Two Texas billionaires tried to buy all the silver on Earth in 1979.
Nelson and William Hunt spent $1 billion buying 100 million ounces.
That's one-third of the world's entire supply.
Silver went from $6 to $50 per ounce in 12 months.
Then the government changed the rules overnight and they lost everything.
The Hunt brothers inherited billions from oil.
1973: Inflation was running at 11%.
Nelson Hunt: "We don't trust paper money. We're buying hard assets."
They started with silver. Quietly.
Futures contracts. Physical bars. Coins.
By 1974 they owned 55 million ounces.
Most traders settle futures in cash.
The Hunts demanded physical delivery.
Hired armed guards. Rented vaults in New York, Chicago, Zurich, London.
They weren't trading silver.
They were removing it from circulation.
The available supply started shrinking.
Silver price 1978: $6 per ounce.
Hunt brothers kept buying.
January 1979: $11
September 1979: $20
December 1979: $35
January 17, 1980: $50.05
The Hunts' position was worth $4.5 billion.
They'd made $3.5 billion in paper profits in 18 months.
Tiffany & Co. took out a full-page ad in the New York Times in January 1980:
"We think it is unconscionable for anyone to hoard several billion, yes billion, dollars worth of silver."
Jewelers couldn't get supply.
Industrial users couldn't get supply.
The Hunts owned it all.
But the Hunts didn't sell at $50.
They borrowed MORE money to buy MORE silver.
Used their existing silver position as collateral.
Margin debt: $1.5 billion.
If silver dropped, they'd face margin calls.
Their bet: Silver only goes up when you own all of it.
January 21, 1980: COMEX changed the rules.
New regulation: "Silver Rule 7."
Traders could ONLY liquidate existing positions.
No new buying allowed.
The only buyers in the market were the Hunts.
The exchange made it illegal for them to buy more.
Silver collapsed.
January 21: $50
February: $35
March: $20
March 27, 1980 - "Silver Thursday": $10.80
The Hunts couldn't meet margin calls.
They owed their brokers $1.7 billion in ONE day.
They didn't have it.
If the Hunts defaulted, it would take down multiple brokerages.
Maybe the entire commodities system.
March 27: Federal Reserve organized emergency bailout.
Consortium of banks loaned the Hunts $1.1 billion.
Too big to fail.
Paul Volcker, Fed Chairman: "The situation is under control."
The aftermath:
The Hunts lost $4.5 billion in paper wealth.
Declared bankruptcy in 1988.
Fined $134 million for market manipulation.
Lifetime ban from commodities trading.
If they'd sold at $50, they'd have walked away with $4.5 billion.
Instead they tried to corner the market.
When you're winning too big, the house changes the rules.
The Hunts forgot: The government writes the regulations. Not the billionaires.