Hunts Deny Manipulating Silver Prices : Attorney Blames Extreme World Events for Rise, Crash in 1980

Attorneys for the Hunt brothers of Dallas said Monday that the price of silver skyrocketed in 1980 in reaction to extreme world events and not because the Hunts were buying millions of ounces of silver.

The government claims that Nelson Bunker Hunt, William Herbert Hunt and other big money traders made rapid and concerted silver purchases to manipulate world markets, which caused thousands of investors to lose billions of dollars.

The Hunts, however, said the disruption in the silver market was caused by the Soviet military movement into Afghanistan, the overthrow of the shah of Iran, the Organization of Petroleum Exporting Countries’ raising the price of oil and double-digit U.S. interest rates.

“We will establish that the culprits for the rise in price of silver in 1979 and 1980 are not represented in this courtroom,” said Hunt attorney Paul Curran. “It is, I submit, patently implausible for any individual or group to have manipulated a worldwide, actively traded commodity for over six months.”

The statements were the first time the Hunts have disclosed their defense in the case, which has been investigated by the Commodity Futures Trading Commission for more than five years.

Wanted Secret Hearings

The regulatory hearing to determine whether the Hunt brothers illegally manipulated the world silver market began with an order that the proceedings be open to the public.

Administrative Law Judge Arthur Shipe quickly denied a motion by the Hunts’ attorneys to keep the hearings secret, issue a gag order on those involved and seal the record to protect their right to a fair hearing.

In his opening statement, Stephen Meyer, lead attorney for the federal agency, sketched a history of allegedly deceitful, concerted purchases of silver by the Hunts and several major traders that amounted to an illegal manipulation of the silver market.

Meyer said the Hunt brothers sought out and recruited two wealthy Saudi Arabian sheiks, Ali bin Mussalam and Mohammed Aboud Al-Amoudi and Naji Robert Nahas of Brazil, to join in their scheme to buy out the world’s silver.

“I don’t think you need a Nobel Prize in economics to know that if you buy up one-half of the world’s silver, the price is going to go up,” Meyer said.

The Hunts and their colleagues owned silver bullion or futures representing more than 300 million ounces at the height of their buying binge in December, 1980, Meyer said. The Hunts alone owned one-third of the world supply of silver bullion, he said.

He said the Hunts sought to cover up their plan, during which silver prices climbed from $16 per ounce to a high of more than $50 during a six-month period from September, 1979, to the crash, dubbed Silver Thursday, on March 27, 1980.

Face Heavy Damages

The 1980 silver crash resulted in at least a $1.3 billion loss for Bunker Hunt and his brother, William Herbert Hunt, who had bought 59 million ounces of silver.

The Hunts refinanced their loss through $1.1 billion in loans, after mortgaging their Placid Oil and Penrod Drilling companies, and the brothers sued their 23 bank lenders in a dispute about $1.5 billion in loans.

The CFTC hearing is one of several legal proceedings probing the March, 1980, collapse of the silver market.