It Was Called Black Friday
October 24, 2008
You can tell what kind of mood I am in this morning. The financial markets don't look good. There is nothing I can do about gold dropping under $700 an ounce or silver under $9 an ounce, except reflect on my experience and on history.
I googled Black Friday. Interestingly, the first references deal with the first shopping day after Thanksgiving. That is not what I was looking for. I was looking for the real Black Friday.
I did the search because many years ago when I was a student I read biographies of Jay Gould and Jim Fisk. They were partners in an effort to corner the gold supply in 1869.
Friday Sept. 24, 1869, was the critical day of the attempt. It went down in Wall Street lore as Black Friday.
The floating supply of gold in New York City on which so much of the nation's finances rested was not that large. The Gould-Fisk effort to corner the market was brazen and very public. The value of the precious metal was set in trading in the Gold Room of the New York Stock Exchange.
Imagine two people being able to threaten the integrity of the financial system.
On Black Friday, Gould got wind of the fact that the U.S. Treasury would release gold into the market. He secretly reversed his positions, selling what he had accumulated and leaving his partner in the dark.
Fisk very visibly kept trading and was loudly bullish until the avalanche of public gold overwhelmed him.
Gould had left his partner to dangle because both could not get out of the market in one piece. Gould elected himself to be the surviving partner, though he later advised Fisk to renege on his commitments to buy gold. Fisk did. Many were ruined financially as a result.
Who is playing Gould today and who is Fisk, I don't know, but fortunes are being made and lost.
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