short contracts on 38,000,000 ounces of silver.

MT--

How common do you think this is (a situation wherein there are predominantly two big entities, COMEX and Hunt in this case, essentially controlling, or fighting to control, a market)?

So common that it might be happening right now... 

i wonder how the new Hong Kong exchange will effect things http://www.zerohedge.com/article/hong-k ... -and-bang-