By David Kurlander

Last week, Reddit-influenced amateur traders invested heavily in the weak stocks GameStop and AMC, wreaking havoc on hedge funds and leading Robin Hood, the popular trading app, to restrict access to the stocks. This week, the burgeoning populist community allegedly set its sights on silver, leading the CME Group—the leading commodities trading marketplace—to raise deposit requirements on silver. The last dramatic silver run, in the late 1970s, came when the billionaire Hunt brothers attempted to solidify their fortune by purchasing a wide swath of the world’s silver. The Hunts’ gambit, which almost crashed the stock market, led to a prolonged tap-dance with federal regulators that could resemble what we see from Washington in the coming months.

Nelson Bunker Hunt came from a legendary family. His father, H.L. Hunt, tapped East Texas’ fertile oil fields in the 1930s and became one of the richest men in the world. The elder Hunt served as inspiration for Jock Ewing, the patriarch of the influential 1980s TV series Dallas, and his colorful children—who included Super Bowl founder Lamar Hunt—were active in right-wing political circles. The elder Hunt funded a massively popular fundamentalist radio show, Lifeline, and Nelson was a passionate member of the John Birch Society. They even figured in prominent JFK assassination conspiracy theories, as they had been relentlessly critical of Kennedy’s supposed laxness toward communism. 

Nelson spent his early career in the years following WWII unsuccessfully looking for oil in the Middle East. In 1957, however, he struck it big. King Idris, the first independent ruler of Libya, negotiated a concession to Hunt of Sarir Field, which turned out to have massive quantities of oil. Nelson partnered with BP to drill, ultimately surpassing his father’s wealth. In 1973, three years after Marxist Colonel Muammar Ghaddafi took control of Libya, however, the new leader nationalized the oil fields and kicked Nelson out. “The time has come for us to deal America a strong slap on its cool, arrogant, face,” Ghaddafi told the press. 

Nelson felt he could no longer trust oil. And he also had profound concerns about President Nixon’s decision to take the U.S. off the gold standard, believing (correctly) that de-pegging the dollar would cause rampant inflation. Nelson searched for guidance from his brother Herbert, who had become a fan of a giddily pro-silver pop economics book, Silver Profits in the Seventies. 

Over the next six years, the brothers ultimately purchased somewhere around 240 million ounces of silver. The Hunts bought much of the silver on credit, effectively gambling that the price would rise as they both spread the word and bought up more of the available supplies. They also purchased and subsequently hoarded the metal from the COMEX silver exchange—a futures market where traders usually sold relatively quickly—making their speculations all the more tied to the overall fate of silver. 

The wacky saga of the Hunts’ silver acquisitions contains multitudes: midnight plane shipments of millions of ounces of bullion to Switzerland, an unsuccessful attempt to woo the Shah as an investor in 1975, a successful attempt to woo emissaries of the Saudi Royal family in 1978, and a bizarre subplot involving the Philippine sugar market. To call the story convoluted would be a vast understatement. 

Whatever methods the Hunts used to get their silver, they got it at the right time. In mid-1979, the Iranian revolution triggered a massive increase in the price of global oil and a resultant surge in inflation. The price of silver jumped from $8.50/ounce in July 1979 to $40/ ounce in early 1980. Westchester County reported a massive uptick in household silver theft. 

While the Hunts’ silver was appreciating, President Carter was trying to help the dollar—ultimately an oppositional force to silver speculation. Carter appointed Paul Volcker, an inflation hawk, to lead the Federal Reserve. In early 1980, Volcker announced a far more aggressive program to combat the weak dollar than had his predecessors—a system of credit restraints that included restrictions on loans to silver and gold speculators. COMEX also recognized the risk of the Hunts’ buying, and in response, restricted the use of borrowed money in silver trades. The brothers were in serious trouble.  

The price of silver began to plummet. The financial community knew that the Hunts had bet heavily and watched with bated breath to see whether the brothers had the cash to cover their (and their lenders’) losses. On March 26th, 1980, the Hunts announced that they would be selling silver-backed bonds with the Saudis—a sure sign that they were out of cash to cover their losses. The next day, “Silver Thursday,” the bottom fell out. Volcker recalled in his memoir that he received a panicked call in the midst of the chaos from Harry Jacobs, CEO of Bache, the Hunt’s main lender. “Close the market!” Jacobs pled. The Dow ultimately went down 25.93, a massive drop at the time. 

Despite his credit restraints and general antipathy toward the brothers, Volcker had to approve $1.1 billion in loans to the Hunts (including self-loans from their domestic oil companies) to shore up their perilous silver position and to avoid further financial catastrophe. 

The brothers did not stand accused of any crime (though the Peruvian silver industry would later successfully sue them). Their bizarre silver-gobbling, however, had played a significant role in almost crushing the American financial system underfoot. In late April, the brothers had a somewhat anticlimactic appearance before the House Committee on Government Operations. The Hunts, in keeping with their stated politics, railed against the “manipulative actions” of the Fed and COMEX.

Writer L.J. Davis summed up the debacle in Harpers: “Only one thing is certain: most of the elements of the capitalist system, like the futures market, can be employed in ways for which they are not designed and against which they have few or no defenses.” 

Today’s market insurgents are (mostly) not billionaires. In fact, they are trying to stick it to the proverbial Hunts of the financial world. Still, the protestations of the Redditors that the government is out to end their spree, and the general shock with which Wall Street has reacted to these populist missions, shows that speculation is once again taking on a political life all its own. 

For the most in-depth accounting of the Hunts’ silver ploy, check out Stephen Fay’s 1982 Beyond Greed: How the Two Richest Families in the World, the Hunts of Texas and the House of Saud, Tried to Corner the Silver Market – How They Failed, Who Stopped Them and Why it Could Happen Again. And for a rollicking history of silver, read William L. Silber’s 2019 The Story of Silver: How the White Metal Shaped America and the Modern World. 

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