1980 Silver Thursday & The Hunt Brothers Corner
How two Texas oil barons attempted to corner one-third of the world's private silver supply
Executive Historical Summary
Billionaire brothers Nelson Bunker and William Herbert Hunt accumulated over 200 million ounces of physical silver and leveraged futures contracts to hedge against US dollar debasement. When COMEX and CBOT enacted emergency liquidation-only rules and raised margin requirements, the brothers suffered a $100M margin call on March 27, 1980, requiring a $1.1B consortium bailout to protect Wall Street brokerages.
Chronological Account & Crisis Breakdown
In the early 1970s, facing stagflation and dollar devaluation following the end of the Bretton Woods gold standard, Nelson Bunker Hunt and William Herbert Hunt concluded that paper currency would keep losing purchasing power. With private gold ownership restricted by US law until late 1974, they chose physical silver as their vehicle of choice.
By 1979, partnering with wealthy Saudi royals in an entity called International Metals Investment Co., the Hunts had accumulated an estimated 100 million ounces of physical silver stored in Swiss and American vaults, alongside futures contracts representing another 100 million ounces. Because total global annual silver mine production was only ~300 million ounces, they effectively controlled the global deliverable supply.
Between September 1979 and January 1980, silver rocketed from $9.00 to an intraday peak of $49.45 per ounce. Tiffany & Co. took out full-page newspaper advertisements condemning the brothers, while citizens formed blocks-long queues outside pawn shops to melt family silverware.
On January 7, 1980, the COMEX Board of Governors enacted 'Silver Rule 7', capping futures positions to 3 million ounces and restricting trading exclusively to liquidation. As margin requirements were raised from $1,000 to $60,000 per contract, the price began to stall.
The reckoning arrived on Thursday, March 27, 1980 ('Silver Thursday'). Unable to meet a $100 million variation margin call from broker Bache Halsey Stuart Shields, the Hunts defaulted. Silver collapsed from $21.62 to $10.80 within hours. Federal Reserve Chairman Paul Volcker intervened, coordinating a $1.1 billion private bank credit facility to keep the brokerage houses solvent.
Geopolitical Catalyst
High 1970s US inflation (exceeding 13%), the Iranian hostage crisis, the Soviet invasion of Afghanistan, and deep skepticism of fiat currency following the Nixon Shock.
Structural Market Failures
- Absence of exchange position limits allowed a single entity to corner front-month deliverable supply.
- Over-leveraged commodity brokers allowing margin debt collateralized by physical silver itself.
- Regulatory asymmetry between US exchanges and offshore London physical delivery markets.
Enduring Policy Reforms
- In February 1985, the CFTC brought allegations that Nelson Bunker Hunt, William Herbert Hunt and other participants had manipulated and attempted to manipulate silver prices in 1979–1980.
- In August 1988, a civil jury found Nelson Bunker, William Herbert and Lamar Hunt liable in Minpeco’s lawsuit over the silver-market scheme.
Archival Evidence & Reports
History of the CFTC: 1980s
Minpeco, S.A. v. Hunt, 718 F. Supp. 168 (1989)