As recounted recently on Priceonomics, in the late 1970s, extending into 1980, Dallas’ own Hunt brothers bought up just about every bit of silver that they could get their hands on. By the end of 1979, Bunker and Herbert Hunt each owned 21 million ounces of the precious metal, while holding futures contracts on tens of millions of ounces more.
Their stockpiling contributed to the price of silver skyrocketing, and they were later dragged into court for the perceived market manipulations. But it remains a legitimate question whether the Hunts understood what they were doing, especially since they ended declaring bankruptcy after the high valuation of silver led to whole new supplies being fished out of people’s attics and closets, resulting in a subsequent price collapse:
Though the Hunt brothers clearly amassed a staggering amount of silver and silver derivatives at the end of the 1970s, it is impossible to prove definitively that market manipulation was in their hearts. Maybe, as the Hunts always claimed, they just reallybelieved in the enduring value of silver.
Or maybe, as others have noted, the Hunt brothers had no idea what they were doing. Call it the stupidity defense.
“They’re terribly unsophisticated,” an anonymous associated was quoted as saying of the Hunts in a Chicago Tribune article from 1989. “They make all the mistakes most other people make,” said another.
When the Hunts were dragged before the CFTC a few months after the crash, Commissioner David G. Gartner wondered out loud: “Do you think there’s any possibility that the Hunts are just having fun, just horsing around?”
In their civil trial against the South American mineral firm, the Hunt brothers’ decision to begin accepting delivery on their enormous holdings in silver futures was considered a red flag. A market participant would only take the actual metal, rather than cash in on highly profitable futures contracts, if their plan was to remove the bullion from circulation and artificially inflate the price. That decision, it was argued, was consistent with market manipulation.
But one could argue that it is also consistent with having an irrational fixation on shiny metal and way more money than sense.
