Monthly Archives: April 2011

Why $50 Silver In 1980 Does Not Count

As silver speeds towards $50 per ounce, I read and hear more and more about how it hasn’t been this high since the 1980’s. It’s true that silver once closed at almost $50 an ounce, but you can’t count that, and there’s a good reason why.

Here’s what happened: There were these two guys, Nelson and William Hunt. They were brothers from a rich oil family in Texas. Not just any rich oil family, the richest family in the whole country at the time. Their daddy had set them up in oil businesses of their own and they expanded into cattle, sugar, real estate and pizza parlors. In the early 70’s inflation was cutting into their oil profits and they started looking around for something to invest in to protect their wealth. Since it was illegal to own gold bullion at the time, they decided to invest in silver, which was then trading at about $1.50 per ounce.

The brothers hatched a plan and in 1974 bought up 55 million ounces of silver on contract, which equaled about 8% of the entire world supply at the time. The price of silver responded by rising to $6.00 per ounce. Their purchases left them strapped for cash, but hungry for more silver, so they started looking for partners. In 1978 they teamed up with a couple of Saudi Sheiks they knew from their oil ventures and created an investment company called International Metal Investment.

The company quickly bought up every ounce of silver and every contract they could get their hands on, and by late 1979 they had amassed over 130 million ounces of physical silver and 90 million ounces on contract for immediate delivery, which just about put them in control of the market. This caused a panic and silver prices soared.

The Federal Reserve got hip to what was happening and made changes to the trading rules which forced the group to liquidate their holdings. The Hunt Brothers were eventually forced to declare bankruptcy. In 1988 they were convicted of conspiring to manipulate the market and the IRS slapped them with a 90 million dollar tax bill. (Ouch!) Meanwhile silver fell back to normal levels and by 1990 was trading at a more realistic $3.50 per ounce.

So when you hear that silver once traded at almost $50 an ounce in the 1980’s, it’s true, but it did that for only a couple of days. And during those two trading days,  January 17 and January 18, 1980, the price of silver went over $50, but it never actually closed over $50.00. Those up and down prices during a trading day are called intra-day trading prices and are not recorded as the closing price. So technically, as of this date, silver has never closed at over $50.00 per ounce. But it certainly may do that very soon.

The steady rise in silver prices over the last 10 years is due to many factors, such as the increase in industrial use, the fact that more is being demanded than is available, the silver ETF’s and many other reasons. The good news is, at least this time, the rise in price is not because of couple of greedy cowboys trying to force the price up artificially. The bad news is, I believe high prices are here to stay. I believe we will continue to see the volatile up/down price in an upward pattern, always hitting new highs with bigger price swings.

The chart below shows the price of silver from 1900 through today. You can clearly see that over time the trend is upward, and you can also see what a huge (but temporary) impact the Hunt Brothers had on the market. (Click on the chart to bring up a full screen version).

The cold hard truth is that the price of silver products are directly related to the price of silver in the spot market. Manufacturers, distributors, and retailers of silver products are powerless to change that. The rising cost of silver has been a source of pain for all of us.

So how do we move forward?

  1. Accept it. Everything, including silver, is rising in price. These are inflationary times.
  2. Fall in love with bronze and copper clays. (All of the projects in our Learning Center can be completed in bronze or copper clays!) Bronze requires a kiln, but some copper can be torch fired. Some people are reluctant to purchase a kiln because of the price tag, but kilns are looking more affordable every day compared to silver clay. In my last article, Why Are Silver Clay Prices Going Up?, I mentioned that a kiln can be had for less than the cost of three – 100 gram packages of silver clay.
  3. Mix mediums. Maybe we begin to treat silver as we do gold; using it as an accent or a small portion of your overall creation to help reduce your costs. Incorporating beads, gems, metal stampings, new findings or other jewelry items can help you use silver metal clay to define your designs and use less silver.
  4. Watch the market. Prices fluctuate all the time. Purchase your silver clay when the price is affordable to you. Like gasoline, a small decrease in price, however brief, is still a small victory.
  5. Don’t be afraid of the price of silver! It’s still a bargain. If the price of silver were based on its abundance, it would be higher than gold.

Why $50 Silver In 1980 Does Not Count © 2011 Mardel Rein |

Congratulations To The March Survey Winner!

Congratulations Alix Bradley, the March Survey Winner! Alix has won a $100 Cool Tools Gift Certificate for taking our survey and offering us her opinions!

Alix was excited and told us a little about herself and her work:

“This is a very nice surprise! I have been working and saving to buy tools and materials for jewelry making for more than two years now. I managed to collect quite a few necessities and setup a soldering station just this month. I also attended my first jewelry making workshop recently. I have not had an opportunity to make anything in PMC yet as I did not have the right setup or material for it, so this will help me enormously! This piece I completed at a workshop using a range of techniques. I can’t wait to use PMC so I can work in sculpture as well. I will be delighted to send a picture of my first PMC piece when I complete it!

Thanks so much for this privilege.”

Every time you take our survey after purchasing a product, you are automatically entered into a contest to win a $100 Cool Tools Gift Certificate. Keep offering us your insight to help improve our website and your purchasing experience! A Winner is selected every month!

Help us congratulate Alix!

March Random Review Winner!

Congratulations to Lorraine Garcy, the March Random Review Winner! Lorraine has picked a Cool Tools Gift Certificate as her prize for reviewing a product she purchased!

Lorraine was very excited about being selected and told us a little about herself and her work.

“WOW!  This is exciting.  I love your tools…  

I have worked with metals off and on for over 40 years.  I have a degree in art with a metal fabrication focus but for 34 years worked in a different industry.  It was only in 2003 when I decided to take early retirement that I was able to realize my dream of spending as much time as I wanted working in metals.  I went back to school to bring my skills up to speed and received my Bench Jewelers Certificate from Revere Academy. During the last few years I have been able to study metal smithing with Brian Clarke in Ireland and take classes from Alan Revere, Tim McCreight, Trish McAleer, Chris Darway, Michael Goode and many others.  I have had a great time learning from these fantastic artists.

I was lucky to take my first PMC class in 1997 and trained as a PMC instructor with Rio Grande. I have been working with metal clay ever since.  Most recently I switched to Bronzclay because of the cost of silver clay.  I currently have a small studio and in the process of designing a much larger one so that I can hold classes.  I want to share with others the fun of working with metals, especially Bronzeclay.  It is such a wonderful medium in which to work.

I live with my husband Tom and black cat Devil in Brownsville, Oregon, which is a small city with a thriving art community.” 

Lorraine won her choice of Metal Clay or a Gift Certificate simply for reviewing a product she ordered. When fellow artists rate our products it gives the community a better understanding the product, its uses, and  the best applications. The more products you review the more entries you get into the drawing! Keep reviewing products and help us congratulate Lorraine this month!

New Free Project: Trashy Glass Earrings

Turn Trash to Glass Charm!

The Trashy Glass Earrings are designed by Dale Wayne and can feature any type of beads or crystals. Dale uses innovative ways to recycle plastics, glass, metals and more.

The Trashy Glass Earrings use recycled plastic from a water bottle, silver ear wires, and a few simple jewelry techniques. These earrings are so fun and easy to make you can add your own unique twist, such as metal clay spacers, beads and charms! Make these easy and affordable earrings today. Download Now!

New Crystal Beads Available!

Cool Tools offers new Crystal Beads to add beautiful colors and shapes to your jewelry projects. Our Crystal Beads come in square, round and bicone shapes from 3mm to 6mm. Crystals offer brilliant sparkle, uniform colors, innovative shapes and precision cut facets with polished holes making them easy to add to any jewelry medium.

Our selection of Crystal Beads feature colors like Amethyst, Blue Zircon, Emerald, Hyacinth, Light Rose, Olivine, Sapphire, Siam, Crystal and more. Use these crystals to make the Trashy Glass Earrings or come up with your own unique way to express your passions! Shop Now!