I had high hopes for silver in 1995. It was trading below $5 an ounce, which was dirt-cheap, but I could see that it was terribly undervalued.

Along with a few other traders at Salomon Inc., we made the purchase of physical silver – actual silver bars. I held 125 million ounces in Brooklyn, New York, and over 100 million ounces in London for safekeeping. What I didn’t realize was the stress our buying was about to put on the silver market.

Not long after that purchase, I received a call from the chief regulator of the London Bullion Market.

“Hello Andy, this is Terry from the Bank of England. Rumor has it that you boys own a lot of physical silver here in London. We would appreciate it if you would lend that silver so there are no disruptions in the London market.”

Holy cow, I thought to myself, there’s not that much silver in London! The dealers were concerned that they wouldn’t be able to meet their promises to their paper silver holders.

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