1998 was the year. Mark McGwire and Sammy Sosa both surpassed Roger Maris' single season home run record that stood for 37 years. In seemingly effortless fashion, these two behemoth men crushed baseballs out of the park, as though they were taking batting practice on a little league field. Three years later another anomalous human specimen chased what then seemed like an unreachable feat. In 2001 Barry Bonds surpassed Mark McGwire's record of 70 home runs in a single season, by hitting 73 of his own. There was so much hysteria surrounding the incredible achievements of these men that any wrongdoing on their part was merely an afterthought.
Fast-forward to 2004. I was living in St. Louis at the time, and shacked up in Mark McGwire's neighborhood. One day my wife, who is a doctor and holds a dual degree that includes one in Kinesiology, came home from Starbucks and told me she ran into Mr. McGwire. As a Cardinals fan, she knew it would break my heart but she told me the bad news anyway. Hands down, Mark McGwire's huge stature was a result of steroid use. Shocking! Let's be honest it doesn't take a doctor or scientist to figure that one out, just someone who's unbiased and has a pair of functioning eyeballs. The man is a modern day goliath, and his biceps dwarf any small child's torso.
Ultimately, the two consecutive home run records are marred by admitted steroid use. So what's the point? In 1980 silver reached an all-time high of $50. The Hunt brothers, Nelson Bunker and Herbert, leveraged their family fortune to the tune of $4.5 Billion. By cornering the Silver market and holding more than half of one year's supply of deliverable silver, these guys inflated prices un-naturally. That is the key, the price of silver reached the stratosphere on market manipulation. So, why is everyone so obsessed with this record price? I mean I get it, sort of. Silver has traded at 50 bucks in the past, so it's not out of the realm of possibility that we could see those prices again. That being said, it's disingenuous at best for the media and investment advising community to hang this carrot for investors to chase. It's important to recognize that the price Silver is trading at today is really the highest natural price we've ever seen, driven by market forces on a level (relatively) playing field.
Just as up-and-coming MLB hitters should set their sights on records set by honorable men, it would behoove Silver traders to do the same. Price history plays such a dominant role in the psychology of precious metals trading that anyone engaged in trading these speculative commodities should really consider just how potent the juice is that's hitting silver prices out of the park.
