Hunt Brothers' Silver Bet Ends in Disaster with 50% Price Crash

The Hunt brothers, Nelson and Herbert, inherited their father's wealth and anti-government views in Texas. After President Nixon suspended the dollar's convertibility into gold in 1971, they predicted the US currency would collapse.

In a difficult economic period for the US, marked by high inflation, unemployment, and a lost decade for the stock market, the brothers bet on silver. They started buying in 1973 at $2-3 per ounce, increasing their position over the next year through physically delivered futures and borrowed capital.

The Hunts accumulated around 8% of the world's silver reserves by early 1975 and stored most of it in Switzerland. The silver market reached its climax in 1979 with the brothers' position at 195 million ounces, squeezing short sellers out of the market as the metal's price soared from $9 to $35 per ounce.

The COMEX exchange capped the maximum position size for silver futures on January 7, 1980, and banned new purchases a week later. The outcome was inevitable: every seller remaining in the market would face a significant loss. In one day, silver fell from $50 to $34 per ounce.