In the early weeks of 1980, Americans queued around the block to melt the family silver. Coin dealers weighed teapots and christening spoons by the sackful; refineries ran backlogs measured in months; Tiffany & Co took out a newspaper advertisement condemning the men it blamed for it all. The price of silver, about six dollars an ounce a year earlier, was touching fifty. And an extraordinary share of the world's deliverable supply had come to rest in the hands of two brothers from Dallas: Nelson Bunker Hunt and William Herbert Hunt.
The Hunts were sons of H. L. Hunt, the wildcatting Texas oil tycoon reputed at one point to be among the richest men in America. (A third brother, Lamar, took a different route to fame: he founded the Kansas City Chiefs and coined the phrase "Super Bowl".) Bunker Hunt, who had discovered a vast oilfield in Libya only to see it nationalised by Colonel Gaddafi, emerged from the early 1970s convinced that inflation was destroying paper money and that hard assets were the only refuge. Gold was awkward — private ownership had been restricted for Americans until the end of 1974 — so the brothers turned to silver, and began buying heavily in 1973. Unusually, they took physical delivery rather than settling contracts for cash, at one point flying tonnes of bullion to vaults in Switzerland under armed guard.
Through the late 1970s the buying accelerated, joined by wealthy Saudi partners through a joint venture called International Metals Investment Company. By early 1980 the Hunts and their allies held silver and silver contracts widely estimated at around a third of the entire world's privately held deliverable supply. Whether they set out to corner the market or, as they always insisted, merely to hold an inflation hedge on a Texan scale, the effect was the same: the price went vertical, from around $6 an ounce in early 1979 to a peak near $50 in January 1980.
The exchanges change the rules
What broke the corner was not the market but the rulebook. In January 1980 COMEX, the New York metals exchange, adopted "Silver Rule 7", drastically restricting the use of borrowed money to buy silver contracts, and the exchanges soon moved to liquidation-only trading — existing positions could be closed but not extended. The exchange boards, critics noted, included members whose firms held heavy short positions, a conflict of interest argued over ever since. With new buying throttled, the price could only fall, and the Hunts had built much of their hoard on borrowed money, against silver collateral that was now shrinking by the day.
The end came on 27 March 1980 — Silver Thursday. Silver collapsed to around $10.80 an ounce, and the brothers failed to meet a margin call of roughly $100 million from their broker, Bache. For a day, Wall Street genuinely feared a chain reaction through the brokers and banks exposed to Hunt debts. With the blessing of Paul Volcker's Federal Reserve, a consortium of banks extended a loan of about $1.1 billion, secured against Hunt assets including their oil interests, so the position could be unwound in an orderly fashion — a private rescue with a public purpose, and a preview of arguments about moral hazard that would return decades later.
The rules written afterwards
The reckoning took years. In 1988 a New York jury found the brothers liable for conspiring to corner the silver market, in a civil suit brought by Minpeco, a Peruvian state minerals company that had been ruined shorting silver during the spike; the damages helped push Bunker Hunt into personal bankruptcy that year, and the brothers accepted bans from commodity trading. The man once counted among the richest in the world is remembered for the shrug, long attributed to him, that a billion dollars isn't what it used to be.
The episode permanently changed how commodity markets are policed. Silver Thursday became the standard case study for position limits — caps on how much of a market any one trader may hold — and for exchanges' emergency powers over margin, tools that the Commodity Futures Trading Commission and the exchanges wield to this day. It also fixed in regulators' minds the lesson that a corner rarely fails quietly: it strains the whole financial plumbing around it. Quiz setters, meanwhile, cherish the story for its dates and its cast — two oilmen, one Peruvian mining firm, and fifty-dollar silver.
The Hunts had bet that metal was safer than paper. In the end it was paper — a rulebook amendment and a margin call — that took the metal away from them.
Quiz nuggets
- Silver Thursday was 27 March 1980, when the Hunts missed a margin call of roughly $100 million from broker Bache.
- Silver rose from about $6 an ounce in early 1979 to a peak near $50 in January 1980.
- The brothers' father was Texas oil tycoon H. L. Hunt; brother Lamar founded the Kansas City Chiefs and coined "Super Bowl".
- COMEX's "Silver Rule 7" of January 1980 restricted leveraged silver buying and helped burst the bubble.
- In 1988 a jury found the Hunts liable for conspiring to corner the market, in a suit brought by Peru's Minpeco; Bunker Hunt went bankrupt.