Blast from the Past: Hunt brothers’ fateful silver gamble

Texas oil heirs Nelson Bunker and William Herbert, known as the Hunt brothers, in the 1970s started collecting piles of physical silver stock and futures contracts. Distrustful of paper money and concerned about inflation, they saw silver as a store of value . 

By January 1980, their feverish purchases helped lift silver prices from $6 to almost $50 an ounce. Regulators were watching, and with new credit cut off to them, the brothers missed a $100-million margin call from their brokers, leading to forced selling. Silver collapsed in just one day. 

Wall Street was in disarray, with banks who had financed the Hunts in jeopardy. Relief came in a $1.1-billion loan package through Federal Reserve approval. The brothers declared bankruptcy, each paying $10 million fines, and faced commodity trading bans. 

The meltdown led to stronger Commodity Futures Trading Commission oversight and sustained wariness over commodity bubbles. The saga offers a stark lesson of the market perils of excessive leverage.

This is part of The Northern Miner‘s Blast from the Past series, where we link current developments, like rising precious metals prices incenting further exploration and mining, with news items from our 111 years of archives. The Miner is Canada’s oldest mining publication.