Late 1970s: Gold and Silver
Things weren’t looking good for the U.S. during the late 1970s. There was the Iranian hostage taking, the Soviet invasion of Afghanistan, a spike in oil because of OPEC, soaring interest rates and a rising unemployment rate.
Seeking a safe haven, investors bought up huge amounts of gold. From 1979 to 1980, the price skyrocketed from $240 per ounce to $850. But it soon collapsed when the Fed Reserve severely tightened money supply, which killed inflation.
But gold wasn’t the only precious medal to go into the bubble-phase. Silver also staged a huge run. A big part of this was from the buying of billionaire brothers Bunker and Herbert Hunt. They inherited an oil fortune but thought that capitalism was on the verge of failure. So they stored large amounts of silver in Switzerland, which they believed would be protected in the event of a Soviet invasion.
At the height of their buying, the Hunt brothers accumulated a large part of the world’s supply of silver — a classic cornering of the market.
But COMEX and CBOT were not happy about this activity and raised the margin requirements, which popped the bubble. It would result in a bank bailout and the personal bankruptcies of Banker and Herbert.