Silver Czar Passes Away At 88
Nelson Bunker Hunt: World's Former Richest Man and legendary horse owner recently dies at 88. Born with a silver spoon in his mouth (so to speak), Nelson Bunker Hunt lived a sterling life…and who will long be remembered by avid students of silver history.
The world's former richest man Nelson Bunker Hunt, who amassed a £16bn fortune, has died aged 88.
The Texas oil tycoon and Derby winning horse owner died in modest circumstances at an old people's home in Dallas after battling Alzheimer's.
He was once considered the world's richest man before he lost billions when the silver market collapsed in the 1980s. He had invested huge sums of money into the market and had at one stage controlled up to half of the world's supply of silver.
He was later fined $10m (£6.2m) and banned from trading in the commodity markets after being charged with conspiring to manipulate the silver market.
The New York Times reported that when confronted by his sister Margaret who demanded to know what he had hoped to achieve, he replied: "I was just trying to make some money."
Prior to that Hunt played a significant role in the development of oil fields in Libya, which were later seized by Libyan dictator Muammar al-Gaddafi.
He also owned 8,000-acre Bluegrass Farm in Lexington, Kentucky and raced thoroughbreds in Europe and North America.
He was given the title of "legendary owner-breeder" by the National Thoroughbred Racing Association. He bred 58 stakes winners and owned 25 champions, and was best known in British racing for providing Lester Piggott with his seventh Derby victory on Empery in 1974.
He lived out his days modestly with his wife Caroline in Dallas with their four children before being moved to a care home after suffering with Alzheimer's, according to his family.
1970s: The Hunt brothers and the silver market
Brothers Nelson Bunker Hunt and William Herbert Hunt attempted to corner the world silver markets in the late 1970s and early 1980s, at one stage holding the rights to more than half of the world's deliverable silver. During the Hunts' accumulation of the precious metal, silver prices rose from $11 an ounce in September 1979 to nearly $50 an ounce in January 1980. Silver prices ultimately collapsed to below $11 an ounce two months later, much of the fall occurring on a single day now known as Silver Thursday, due to changes made to exchange rules regarding the purchase of commodities on margin.
By the final quarter of 1979, silver prices had risen to levels between $15.00 and $25.00 per ounce. At these levels several physical market forces combined to act against higher prices. Additionally, the two major U.S. futures exchanges that traded silver at the time took steps to force those with margined long positions to liquidate their positions. During the Hunt brothers’ accumulation of the silver, prices of silver bullion rose from $11 an ounce in September 1979 to $49.45 an ounce in January 1980 based on London PM Fix. Silver prices ultimately fell to below $11 an ounce two months later.
Long-Term Silver Chart (1976-2014)
The Hunt Brothers and the Silver Bubble
In 1973, the Hunt family of Texas, possibly the richest family in America at the time, decided to buy precious metals as a hedge against inflation. Gold could not be held by private citizens at that time, so the Hunts began to buy silver in enormous quantity.
In 1979 brothers Nelson Bunker and William Herbert, together with some wealthy Arabs, formed a silver pool. In a short period of time they had amassed more than 200 million ounces of silver, equivalent to more than half the world's deliverable supply.
When the Hunt brothers began accumulating silver back in 1973 the price was in the $1.95/ounce range. Early in 1979, the price was about $5. But by late 1979 to early 1980, the price soared in the $50's, peaking intra-day at $54/oz (due primarily to the Hunt’s cornering tactics).
Once the silver market was cornered, outsiders joined the chase but a combination of changed trading rules on the New York Metals Market (COMEX) and the intervention of the Federal Reserve put an end to the game. The price began to slide, culminating in a 50% one-day decline on March 27, 1980 as the price plummeted from $21.62 to $10.80/oz.
Silver Thursday was an event that occurred in the United States in the silver commodity markets on Thursday, March 27, 1980. A steep fall in silver prices led to panic on commodity and futures exchanges.
Nelson Bunker Hunt and William Herbert Hunt, the sons of Texas oil billionaire Haroldson Lafayette Hunt, Jr., had for some time been attempting to corner the market in silver. In 1979, the price for silver jumped from $6 per troy ounce ($0.193/g) to a record high of $48.70 per troy ounce ($1.566/g), which represents an increase of 712%. The brothers were estimated to hold more than one third of the entire world supply of silver (other than that held by governments). The situation for other prospective purchasers of silver was so dire that the jeweller Tiffany's took out a full page ad in The New York Times, condemning the Hunt Brothers and stating "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".
But on January 7, 1980, in response to the Hunts' accumulation, the exchange rules regarding leverage were changed, when COMEX adopted "Silver Rule 7" placing heavy restrictions on the purchase of commodities on margin. The Hunt brothers had borrowed heavily to finance their purchases, and as the price began to fall again, dropping over 50% in just four days, they were unable to meet their margin obligations, causing panic in the markets. Consequently, the Hunt brothers suffered horrific losses, estimated in the billions. (Source: Wikipedia)
After losing more than $1 BILLION in trying to corner the silver market, Nelson Bunker Hunt is reported to have said: “A BILLION DOLLARS AIN’T WHAT IT USED TO BE” (that was 34-years ago in 1980).
Another Silver Speculator Enters…Billionaire Buffett
In the late 1990s renewed buying of physical silver ensued. It began through a large trading firm by a major investor, Warren Buffett’s Berkshire Hathaway (ticker: BRK), which accumulated nearly 130 million ounces from 1997 to early 1998. The market price rose sharply as this news broke, however it did not make the kind of price moves that would shock the public as the Hunts’ corner had. But unlike the greedy Hunt brothers, the legendary sage Buffett soon took profits in his venture into silver. This is why Buffett is recognized as the world’s most successful investor…and is today the richest man in the world – with a net worth near $70 BILLION. Incidentally, Buffett’s flagship company (Berkshire Hathaway) has recently accumulated more than $50 BILLION in cash, which begs the question: “Does renowned guru Buffett anticipate a material correction in US equities?! World Stocks Crash Prediction
Bears watching, eh (pun intended)?!
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Founder of Gold-Eagle in January 1997. Vronsky has over 42 years’ experience in the international investment world, having cut his financial teeth in Wall Street as a financial analyst with White Weld. Vronsky speaks three languages with indifference: English, Spanish and Brazilian Portuguese. His education includes a degree in Petroleum Engineering from the University of Oklahoma, a Liberal Arts degree from Hartnell College and a MBA in International Business Administration from UCLA – qualifying as Phi Beta Kappa and Tau Beta Pi for high scholastic achievements. Vronsky believes gold and silver will soon be recognized as legal tender in all 50 US states…and many countries worldwide. You may reach I. M Vronsky at: email@example.com and/or firstname.lastname@example.org