Hunt Brothers lost $1B trying to corner the silver market — the silver crash

Nelson Bunker Hunt and William Herbert Hunt, sons of Texas oil billionaire H.L. Hunt, embarked on one of the most audacious schemes in financial history: cornering the world silver market. Beginning in the 1970s, they accumulated massive positions in silver futures and physical silver, eventually controlling more than half of the world's silver supply outside government vaults.

The Hunts' buying drove silver from $6 per ounce in early 1979 to a peak of $49.45 per ounce in January 1980. They had borrowed heavily to finance their purchases, using their oil wealth and bank loans to buy on margin. The Hunt brothers also persuaded wealthy investors and even a Saudi prince to join their silver buying.

When the COMEX and the Chicago Board of Trade changed the rules to prevent further margin buying, and the Federal Reserve tightened credit, the bubble burst. Silver prices collapsed to under $11 per ounce within two months. The Hunts faced margin calls they could not meet, and their brokerage firm, Bache, was forced to issue a $1 billion bailout.

The Hunt brothers ultimately lost approximately $1 billion and were forced into bankruptcy. They were later found to have violated commodities trading laws and were barred from futures trading. The case became the definitive example of a failed market corner and led to reforms in commodity futures regulation.