The silver price reached its all-time high of $50 per troy ounce, established in the 1980s, in October and subsequently significantly surpassed it. This was different in 2012, when the $50 mark was also briefly reached. At that time, the old high was only surpassed by a few cents.
However, both surges shared a pronounced steepness, which was also observed in this year’s increase. This was followed by an equally steep sell-off in both 1980 and 2012. This inevitably raises the question of whether a similar development could occur again now.
If one looks solely at the charts and their steepness, this danger is indeed very significant. However, the fundamental reasons that led to the respective increases then and now are different. It is therefore advisable to examine them in detail.
When Oil Billionaires also Seek Success in Silver
The massive surge in the silver price in the early 1980s is inextricably linked to the brothers Nelson Bunker Hunt and William Herbert Hunt. Their traditional business was the oil trade. Here they had amassed a billion-dollar fortune and witnessed in the 1970s how the oil price rose from under two to $40 per barrel (159 liters).
Now they envisioned the same for the significantly smaller silver market. Therefore, the Texas-based brothers bought up enormous quantities of silver. Initially, the silver was primarily bought physically and hoarded; later, the Hunt brothers also became active in the futures market. Their goal was to accumulate such large silver holdings that they could dictate the price.
Their plan initially worked, as the silver price rose from $1.50 per ounce in the early 1970s to $50 by 1980. However, once this price level was reached, regulators and exchange operators intervened. They tightened trading rules, as only existing contracts could be closed, but no new ones could be bought. This dealt a death blow to the rally.
The Specter Ends as Quickly as it Began
The new regulations quickly led to a massive chain reaction. The Hunt brothers now faced the challenge of servicing their loans. When they could no longer do so and were forced to sell, prices plummeted. The artificially generated rally was over, and the silver price would not reach these price regions again until 2012.
It can thus be concluded that the silver price in 1980 rose so sharply only due to an artificially induced scarcity. Had the Hunt brothers not cornered the market, the rally would never have begun, let alone reached the high price level of 50 Euros.
Will such a scenario repeat itself in the silver market soon? Most likely not, because the silver price increase of 2025 is not due to manipulation or speculative purchases by individual highly capitalized investors. Unlike in 1980, genuine demand is driving the silver price today. This demand primarily comes from industry. Industry does not use silver as a means of speculation but requires it for its products.
Key Conditions are Different Today
It is not only the genuine industrial demand that distinguishes the silver price increase of 2025 from that of 1980. The positioning of investors in the futures markets is also completely different today. While the Hunt brothers were long-positioned in 1980, betting on rising silver prices, today’s silver market is characterized by a short squeeze.
Many investors have bet on falling silver prices. With every dollar that silver continues to rise, they are increasingly coming under pressure. The pressure is twofold, as closing short positions becomes more expensive. At the same time, more and more silver buyers are not only demanding cash settlement but are insisting on the delivery of the purchased goods.
At this point, the problem arises that inventories at the London Metal Exchange have been declining for months. In 1980, however, warehouses were full. At that time, there was always enough silver in the warehouses to easily fulfill all requests for delivery of the goods.
There is a Shortage of Silver, and many Market Participants Were Wrong in Their Forecasts
We are far from this seemingly idyllic situation today. Warehouses are not full but empty, and global silver consumption is not decreasing but tends to increase year by year. This is a very important and crucial difference compared to 1980 and 2012.
Short positions that have gone into the red on the exchange can be closed relatively quickly. While this can be very expensive for the misguided speculator, it does not put the silver market as a whole at risk. The situation is different with the sharply increased physical demand. It demands to be met, not with paper silver, but with real metal.
Borrowing silver short-term was the classic solution for such a problem in earlier years. However, with fees of 39% for a one-month silver loan, it quickly becomes clear that this option has also mutated into a financial minefield.
Good Prospects for Silver Buyers and Owners
Even if the price increase of recent months in the chart strongly resembles the price development of 1980, the circumstances today are completely different from back then. 45 years ago, the Hunt brothers bet on a sharply rising silver price using loans. Today, the silver price is rising because demand is high, and additionally, market participants who bet on a falling silver price were mistaken.
The supposed demand of 1980 was a pipe dream, whereas today’s demand is very real. In 1980, industry absorbed only about 30% of global silver production; today, it is already 60%. Therefore, even independently of the short-seller issue, it can be expected that the silver market will continue to struggle with a deficit in the coming years. This is at least the assessment of the Silver Institute. It assumes that a structural supply deficit exists, which is likely to persist for many years to come.
The pressure on the silver price is therefore likely to remain high. This by no means excludes price corrections but allows for the expectation that these will be a temporary phenomenon and the overarching rally will continue.
