Silver Thursday – 1980

Apart from a handful of reigning monarchs and despots, in 1961 Nelson Bunker Hunt was the richest man in the world.

Like his father, the legendary oilman H L Hunt, Bunker gambled big and got lucky. By 1970, although his wealth was accumulating faster than he could spend it, he foresaw a volatile economic future.

Prevented by F D Roosevelt’s 1933 prohibition on US citizens owning gold, Bunker and his brother Herbert chose silver, then standing at $1.50 per ounce, as their speculative hedge.

Their initial caution vanished after Colonel Gaddafi nationalized Bunker’s Libyan oil fields in 1973. Furious, and paranoid that paper money would soon be worthless, in 1974 the Hunt brothers bought futures contracts on 55 million ounces of silver – but instead of selling the contracts like normal commodity traders, they took delivery of the bullion and chartered three Boeing 707s to airfreight it to Switzerland.

By 1979 they had engineered a genuine shortage. The Hunts owned $4.5 billion-worth of shiny, glittering silver, safely stashed in Swiss vaults. Still the price climbed, until on January 17 1980 an ounce cost $49.45. Then the goal posts were moved.

Almost simultaneously, trading in silver was suspended and the Federal Reserve raised interest rates. Without these props, the silver boom was suddenly over – but Bunker still had to honor contracts to buy at prices over $50. The day after he decided to get out – ‘Silver Thursday’, March 27 1980 – silver fell from $21.62 to $10.80, the metal’s biggest single collapse. The Hunts became the (then) greatest debtors in financial history; and though the New York banks allowed them $1.1 billion credit towards clearing their obligations, Bunker was personally bankrupted and later convicted of illegally trying to corner the market. He had gambled that silver was undervalued: he failed because he made the price of silver too attractive for its own good.

When: March 27 1980

Where: USA

Toll: Nelson Bunker Hunt and William Herbert Hunt were bankrupted.

You should know: J R Ewing in Dallas and the Duke Brothers in Trading Places all drew inspiration from Bunker’s story, and his larger-than-life, characteristically ‘Texan’, persona.