The 1983 Hollywood comedy, Trading Places, offered many laymen their first glimpse at the hustle-and-bustle world of commodities trading. The film features a pair of imperious billionaire brothers, the Dukes, who attempt to add to their fortune by illegally manipulating the price of orange juice in the futures market.
The protagonists, played by Dan Akroyd and Eddie Murphy, foil the brothers’ plot and leave the Dukes disgraced and penniless. But although the movie was a work of fiction, the Duke characters were in fact based on a pair of real-life brothers – Bunker and Herbert Hunt – and their story is truly stranger than fiction.
H.L. Hunt and Heirs
The Hunt Brothers’ story begins with their father, H.L. Hunt, who, when he died in 1974, was the richest man in America. But despite his sons’ affinity for the precious metal, H.L. Hunt was not born with a silver spoon in his mouth. To the contrary, H.L. left home at sixteen and worked as a dishwasher, a mule-team driver, a logger, a farmhand, and a construction worker, before finally finding his true calling – poker.
By age thirty-six, poker had made H.L. Hunt a small fortune, which he rolled into his next investment – Florida real estate. After profiting from that boom, Hunt took the proceeds and began drilling for oil. This is how he became the world’s richest man – always taking bigger and bolder risks, and routinely coming out on top – at least in his business life. On the personal front, H.L. had a little more than he could handle.
He had one wife in Texas and another in Florida – at the same time, and separate families in both states. When his first wife died, he took a third wife with whom he had already had four children. All in all, he had fifteen sons and daughters, many of who went on to become moguls in their own right. Bunker and Herbert were chief among them.
From Failure to Extreme Wealth
Nelson Bunker Hunt (who went by “Bunker”) was born in 1926, the second-eldest son of H.L. and his first wife, Lyda. Their eldest son, Hassie, had a mental condition that ultimately led to a full-frontal lobotomy, but prior to that, Hassie had struck out on his own in the oil business, amassing a considerable fortune before his twenty-fifth birthday.
With Hassie incapacitated, Bunker was the heir apparent to his father’s fortune. He owned and operated Penrod Drilling Company with his brothers William Herbert (who, like his brother Nelson Bunker, also went by his middle name) and Lamar, and Placid Oil Company with five of his siblings. But Bunker would gain the most notoriety – and wealth – for his individual efforts in business.
Initially, Bunker’s own ventures were not very successful. He lost $11 million drilling in dry holes in Pakistan, and after leasing two tracts in Libya, he eventually had to sell a 50% stake in one of them in order to meet cash-flow demands. By twist of fate, that tract held the largest oilfield yet discovered in Africa, and in 1961, Bunker surpassed his own father to become the richest man in the world (excluding monarchs and despots).
Bunker’s Attraction to Silver
In what is widely characterized as one of the most draconian acts in the history of the United States government, President Franklin Delano Roosevelt signed Executive Order 6102, “The Gold Confiscation Act,” on April 5, 1933. For the next forty-one years, it was illegal for U.S. citizens to “hoard” gold. With gold, the traditional store of wealth, out of the question, Bunker Hunt decided to hold his oil profits in silver.
The early 1970s were a prosperous time for Bunker. His Libyan oil leases were producing $30 million a year, even as oil was priced at just $3 per barrel. But nevertheless, Bunker did not like what he saw when he surveyed the global economic landscape. Years of post-New Deal Keynesianism was starting to catch up with the U.S., and inflation was gaining steam. The war in Vietnam was unpopular, and people were rioting in the streets.
Confidence in the federal government was at an all-time low, and the Middle East – where Bunker held so much of his wealth – was extremely volatile.
Silver was just $1.50 an ounce when Bunker and his brother Herbert began buying it in 1970. Over the course of the next three years, the brothers purchased approximately 200,000 ounces of the precious metal, and saw it double in price to $3 per ounce.
Then in 1973, Moammar al-Qaddafi nationalized Bunker’s oil fields and demanded a 51% royalty. Understandably, Bunker was furious. He was incensed that the State Department didn’t do more to defend his property, and he was also angry at the major U.S. oil companies for not taking a tougher stand against Qaddafi.
He blamed his long-time rivals, the Rockefellers, whom he considered to be pseudo-socialists, for the loss of his Libyan oil filed, and Bunker firmly believed that the U.S. was on the road to serfdom. As a hedge against what he saw as the inevitable, Bunker ramped up his silver buying.