Proof the Hunt Brothers Didn’t Cause Silver’s 1970s Spike

By Jeff Clark, Senior Analyst, – February 21, 2019

An investor told me he only buys gold. No silver. His reason?

“Silver spiked in 1980 only because the Hunt Brothers were trying to corner it.”

It’s true the Hunt Brothers bought a lot of silver back then. And it’s hard to imagine their involvement didn’t impact the price. If you recall, silver rose a whopping 3,105% from its 1970 low to 1980 high.

But were the Hunt Brothers the primary reason for such a dramatic spike in price? This is an important topic, because if silver’s biggest modern-day mania was the result of a one-off event, then maybe we shouldn’t expect it to rise like that again.

In my opinion, the investor is wrong. And there are three core reasons why.

But first…

Just How Much Silver Are We Talking About?

It’s true the Hunt Brothers were literally hoarding silver (along with their Saudi business partners), both physical metal and futures contracts. At their peak, they controlled about 250 million ounces of silver – 100 million in physical and 150 million in futures contracts. That’s a lot, and most reports conclude this is why silver skyrocketed in the 1970s.

How much of the silver market did they control? Several reports estimate the Hunt’s stash equaled 20% of silver supply. One account claimed it was one-third of global supply. Really?

According to the 2018 Silver Yearbook from CPM Group, there was roughly 2.8 billion ounces of above-ground investable silver in 1980. So the Hunts controlled about 8.9% of investable silver at their peak.

That figure, however, excludes rare coins and all silver used in jewelry, silverware, decorative items, etc. – throw all that in and we’re probably looking at something like 12 billion ounces of total above ground stock. If that figure is correct, then the Hunts controlled about 2% of total world supply at the time.

In either case it’s still a lot, to be sure, but it hardly matches how most mainstream articles portray the extent of their holdings.

Why did the Hunt brothers want so much silver? They distrusted the US dollar, and were worried about inflation. As Mike Maloney puts it, “I believe the Hunt brothers were more concerned about long-term survival and preservation of their family’s wealth, than with short-term speculative profits. In an interview with Barron’s magazine, Bunker Hunt kept quiet about his silver investments, but made no secret of his distaste for the dollar: ‘Just about anything you buy, rather than paper, is better… if you don’t like gold, use silver, or diamonds, or copper, but something. Any damn fool can run a printing press.’”

Also, you’ll recall that until 1975, it was illegal for US citizens to buy physical gold. So the Hunt Brothers focused on silver, because they believed it would serve as a safe haven just like gold, against inflation and a weak US dollar.

Anyway, on to the three reasons the investor is wrong. See if you agree