The 1979 - 1980 Bunker-Hunt silver scam - research question

[jstraw]

If the Duke brothers had been successful, the currently popular orange oil based cleaning processed would have been prohibitively expensive to develop and our kitchen counters couldn't smell like something Anita Bryant would be proud of.

 

[Photo Engineer]

As far as I remember, the whole thing was purely political. The silver price went up, because of monopoly reasons. At that time, I calculated the difference in price for a certain pack of B&W paper. It was say: 1 penny. But they charged one dollar more. The price for hydrochon went up too. The reason: the price of of silver was up! That is the logic behind it.

Jed

Jed;

This is a simple answer to a complex problem. You calculated the price based on one pack of paper, but lets imagine that there were 100 experiments conducted to produce that one pack. Now, that is an extreme example, I admit, but used to illustrate the point that it took 100 pennies to produce that pack of paper in the example.

What happened was a cascade of events in Kodak that caused each coating done for R&D to go up, and it also caused the creation of a contingency program to reduce silver in the products.

These two events caused that increase you saw.

Things are never simple.

PE

 

[Jed Freudenthal]

[
Things are never simple.

PE[/QUOTE]

And economics in photography is certainly not simple.
Some people say: digital photography is inexpensive, because you don't have to buy films. The same people buy a new digital camera every year.

Jed

 

[aldevo]

As far as I remember, the whole thing was purely political. The silver price went up, because of monopoly reasons. At that time, I calculated the difference in price for a certain pack of B&W paper. It was say: 1 penny. But they charged one dollar more. The price for hydrochon went up too. The reason: the price of of silver was up! That is the logic behind it.

Jed

More specifically, they attempted to create a cartel. It failed.

Today, the conditions for forming a silver cartel are far more favorable.

30 years ago, most silver came from four sources

1) True silver ores (usually with lots of Antimony)
2) Parkes Process refining of Lead
3) Electrolytic processing of Copper ores
4) Recycling of silver from the photographic process (mostly the production of materials)

4 bears mention. Fully 85% (!) of the silver used in photographic processing is recycled as scrap. No doubt that figure has increased over the years.

Here's where we are now...
1) There's very little silver, silver/antimony ore left that's easy to come by. Nobody is going to hit another "Comstock Lode" anytime soon.
2) The industrial use of Lead has been curtailed and the Parkes Process is somewhat out of favor
3) Most silver is produced as a result of electrolytic processing of Copper ores. This is the main source today.
4) Less silver is being recycled from photographic processes since less of these materials are being produced

Not a lot of people realize this, but until about the early 1890s (or thereabouts) the ratio of gold to silver prices was about 15:1 in the USA because of the possiblity that the dollar would be backed by silver instead of gold. When that ceased to be a possibility, the ratio moved to 50:1 and silver prices crashed. I've never bothered to research it, but I wouldn't be surprised to learn that this drop helped spur the viability of photography for the general public in the early decades of the 20th century.

Now we've got the real possiblity that central banks (e.g. India) will be holding vast amounts of silver as a hedge against a declining dollar. As a result, many feel that the gold:silver price ratio will start to drop and silver will become considerably more expensive. Plus silver has always been pretty popular for jewelry in parts of the world where economic growth is particularly high at the moment (China, India) and this increases physical demand.

If those brothers tried to form a cartel in 2007 they may have met with more long-term success. They would also be aided by the fact that there's been a huge wave of mergers and acquisitions of copper mining outfits recently.

Not a pleasant thought...but as I type this I see that silver is back up to around $14.25 / troy ounce.

 

[Photo Engineer]

The actual ratio for over 100 years was 20:1 gold:silver. If you look at the original minting of US gold and silver coins, one ounce of gold was in a $20 gold coin when 1 ounce of silver was in a $1 coin. This ratio was preserved nearly world wide up until just before WWII when the US went off the gold standard. In fact, at that time a 1 ounce silver yen coin was equal to $1.

PE

 

[aldevo]

The actual ratio for over 100 years was 20:1 gold:silver. If you look at the original minting of US gold and silver coins, one ounce of gold was in a $20 gold coin when 1 ounce of silver was in a $1 coin. This ratio was preserved nearly world wide up until just before WWII when the US went off the gold standard. In fact, at that time a 1 ounce silver yen coin was equal to $1.

PE

If you're willing to skirt around all the "Buy Precious Metals Now" rhetoric you'll come across a chart mid-way down this page that shows the ratio increased considerably after the 1890s. Wartime conditions closed them up.

http://www.gold-eagle.com/editorials_99/mbutler101899.html

The price of gold was set relative to the $ until World War II - as you have stated. In fact it was steady at $20.67 for many years until the Great Depression. In 1933, in an effort to increase the money supply to stimulate spending, the dollar was depreciated about 60% relative to gold. When 1937 rolled around and the recovery stalled, it was again re-valued.

Although the US Treasury may have employed Gold as a guideline for the silver content in its coins, silver prices were variable. And the price ratio of Gold to Silver was not fixed.

 

[Photo Engineer]

Oh, I'm sure that is right, IDK the details, but the ratio of 20:1 and $20 = $1 gold:silver remained in force for over 100 years in terms of currency until we left the gold standard. This was true virtually all over the world as the US had a trade dollar in the orient which was 1 ounce, $1 and one yen in silver.

I have one of each of these two and also a 1 yuan (Chinese) which is 1 ounce and $1 with a portrait of Sun Yat Sen on it. I understand that they are quite rare today.

PE