Gambling on Silver - The Rise and Fall of the Hunt Brothers

The Hunt brothers of Texas were certainly responsible for some of the all-time great quotes to a congressional committee. Bunker Hunt is quoted to have said, "A billion dollars is not what it used to be." When prompted to reveal his total wealth by Chairman Benjamin Rosenthal, Bunker answered: "I don't have the figures in my head. People who know how much they're worth aren't usually worth that much." The Hunt brothers' quirky, individualistic nature followed that of their father, H.L. Hunt. He was a logger, mule-skinner and card shark before his very big oil strike in East Texas made him one of the richest men in the country.

In the early 1970s, Libya nationalized the Hunt's eight million acres of oil holdings. Qaddafi's demands, and the threat of accelerating inflation, prompted Hunter and Herbert Hunt to look at silver as a hedge against paper money. U.S. citizens could not hold gold at this time. Starting in 1973, the Hunts bought huge quantities of silver. Silver's price was $1.95/oz. rising to $3/oz. by year's end. By 1979 the price had risen to $5/oz. The brothers now turned to wealthy Arab investors to form a silver-buying pool. At its peak in 1980, silver reached $54/oz. and the Hunts had amassed over 200 million ounces of silver and cornered over one third of the world silver supply. The Hunt brothers owned huge quantities of physical silver and stored it in Switzerland, and warehouses in New Jersey and Illinois.

Late to the game, outside investors tried to join in, but the New York Metals Market (COMEX), and the Federal Reserve took action by altering trading rules. By March, 1980 the silver price had dived to $10.80/oz. The Hunt brothers found it difficult to borrow their way out of bankruptcy. In 1987 they owed 2.5 billion dollars against 1.5 billion in assets. Federal Reserve Chairman Paul Volcker approved a bank bailout plan for the Hunts, but they were convicted of conspiracy to control the silver market. (D.H.)