The Hunts had put up oil and gas leases, real estate, coal leases, antiques, even a Mercedes and a Rolex, and lost them all, according to Kurt Eichenwald’s “Serpent on the Rock” (2005).
$1.1 Billion
“Twelve U.S. banks, the American branches of four foreign banks and five brokerage houses had provided the Hunts’ silver- buying venture with more than $800 million -- equivalent to almost 10 percent of all the bank lending in the country in the previous two months,” William Greider wrote in “Secrets of the Temple” (1987). The collateral also included silver, whose price was plunging.
Making matters worse, the Hunts had bought futures contracts on 19 million ounces of silver with delivery scheduled for the next Monday, March 31, Greider wrote. The seller was demanding his money. If he didn’t get it, the silver price would plummet again, dragging the lenders of the $800 million down with it, Greider said.
A $1.1 billion loan from a group of banks, blessed by Federal Reserve Chairman Paul Volcker despite his otherwise firm stand against speculative lending as inflation crept higher, stopped the bleeding, Greider said.
Short Bet
“For six days late in March 1980 it appeared to government officials, Wall Street and the public at large that a default by a single family on its obligations in the plummeting silver market might seriously disrupt the U.S. financial system,” said a 1982 U.S. Securities and Exchange Commission report.
During the seven-year increase in silver prices, a Peruvian firm had bet the price was going to fall. It sued Bunker Hunt and Herbert Hunt for manipulating the market.
The case finally came to court in 1988. The trial took six months, said Gorman, the Peruvian company’s attorney. The Hunts lost.
“I remember them being totally stunned, totally shocked,” Gorman said.