In 1980, regulators bankrupted silver billionaires with ONE rule change. (They just used it again.)

Happy Thursday!

Hello, Curse and Coffee friends,

Today, we explore the silver explosion and what could turn it.

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The take: Silver is up 274% in a year. Regulators just made it more expensive to bet on it.

What happened: The CME Group (the exchange that runs silver trading) raised the cash requirement for silver contracts. It's the fourth hike since December.

Why it matters: The exchange used the same tool in 1980 to crush the Hunt Brothers. They'd hoarded a third of the world's silver. They lost everything.

What to watch: Buyers in Shanghai are paying $10 more per ounce than buyers in London. If they keep buying, prices stay high.

In 1980, Tiffany's bought a full-page ad in the New York Times. They called the Hunts "unconscionable" for hoarding "several billion, yes billion, dollars' worth of silver." Tiffany's is still selling jewellery. The Hunts went bankrupt.

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The trick is simple.

Make it cost more to borrow money for bets. Traders who can't pay up have to sell. And prices fall.

It worked in 1980. The exchange raised costs in January. By March, silver crashed 50% in four days.

The Hunt Brothers couldn't cover their loans. They lost $1.7 billion.

It worked in 2011. The exchange raised costs by 5 times in 9 days. Silver dropped from $49 to under $35.

Now they're doing it again.

Since December, the exchange has hiked costs four times. One week saw a 47% jump.

Nobody controls a third of the supply today. The shortage is real. Factories need silver for solar panels and computer chips.

Mines aren't digging up enough. Demand has outpaced supply for five years running.

So the question regulators didn't face in 1980:

What if it's not a scam?

The Hunts borrowed money to hoard metal. Today's buyers want silver because there isn't enough of it.

Raising trading costs doesn't create more silver.

Bull case: The shortage is real. Solar panels and chips need silver. Mines can't keep up. This isn't a scam (it's supply and demand).

Bear case: Every major silver rally has ended the same way. Exchange raises costs. Traders sell. Prices crash.

Our read: The Hunts went broke after gambling with borrowed money. How many traders will learn that lesson again?

CME Group Hikes Silver Margins Amid Speculative Short Squeeze Fears

For every ounce of real silver in exchange vaults, traders had bet on 356 ounces. The Hunts cornered a third of the market. Today's paper bets make their scheme look small.

Silver: up 274% in one year.

How the Hunt Brothers Lost It All — Cowboys guarding jets. Swiss bank vaults. A circus elephant that nearly crashed a plane over the Atlantic. Yes, really.

Is Silver in a Bubble? — One side says the shortage is real. The other says traders got greedy. Both make good points.

Silver breaks another record — A Shanghai fund had to stop trading because too many people wanted in. That's not gambling. That's demand.

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Enjoy your Thursday, keep it caffeinated.

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