Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
And NOW, the exciting conclusion! Preface to all four parts: with all the focus on precious metals lately, I wanted to share a chapter from my Panic Prosperity and Progress book about a germane period in financial history related to the Hunts and their attempt to corner the silver market. Part 1 is here, Part 2 is here and Part 3 is here.
Because the Hunts had started purchasing silver when it was much cheaper, the cost basis of their bullion was only about $10, which meant that even with the complete devastation that has been leveled against silver prices in the first couple months of 1980, they still had a small profit on their holdings. Their trouble wasn’t with the bullion, but with the massive amount of futures contracts they had secured with a price of about $35 per ounce.
The debts they owed on these obligations were enormous and so complex that no one was sure what the exact figure was, but the damage was in the neighborhood of $1.5 billion. On top of this, they already had an obligation to take delivery of silver to the tune of $665,000,000 to add to their already staggering pile of bullion. The Hunts had acquired much of their silver with leverage, which worked fabulously during silver’s unrelenting ascent, but had a devastating effect now that prices had fallen so hard.
Preface to all four parts: with all the focus on precious metals lately, I wanted to share a chapter from my Panic Prosperity and Progress book about a germane period in financial history related to the Hunts and their attempt to corner the silver market. Part 1 is here and Part 2 is here.
Officials from the Commodity Futures Trading Commission and the two exchanges had a meeting with the Hunts to ask about their intentions and to see if, at the lofty prices silver had achieved, they might be interested in being net sellers instead of buyers of the metal. After all, the profits they had achieved were already sensational. The Hunts told them they had no interest in selling, not only because they didn’t want to deal with the substantial taxes such profit-taking would incur, but also because they actually did want to permanently retain as much silver as they could acquire.
Taking delivery of the commodity promised in silver contracts was certainly not illegal; far from it, because even if the vast majority of traders never took delivery, the fact the Hunts were choosing to pay cash for the product represented by the paper contracts was, of course, wholly appropriate.
Preface to all four parts: with all the focus on precious metals lately, I wanted to share a chapter from my Panic Prosperity and Progress book about a germane period in financial history related to the Hunts and their attempt to corner the silver market. You can read part one here.
Around this time, a radical military man named Colonel Gaddafi seized power in Libya and nationalized the country’s oil wells. Of course, Bunker’s successful operation was one of these, and the arch-conservative Bunker expected the United States to take ferocious action against this thief. The U.S. did nothing of the sort, and Armand Hammer (the interestingly-named CEO of Occidental Petroleum) agreed to give Gaddafi a 51% “royalty” in exchange for continuing operations in Libya.
Bunker was incensed at this thinly-veiled extortion payment. The Hunts had a grave distrust of many parties, including East Coast oil companies (led, they believed, by the Rockefeller clan), and Occidental’s capitulation to this lunatic Colonel was just more proof that their worldview was correct.
Preface to all four parts: with all the focus on precious metals lately, I wanted to share a chapter from my Panic Prosperity and Progress book about a germane period in financial history related to the Hunts and their attempt to corner the silver market.
The stunning bull market in precious metals in the late 1970s, followed by its swift collapse, has a fascinating and remarkable history. The roots of the event date back to the dark days of the Great Depression, when President Roosevelt issued Executive Order 6102 which outlawed the “hoarding” (that is, the ownership in almost any form) of gold by any person or other entity within the United States.
Prior to this order, gold was intricately intertwined in the nation’s currency. U.S. dollars were convertible into gold on demand, and this convertibility helped constrict the velocity of money severely. Roosevelt recognized that inflating the money supply was essential to turning the economy around, so he took the extraordinary step of criminalizing private ownership of gold as one of the steps to decouple the precious metal from the nation’s currency.
After weeks of reading, I finally finished the nearly 1400 page tome written in 1962, Man, Economy, and State (with Power and Market) by Murray Rothbard. It is a remarkable work, but allow me to share one small morsel with you:
With the establishment of fiat money by a State or by a World State, it would seem that all limitations on credit expansion, or on any inflation, are eliminated. The central bank can issue limitless amounts of nominal units of paper, unchecked by any necessity of digging a commodity out of the ground. They may be supplied to banks to bolster their credit at the pleasure of the government. No problems of internal or external drain exist. And if there existed a World State, or a co-operating cartel of States, with a world bank and world paper money, and gold and silver money were outlawed, could not the World State then expand the money supply at will with no foreign exchange or foreign trade difficulties, permanently redistributing wealth from the market’s choice to its own favorites, from voluntary producers to the ruling castes?
(pages 1018-1019), emphasis added by Tim
This was written nearly 60 years ago. Does any of the above sound familiar?