For Walter Hoving, it was always about the highest quality. The son of Swedish immigrants, he managed the fortunes of luxury jeweler Tiffany & Co. from 1955 to 1980. Strict rules applied during his time in office: Silver-plated jewelry did not enter his shop windows; only full-value silver jewelry left the store doors. He went so far with this conviction that he turned down the request of then US President John F. Kennedy for some memorabilia made of Lucite, a transparent plastic substitute for silver. "We don't sell plastic," Hoving told the leader of the free world.

It must have been all the more painful for him when he was suddenly unable to get his hands on silver in 1979 and 1980. The market for the precious metal was completely overheated and prices skyrocketed. In desperation, Hoving placed an ad in the New York Times: "We think it's irresponsible for someone to hoard billions, even billions of dollars worth of silver, driving the price up so high that others have to pay artificially high prices for silver items."

Hoving's complaint was directed primarily at three men in faraway Texas: Nelson Bunker Hunt, Lamar Hunt and William Herbert Hunt. Within a few years, the three brothers had bought a large part of the silver available on the free market, according to some estimates up to two thirds of the stocks that were not in government hands. This corresponded to around 200 million ounces, approximately 5700 tons of silver and thus a value of around ten billion US dollars.

The silver rush of the hunts drove prices to unimagined heights, people melted down heirlooms to participate in the boom, burglary figures shot up as opportunistic criminals suddenly sought silverware. When the bubble burst on March 27, 1980 - later to become infamous as "Silver Thursday" - it was not only the speculators who got into trouble, but also one of Wall Street's largest investment banks, not to mention small investors, silver dealers and miners around the world. Banking syndicates - allegedly with the active assistance of the head of the central bank - joined forces to save the Hunts from bankruptcy, only for them to finally face the ruins of their empire a good eight years later.

The Hunts were an eccentric family

Bunker, Lamar and Herbert were three of the 15 children of oil tycoon H. L. Hunt. The senior was already a dazzling figure, who was considered the richest man in the world at the time of his death in 1974. H. L. Hunt had acquired his first oil production rights in exchange for poker winnings. He was considered a penny-pincher whose only vice was betting. He was particularly fond of sport and horse racing.

His second eldest son Bunker Hunt inherited many of these traits. He was also considered stingy, but at the same time had a passion for gambling, at times owning around 600 racehorses himself. And this passion for gambling drove him into a commodities market in the 1970s that he considered to be undervalued. Bunker had previously tried his hand at oil - just like his dad - and had also been successful in Libya, but had fallen victim to the military government's nationalization programme there. Now silver.

Silver everywhere: the Hunts were in a frenzy

Initially, he and his brothers bought 35 million ounces (992 tons) of silver, mainly via options. The markets reacted, but still within the bounds of what was known. It wasn't until 1979 that the Hunts finally rang in the next stage of their plan.

Observers were already speculating at the time that the Hunts were trying to "corn" the silver market with the help of purchases and options. In other words, they wanted to accumulate so much silver that those who had to service their options could no longer get their hands on the metal and could only redeem their brothers' options for cash. The trick was that the hunts were more or less free to determine the amount.

Bunker and Herbert always denied in public statements in the following years that this had been their plan. Nevertheless, they increased their holdings to almost 200 million ounces, while the price rose from just over six US dollars per ounce to almost 50 US dollars. If the Hunts had wanted to cornhole the market, they would definitely have been on course.

But then the commodity exchanges, of all places, got cold feet. In view of the madness on their trading floors, they limited the purchase of options, which dampened demand somewhat. At the same time, anyone who had even a few grams of silver in their cellar threw them onto the market, which in turn increased supply. From March 27, the price of silver fell sharply and by the end of March an ounce was worth just over ten US dollars.

The bubble bursts

In view of falling prices, Bache Halsey Stuart Shields, the Hunts' principal bank on Wall Street, demanded further collateral for the options it had sold to the brothers. The margin call amounted to around 100 million US dollars. However, Bunker and his brothers had made a large part of the silver purchases on credit and were now in danger of getting into financial difficulties.

In desperation, Bunker and Herbert Hunt turned up uninvited at a bankers' meeting in Florida and begged for more loans to pay off their debts (which allegedly amounted to 1.7 billion US dollars). The assembled financial experts were not impressed. However, late at night, Paul Volcker, then head of the Federal Reserve, showed up at the meeting. Some of the bankers probably interpreted his presence as meaning that the Fed wanted to save the Hunts. In fact, over the next few weeks, a rescue package was put together that secured the family's empire.

Unsurprisingly, all these events soon became a matter of political concern. Volcker's alleged interference in particular infuriated many, but Bunker and Herbert Hunt also soon had to appear in Washington and justify themselves before several congressional subcommittees. They did so with some chutzpah: the silver purchases were not about speculation, but about hedging against inflation, they argued. "A billion isn't what it used to be," was Bunker Hunt's wet-behind-the-ears explanation. His brother Herbert explained that it was not their own risky business practices, but the new stock market regulations that had brought the family into calamity.

The revenge of the Peruvians

And then? Nothing happened for a long time. The Hunts had averted the insolvency of their empire. They were a good deal poorer, but still multimillionaires. Small investors and silver companies sued, but these lawsuits led nowhere for years - until 1988, when a Peruvian silver trader, Minpeco, successfully sued the brothers in a court in New York. The dealer was awarded 63 million US dollars in damages because a jury considered it proven that the Hunts had attempted to take over the silver market.

Now the legal aftermath of Silver Thursday threatened to turn ugly for the Texans. Around 17,000 further lawsuits were still outstanding. Although they were seeking an appeal against the Minpeco ruling, they had to post 225 million US dollars bail for this alone.

At the end of 1988, the Hunts finally filed for personal bankruptcy. It was the premature end of their career as commodities speculators, as a year later they were banned from activities in this area by the stock exchange regulator. What their father had built up at the poker table, they had gambled away on the stock exchange.

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Sources:

Nation: He Has a Passion for Silver -- Printout -- TIME

Business: Bunker's Busted Silver Bubble -- Printout -- TIME

Big Bill for a Bullion Binge -- Printout -- TIME

PERSONAL FINANCE: Billionaire Bankrupts - TIME

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