The Hunts “moved the price of silver around the world,” said Thomas O. Gorman, a partner at Dorsey & Whitney LLP in Washington who successfully sued the Hunts for market manipulation.
Most traders buy and sell paper. The actual stuff represented by that paper is delivered to someone else. Hunt wanted the silver. He chartered three 707 jet aircraft to haul the metal to warehouses in Switzerland and hired a dozen sharpshooting cowboys to provide security, according to Knight.
In the late 1970s, the Hunts were accumulating so much silver they needed surrogates to buy it for them, said George Gero, who traded the metal at the Commodity Exchange Inc.’s open outcry pit in New York for the investment bank Drexel Burnham Lambert.
Family Cutlery
“The main buyer for Nelson Bunker Hunt was Conti Commodities, and when we saw the Conti broker coming to the pit, we’d all buy some silver,” raising the price, said Gero, now vice president, global futures, for RBC Capital Markets in New York.
Through the 1970s the price rose slowly, steadily. Then, in 1979, quickly. Silver started the year around $6 an ounce and ended the year at more than $32.
Everyone got in on the trade. Grandmothers sold the family cutlery. Thieves were making off with silver jewelry and melting it down.
It got so bad that Tiffany & Co., the New York-based jeweler, bought an advertisement in the New York Times that said, “We think it is unconscionable for anyone to hoard several billion, yes billion, dollars worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver from baby spoons to tea sets, as well as photographic film and other products.”
On Jan. 7, 1980, in response to the Hunts’ position, Comex and the Chicago Board of Trade imposed emergency rules that included higher margin requirements.
Ascent Broken