The late Lamar Hunt was best known as the owner of the NFL’s Kansas City Chiefs, but the Texas-born tycoon and his brothers, Nelson and Herbert, almost lost their fortunes in a bid to corner the world’s silver market.
The ill-fated endeavor began in the 1970s as the U.S. economy contended with rampant inflation amid the Vietnam War and the 1973 OPEC oil embargo. Given the unstable U.S. dollar and laws banning the acquisition of gold, the Hunt brothers began buying up massive quantities of silver, relying on loans and borrowed money to fund the purchases.
By 1979, the Hunt brothers owned up to two-thirds of the world’s private supply of silver, according to Priceonomics. A worldwide shortage of the precious metal drove a sharp spike in prices. Nelson and Herbert Hunt, along with Lamar Hunt, who held a smaller silver position, earned hundreds of millions of dollars in on-paper profit.
However, the bubble burst following changes in early 1980 by federal commodities regulators, which limited the use of borrowed money to purchase silver. Two months later, the price of silver collapsed, falling to $10.80 from a peak of $50.35 per ounce, when the Hunt family failed to complete a $100 million margin call, or request for deposit to cover losses from a key lender, according to the New York Times.
The collapse, known as “Silver Thursday,” roiled U.S exchanges and sapped the Hunt family’s fortune. The family’s silver positions lost more than $1 billion, according to some estimates, and drew more scrutiny from regulators.
In 1988, a federal civil court determined that the Hunt brothers had participated in a racketeering scheme to corner the silver market and ordered them to pay $130 million in damages to Minpeco S.A., a commodities firm owned by the Peruvian government.
Throughout the trial, the brothers maintained that their silver acquisitions were not an attempt at market manipulation, but rather a hedge against the struggling U.S. dollar. The Hunts did not face any criminal charges.
Nelson and Herbert Hunt were found guilty on an array of charges, including antitrust violations and participation in a racketeering scheme to corner the silver market. The court found that Lamar Hunt had not committed racketeering but was liable on other charges.
In September 1988, following major losses in their silver and oil holdings, the Hunt brothers filed for Chapter 11 bankruptcy protection.
The silver scheme became a footnote in Lamar Hunt’s storied career in professional sports. The longtime Chiefs owner played a crucial role in the NFL’s development as a major sports league and was credited with coining the phrase “Super Bowl.” He was also an original investor in Major League Soccer.
When Lamar Hunt died in 2006, his family, including son Clark Hunt, assumed ownership and operational control of the Chiefs.
The Hunt family will be in attendance on Sunday when the Chiefs will return to the Super Bowl for the first time in five decades.