The Hunts Are on the Hunt

And believe their clouds have silver linings

Nelson Bunker Hunt is lying low these days, which is not easy for the 275 Ib. Croesus, whose silver market setback last month triggered Wall Street's worst panic in nearly two decades. Hunt had tried to corner silver and been badly squeezed, when prices plummeted from $21.50 per oz. to $10.20 in less than four days. Early last week Hunt was tucking into a steak dinner in the Rib Room of London's Carlton Tower hotel when a Merrill Lynch customer's man seated near by spotted him. After Hunt had returned to his room, the eager stockbroker called him on the house phone and offered his firm's help. The now bashful Texas billionaire slammed down the phone and the next morning decamped, leaving behind a trail of unopened telexes.

Hunt's paper loss of nearly $1 billion in the silver markets two weeks ago may have been the first robin that heralds the coming recession. At least that is what some shell-shocked silver traders were saying even as the market recovered last week to close at $14.65 per oz., up over $4 for the week, but a far cry from its January high of $50.35. Says Thomas Herzig of P.R. Herzig, a Wall Street metals broker: "The play on the silver market was the beginning of deflation. Hunt's situation was not an isolated thing. Silver isn't the only commodity going down; so are platinum, copper and gold. This is part of a general collapse."

Whether hiding out in London or in Boca Raton, Fla., where he was reported to have dropped in on a weekend bankers' convention, Hunt was busy tidying up business deals. The silver baron woke up last Monday morning with IOUs scattered all over Wall Street. Chief among them: $33 million to Bache Halsey Stuart Shields; $10 million to Paine Webber and $4 million to St. Louis Broker A.G. Edwards. The biggest debt was owed to Engelhard Minerals and Chemical Co. Hunt had contracts to buy 19 million oz. of silver from the firm at $35 per oz. Fulfilling that agreement would have meant paying $665 million for silver worth only $270 million in the market that day. Following a feverish negotiation, the Hunts were finally let out of their commitment in return for giving Engelhard 8.5 million oz. of silver worth $121 million, as well as oil and gas drilling rights valued at $300 to $750 million in Canada's Beaufort Sea.

While Hunt was paying off some of his debts, Government officials were beginning to investigate how he came to have, or whether he should have been allowed to have, such a dominant position in the silver market. In Washington, Benjamin S. Rosenthal, chairman of the House Subcommittee on Commerce, Consumer and Monetary Affairs, began hearings on the silver collapse and its effects on other financial markets. The Commodity Futures Trading Commission, which has earned a reputation for being the Keystone Kops of federal regulators, came under heavy criticism for doing little to restrain silver speculation before the market's collapse. On a tape of a CFTC meeting played at last week's hearing, Commissioner David G. Gartner blithely queried: "Do you think there's any possibility the Hunts are just having fun, just horsing around? Like playing Monopoly like you and I might do, or nickel-and-dime poker?"

Securities and Exchange Commission Chairman Harold Williams told the Rosenthal subcommittee that the SEC was investigating the relationship between the Hunt family and Bache Group Inc. Bunker Hunt and his brother own 6.5% of Bache, and did much of their trading through the firm. The brothers, for example, failed to disclose to the SEC, as required by law, that they owned more than 5% of a publicly traded company.

Despite their vicissitudes, the Hunts still maintain an invincible belief in the value of silver as an investment. Because of new regulation over commodity exchanges in the U.S., the brothers have now moved much of their operations to the London silver market. One day last week the price of the metal on the London Metal Exchange shot up $3 per oz. amid rumors that Bunker was back in town. -

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