Last week, one of the biggest bubbles of the past century seemed to have burst. Silver tumbled 31 per cent from its peak near $50 an ounce to Friday’s low.

But this week the price bounced nearly 20 per cent, before falling again. Perhaps the bubble has not burst after all, its supporters wonder, fingers no doubt crossed under the table.

The question for those hoping silver has taken off again is not whether the metal has been in a bubble. It has.

From December 2008 to its peak, silver rose fivefold, more than the rise in the Nasdaq in the equivalent period up to the bursting of the dotcom bubble; more than the Dow Jones Industrial Average in the run-up to the 1929 crash; far more than the final years of Japan’s investment insanity.

The biggest bubble

But has the bubble burst? The size of last week’s fall made the question silly, but this week’s rise has brought new hope for silver addicts.

History has conflicting tales to tell. The only bubble bigger than that of gold in the late 1970s was silver itself, late in the decade (see charts). When the Hunt brothers cornered the market, the price rose 11-fold in 2½ years – and then collapsed.

During its run it had some spectacular busts. In September 1979, silver crashed 23 per cent in three days, very like last week, before resuming its skyward trajectory.

Forever blowing bubbles

Addicts hoping for a repeat should be wary. First, there are rumours of manipulation, with culprits ranging from Wall Street banks to Russian oligarchs, but there might be no secret gang pumping up the price this time.

Second, the silver crash of 1980 was not smooth. It was often interrupted as greed triumphed, briefly, over fear – in four days in February 1980 silver recovered almost 20 per cent to $40.25. After reaching a high of $39.48 on Wednesday, it dived 10 per cent.

There is one lesson past bubbles should teach: selling early is much better than selling late.

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