The Frenzy, by Keith Law

I am pleased to be able to share Keith’s latest work with our readers. This was a really fun read about the run up in silver prices at the peak of the market. Enjoy!

FORWARD

In response to a few younger people’s questions here in B.C., who were not alive in the 70’s, I have written this story of the craziness of the markets in the 70’s as we headed to the 80’s, and then the fluctuations leading to a silver high again in 2011.

50 years ago, as I was getting to the height of making silver bullion, we were selling silver bars, with the fabrication charge included, between $50 – $60.00 / Troy ounce CDN. We did get close back in 2011, in terms of CDN dollars, but, there still must be thousands of ounces still sitting in people’s possession. Very few bars, in reality, came through for refining in my years at Engelhard and Technic.

For all you collectors that visit this site, my next story will address how you got your bars, especially the earlier ones. From the scrap coming in the door, refining, and then going back out the door as bullion bars.

I hope you find this bit of history interesting.

Keith law

THE FRENZY

Fren-zy (noun) : A state or period of uncontrolled excitement or wild behavior.

I heard the truck before I saw it. 

As I set the first coffee of the day down on my desk, the rumbling 318 C.I.D, dusty and dented Dodge Power Wagon pulled into the parking lot, leaving a blue haze of burnt oil behind. The exhaust belted one last fart of oil smoke out, as the driver turned the tired engine off, as if to say…”I made it!” 

The driver seemed to peel himself out from behind the steering wheel, as did the two passengers, all looking like they had not slept in days. They too, like the truck, were covered in dust and mud on their coveralls. They headed to my door.

This will be interesting I thought to myself, and, as it turned out…. was it ever! This group of men had arrived at the front door of our business at the peak of the “Frenzy.”

The “Frenzy” as we called it did not start off with a bang; it was a slow crawl until it really exploded as both the gold AND silver markets peaked in the early 80’s.

In previous stories I have talked about the building of the jewellery business at Delta Smelting. We were also trying to gain entry into the photo processing businesses and film developing labs, in order to increase our silver refining potential, along with investment bar production. Being a brand new company, it took some marketing to get us known to the Vancouver market.

Our brilliant idea came with the making of a portable display, to be taken to all the malls that were starting to pop up in the 70’s. We would run an ad in the papers the week before. We had crucibles, our safety gear, pictures of refining procedures, a small sluice box, and, a larger one in which people could pan for gold. We could tell people who brought material to us what they might get for their scrap gold and silver. We had samples of gold and silver scrap on a display board.

The attached picture I took was in 1975 in the Capilano Mall, in North Vancouver. You can see on the sign board silver was $4.20 CDN and gold was $155.15 CDN. Also on the display board you can see samples of articles that might contain gold or silver. This really piqued the interest of people, as it made them aware of what might be lurking in the desk drawer or jewelery box.

When I started with Delta Smelting in 1969, silver was valued in the $1.80 Troz range. As we headed to the 1980’s, the price of silver rose dramatically. Surprisingly, the price rise was being triggered by the HUNT BROTHERS, trying to corner the silver market!

It was not until after the terrible fire we had in 1973 that we actually put in a small sales and receiving room. In conjunction with our advertising and business name being established with the jewellers and pawn shops, we now had the beginning of what was to become the “Frenzy” of people coming to unload their personal treasures. 

In 1971 Richard Nixon took the U.S. off the “gold standard” thus beginning the sharp rise in market prices. Gold went from $40.00 USD to $161.00 USD by 1975, silver from $1.54 to $4.43, …..quite the dramatic increases! 

People started to come to the plant with a few sterling silver bits; watches, the odd trophy, etc.. The flood, or finally, the Frenzy had begun! With the price increase, and the public’s growing awareness of how highly valued silver and gold had become, it was GAME ON!

Now, here was the reality….everything HAD to be checked before it was officially received. Why you may ask? Because not everything was sterling silver or karat gold! So many things were plated silver/gold, just a coloured alloy, or just plain fraudulently stamped on an article.

We in no way wanted to take anything that the customer THOUGHT was sterling, and then tell them 50% of it was not! 

As the company headed to the late 70’s, silver was hitting $11.00. The knowledge of the price was now out there and with that, our small sales and receiving room required two more employees. We trained them in all aspects of testing and receiving items.

Imagine someone shows up with a complete 12 place serving set of sterling silver, more often as not in a beautiful red or blue velvet lined box, plus tea/coffee pots, small dishes, little serving forks, spoons, and candy trays, etc.. We would have to look at all the marks stamped on the article, then, do small “scratch” tests and put a small drop of nitric acid on it, so see what the reaction would be. If it bubbled, it was NOT silver!

This all took time, even taking an hour plus to go through one person’s silver….or gold articles. We got to know the major silver manufacturers, so for some it was quite easy, as we could trust the silver maker’s marks. At times is was a very BIG disappointment for some people, as the article was stamped

E.P.N.S.; Electro Plated nickel silver, or N.S.; Nickel silver, Pewter, NO silver at all, just plated. The attached picture of my tray shows the marking and the silver plate being worn off. I serve coffee when camping with this tray! Ha!

Also, as we found out, the bases of so many things included plaster of Paris, or resin. This was done to fill the voids, add strength to the items and to keep things upright as a weighted base would do. Steel plate was also used a lot, before the final silver sheet was put on to seal things up. BIRKS ring boxes had a steel base in every one. This presented a bit of a problem because we had to explain to the customer that the box had to basically be destroyed to determine the actual received weight of scrap silver. The knives in the serving settings all had a steel shank, but, were filled with plaster of Paris or resin in the handles. Therefore it was a major job to break the handle away from the steel blade/shank, and then pound the silver handle to get the filler material out.

One of the worst offenders for fraudulently stamped silver was Mexico. People would bring in the so called “sterling silver” they bought from the vendor on the beach, sometimes a whole collection from many trips over the years. They would have the 92.5 stamp on them, but, it was just a cruddy alloy that looked silver. As we would say to many people,…ANYONE can buy a stamp.

The magnet was our true friend, as it would grab any plated item or alloy that was magnetic. So many chains were just plated, and charm bracelets were the worst at times.

As the Frenzy built, the time it took to check things increased. By then the line up out our front door stretched the length of the parking lot. One day I counted no less than 55 people waiting to bring their material in. We also received a lot of gold articles and again, the checking process would have to happen. This is when I built my pocket watch collection, as most watches were gold plated, or, rolled gold, which is a form of thicker plate. The watches were works of skilled American craftsmanship, and, a symbol of a dying and soon to be a dead industry. Having come to appreciate them I would make an offer to buy them for my personal collection. Most were from the late 1800’s to the mid 1940’s. The railroad watches were the best find, as they represented the best of quality and reflected a change in the railroad industry after a massive train wreck in the U.S.. This head on collision was caused when two engineers, on separate trains, had used unsynchronized watches with no timing or standards, which were three minutes out. A bit of trivia for you: The investigation had a man named Webb C. Ball hired to investigate the use of watches on the railroad lines. This investigation led to the rules and standards that watches had to meet for the railroad. This event popularized the phrase; “On the Ball.” 

Our company moved to a new building on Shell Road at the height and culmination of the Frenzy, as silver hit a high in 1979 of 11.07 and finally hitting 20.98 in 1980. The price in CDN dollars, for silver bullion that we sold in that time period, was between $50.00 to $60.00 per TrOz. The Hunt Brothers, in the back ground, had bought up 100 million ounces of silver, almost 1/3 of the world’s silver at the time!

This Frenzy also had people bringing in ANYTHING they thought could be silver or gold. It just got crazy, as again, everything had to be checked.

As I wrote about in my story; “TREASURE”, the articles that came in were astounding at times. They were truly fine works created by talented silver smiths, such as hand crafted candelabra, trophies, dishes, serving trays, and so many Art Deco pieces from that time period. Many times we would try to advise people to take their items to an Antique dealer. Often times, customers returned to us, stating that the dealer was more interested in the price of silver than the object itself. It made me, and my co-worker Evan, so sad to have to smash and cut up such historically beautiful things in order to fit them into the melting pot.

On a daily basis people started to arrive early, to be in the line up, a few fights almost broke out. As the price of silver fluctuated on a daily basis, it was often difficult to give customers the payout they expected by the time assays and sales were completed. We would explain the whole process, but at times we would have to phone the customer if the silver price had bounced down, to confirm a sale or not. The customer had the option to withhold sale until silver price was to their liking. Silver and gold are “hedged” the day of sale.

For all you owners of early Delta Smelting and Wessex bars, know, that most of your silver came from BIRKS, ENGLISH and American sterling.  Mexican coin silver was also huge for a year or so. I previously wrote about a fellow that had a contract to buy old 1920’s silver coinage. He brought in 1,000’s of ounces to Delta for refining. He was doing very well until he augured into the Arizona desert when his DC-3 crash landed. Unfortunately, he was transporting a load of marijuana as well as the silver. 

As we now had the photo finishing labs, x-ray film and news paper silver sources, bars would be a mix of all these things. Long before the digital age, Vancouver had two very large movie film processing companies. These companies, along with every photo store had their own silver recovery cartridge. This gave us thousands of ounces on a weekly basis, all ultimately going to bullion bar production and of course the silver content of gold karat alloys. I also made hundreds of ounces weekly of sterling silver casting grain to go back to the jewellery industry.

At times there were both some sad and some funny stories to go with what people brought in. There was a period when counterfeit U.S. Morgan Silver dollars came into the market. People thought they were getting a “good deal” when they were purchased. Ironically, these “dollars” had zero silver in them. We turned away dozens of persons who brought them in.

With gold at $300+ by 1979, then jumping to 612+ in 1980, the “weekend gold panners” started to hit B.C. creeks and rivers with a vengeance. This brought a flood of them coming in on a Monday, after panning their hearts out for two or three days.

They would carefully show us their bottle of “gold”, then, I would have to tell them it was “Fool’s gold!” The look of shock was both funny and sad at times. I would ask did you not do some home work as to what placer gold really looks like!? I got to where I kept a small vile of #16 mesh at my desk to show them what real gold looks like. Most laughed it off, but, there were a few that did not believe me and I would just say, “Take it to an assay lab then!”

We now turn to the story of the ton of “gold” in the pickup truck, both hysterically funny and tragically sad! The material in the truck weighed 2,342 lbs, as they had stopped at a weigh station outside of Hope, B.C..

The three gentlemen headed to my door, stretching out some obvious kinks in their arms and legs from being cramped into that cab. I headed to the door as they hit the door buzzer.

As I opened the door, the obvious leader of the group, asked, “Is this the gold refinery?” He introduces himself as “Bob”. I say yes and invite the three men in. They ask if I have any security that could go and guard the truck, as there is GOLD in there, with emphasis. I of course, invited them to bring it in.

Now, at the same time, the middle passenger, Garry, who was quite a bit younger than the other two, started talking to the other fellow about how they had finally had finally MADE IT! Such a long drive, over 12 hours in the Dodge. The other fellow, Harry, started on about how he did not think the truck was going to make it to Richmond, and that the next thing he was going to do was buy a NEW truck. 

The younger lad started talking about the Ferrari he is going to buy. As I am a car guy, I asked what Model, etc. He says a Ferrari 308 GTBi, which at the time for that model was over $88,000.00+ CDN. I’m thinking they must have hit the jackpot!

Meanwhile Bob, has caught his breath and asks if I can handle a TON of gold. WOW….a TON of gold….that gets my attention!
I ask so where is it? My red flags always go up when that has been asked of me. I confirm that would be no problem.

At the same time, me being the car guy that I am, the young fellow has been telling me the specifications of the Ferrari, how fast it is going to be, and how he has been dreaming of and planning the purchase for the last month.

Bob and Harry now start to tell me they have been working on a “bluff” they discovered while scoping out some fall deer hunting area. To their amazement, they believed they had discovered a vein of GOLD!! In haste they went back with tools, and dynamite.  A week later they had set up camp, where they blasted and sweated for the whole month, baking in the sun.

They of course keep stating they have a ton of “gold” IN THE TRUCK!

Now, in 1983 when this happened, gold was around 400.00 US, so based on the potential weight they stated, worth some potential 13 million….I choked on my coffee!

“Let’s go and take a look!” I said.

On out to the truck the four of us went. I climbed up onto the back bumper and looked into the bed of the truck; they had made some “stake sides” to raise the height of the bed. There, in the bed, were three layers of white five gallon plastic buckets. They filled the whole back, maybe 30 – 40 of them.

I asked; “Where is the gold?”

They said; “You are looking at it!”

I stood there on the bumper, processing what they had said ….then, the light came on…..I jumped down, looked at the three of them and broke into hysterical laughter!

“IT’S FOOL’S GOLD!! “IRON PYRITE!”

Beautiful mineral samples of iron pyrite!

I caught myself, and stopped laughing, as they were really upset. I could now see what happened. They had NO idea what they had actually mined, spending all that money on food, dynamite, fuel and a whole lot of Wobbly Pops.

They of course did NOT believe me. I asked them….”Why, on an old logging road, when it was so easily seen, would this not have been found and mined before…if it were gold?” Our Province has been gone over by prospectors for 200 years; there is no way an out cropping such as this would have been missed.

I had them come back inside, after taking a few small samples, to show them why this is not gold. I explained that when I put a small piece on my testing watch glass and put a drop of nitric acid on it, the sample will bubble, emit a brown gas and DISSAPEAR! I also showed them with a real small mesh piece of placer gold. The two older fellows still did not believe me. I said I have nothing vested in this other than the truth, take a sample to a certified assay lab in Vancouver, of which there were at least six at the time. Of course the sample just disappeared in the nitric acid test.

This is where it got so sad for me; Garry now realized what a massive and silly mistake they had made. He now believed me.

I can still see him to this day, pushing his dark green John Deere tractor hat back on his head, which was now nodding back and forth,  then getting down on his haunches and repeating….”It’s Gone, it’s gone, it’s gone!!!” What he meant was that his dream of the Ferrari has just vaporized, like the truck of gold.

I like to think the other two finally did believe me as they departed, but, they soundlessly left the building. Garry chose to leave me the two nice samples of “Fools gold” which I have to this day. He finally understood the truth.

Versions of this still happened over the years, not as big, but, as the Frenzy continued, so many people bought things that were not gold or silver.

This story covers from the mid 70’s and through to my retiring in 2018, similar Frenzies happening as the prices rebounded after slumps. When the Hunt Brothers were caught, silver dropped from 21.00 to 10.00 by 1981 and a low in 1982 of 7.92. It bounced up in 2006 to 11.55 then headed to 35.00 in 2011, thus starting another major run of scrap.

We also had the Cash Buyer business model come to the forefront.  Online companies and night time TV shows said “Send us your scrap from your jewellery box, and we will send you CASH!” Mobile cash buyers were touring many cities at a time on purchasing sprees. You may have gotten a flyer from the cash buyers in the mail. Many antique dealers and pawn shops too got flooded with silver and then sold to us.

Each price jump had the Frenzy all over again, as the next age demographic went through the jewellery box or got rid of Grandma’s gift of her sterling silver. These cash buyers sure took the strain off us though, no more line ups, as they did the work and we still got the silver and gold.

When I retired in 2018, staggering amounts of silver kept coming into our business on a monthly basis. This was a historic testament to our British and European roots in B.C..  We also received silver manufactured by other cultural groups such as, East Indians, Persians and Asians.

Will there be another Frenzy like the past? Who knows, who could have thought that gold would go from $35.00 U.S. when I started, to $2,146.00 U.S. ($2,756.00 CDN). Who would have predicted silver going from $1.80 U.S. in 1969 to $35.00 U.S.

In 2011?

 With an alleged deficit in silver production for the last three years and so many new technologies coming on stream….get ready to clean out your silver scrap!

Keith Law

February 18, 2024

We really appreciate Keith’s engagement with the site and community and hope you all enjoyed this. Additional images from the time period below: