“A fiery horse with the speed of light, a cloud of dust and a hearty, Heigh-Yo, Silver!”
I have been following the silver market since 1972, even before I began trading at Peavey. I attended a lecture by a company selling $1,000.00 face U.S. silver coins for $2,800.00. They are now $32,000.00. What’s your question?
My First Silver Trades
I made my first trade in silver futures in mid-1973. I bought just under $2.80 an ounce and sold at $3.28. I then traded it a couple of times between $3.00 and its early high of $6.40. I was hooked on silver.
Charlie and I spent some time analyzing the long-term charts. Charlie didn’t see too much. After all, there wasn’t much history, as the price had been fixed at $1.29 an ounce for decades. Somehow I saw a target of $18.00 an ounce and showed it to Charlie. He chuckled and said, “Dad, if you see that in your lifetime it will go much higher. Such a price would cause a stampede of buyers.”
Four Years of Frustration, 1975-1979
Thus began, in 1974, my very long-term campaign in silver, watching and waiting for the Big Move. My enthusiasm was, as they say, infectious. I managed to get two brokers hooked on silver and traded their accounts while waiting, along with my growing book of managed accounts. By the by, we also accumulated a large enough position in a silver stock, Callahan Mining, to be on a first-name basis with its president.
Then followed four years of frustration. Silver traded between $6.00 and $9.00 from 1975 to 1979, and every time it looked like it would break out, it collapsed. Fortunately, using Goodman setups and sound money management, we probably just about broke even.
Then came the summer of 1979. I was certain it was going to break out soon and we loaded up again. It looked good until one morning it didn’t. Prices broke sharply and we were stopped out about six cents from what turned out to be the low. We were all very discouraged and considered stopping the campaign. I was ready to do that and move on.
Silver Thursday and the Hunt Brothers
One of the brokers insisted we try one more time. We did, with much smaller positions (about one-third), and zoom, it finally broke out and soared to the moon. We actually added small amounts at $12.00 an ounce and began selling at $18.00.
What was happening? It just kept going. As we know now, the Hunt brothers, sons of the famous oil tycoon H.L. Hunt, were attempting a corner in silver. The exchanges began raising margins to force them out. Silver was moving limit up almost every day, but the margins were going up faster than whatever a buyer made from the increased price, forcing us and many others out. It finally forced the Hunts out at just below $50.00 an ounce, and prices collapsed back to $6.00. Wow, what a ride! You had to be there. The top day, in February of 1980, has been remembered as Silver Thursday.
The Hunt saga is chronicled on the Internet if you wish to dig deeper. It was interesting to live it, I can attest.
Does History Repeat Today?
Close examination of the current silver charts leads me to believe we are in for another Big Move. I see much similarity in the silver charts between 1975-1979 and 2014 to now, with prices gathering steam and falling back over and over again, frustrating the bulls. Surely the breakout is near! But how near? It could be the next run up, or it could be a year from now. Caveat emptor and YMMV.
I believe silver prices will run to $75.00 an ounce, back off sharply to near the old highs, perhaps $55.00, then really take off for an objective of $150.00 to $175.00 an ounce.
I see Charlie up there smiling. Yes, Charlie, in my lifetime!
This post is educational commentary. It is not investment advice. Trading futures and FX involves substantial risk of loss.
Good Trading!
Michael Duane Archer
Related Reading
- Goodman, Getty and the Potato Futures Scandal of 1976
- Driving Mr. Goodman: Why Traders Must Find It Themselves
- Goodmanisms: Charlie Goodman’s Sayings on Trading, Explained
Keep Learning the Goodman Way
If this article was useful, these are the next steps:
- The Method: propagation, intersection and the 3-C Principle, drawn plate by plate.
- The Goodman Library: the books, from Goodman for Grasshoppers to The Goodman 6 & 6.
- The Trader’s Playbook: the Molokai setup in one printed, numbered volume.
- Mentoring: work one-on-one with the authors.