William Herbert Hunt was once one of the wealthiest men on Earth. With his brother, Nelson Bunker Hunt, the billionaire bought more than 195 million ounces of silver -- 60 percent of the U.S. market -- in the 1970s. By early 1980, their stake was valued at more than $9 billion.
The Hunts’ position imploded when silver prices plummeted 80 percent over the course of a few weeks in March 1980, culminating 33 years ago this week on what traders called Silver Thursday. The crash rattled Wall Street and sent the Texas brothers into bankruptcy.
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Silver Bubble
Williams testified on behalf of the Hunts when they were sued over their silver trading in the 1980s, and has written a book on the market crisis. The brothers accumulated silver positions of a size never seen before or since, in part because U.S. tax regulations discouraged taking short-term gains.
“They liked to take big risks,” Williams said.
By 1980, the Hunts held more than 15 percent of the world’s silver. When silver peaked at $49.45 an ounce in January 1980, the brothers had more than $9.6 billion in bullion and futures contracts, plus hundreds of millions of dollars more in oil assets and other stocks, according to a 1982 report by the U.S. Securities and Exchange Commission.
When the bull market in silver reversed, the brothers received margin calls which some of their brokers, including Merrill Lynch & Co. and Bache Group, helped them meet with more than $475 million in loans, according to the SEC report.
The stakes rose higher for Wall Street when silver fell below $11 an ounce on March 27, 1980 -- Silver Thursday. At that time, the brothers had $1.75 billion in silver-related obligations besides the margin call loans, the SEC report said.
$130 Million
“For six days late in March 1980 it appeared to government officials, Wall Street and the public at large that a default by a single family on its obligations in the plummeting silver market might seriously disrupt the U.S. financial system,” the commission wrote.
The bursting of the silver bubble led to a series of lawsuits against the Hunts. In 1988, a federal court decided Bunker, Herbert and Lamar had attempted to illegally corner the silver market, and were ordered to pay $130 million restitution. A few weeks later, Herbert and Bunker filed for bankruptcy to protect themselves against creditors.
The trust that held their oil companies was protected from creditors and not subject to bankruptcy, leaving the brothers with companies valued at more than $150 million each at the time.
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