The Texas Brothers Who Nearly Owned All the Silver

By the late 1970s, Nelson Bunker Hunt and his brother William Herbert had been stockpiling silver for nearly a decade. They had started buying when silver was below $2 an ounce. The inheritance from their oilman father, H. L. Hunt, gave them roughly $5 billion to spend. By early 1980, the brothers and a few allied investors held about a third of all privately owned silver.

The price reflected it. Silver opened 1979 near $6 an ounce. On January 18, 1980 it touched $50.42, a real-terms peak that has not been beaten since.

The Comex exchange saw what was happening. On January 7, 1980 it adopted Silver Rule 7, capping the silver any one trader could hold on margin and forcing positions above the limit to be liquidated. The CFTC piled on. The price started falling.

The brothers had a new problem. They had borrowed against the position. As silver dropped, brokerages called for more collateral. On Thursday, March 27, 1980 — Silver Thursday — they could not meet a $100 million margin call, the price collapsed from $21.62 to $10.80 in a single day, and Bache Group nearly went under. A consortium of banks put together a $1.1 billion rescue line to stop a cascade across Wall Street.

There were no criminal charges. In 1988 a civil jury found the brothers had conspired to corner the silver market and ordered them to pay $134 million to Minpeco, a Peruvian mining company. Bunker filed for personal bankruptcy.

It is the closest a private buyer has come, in modern markets, to owning a metal.