The speculative commodity boom that might have been


The commodity boom that was expected by many in this period of elevated inflation has not happened. While inflation soared, reaching 10 percent annually in some countries, the prices of commodities that are often used by speculators to make quick profits have not kept pace. For example, gold and silver reached all-time highs during high inflation in the late 1970s, but not yet this time after adjustment for inflation.

What happened to commodity price speculation in this cycle?

During the inflation of the 1970s, some speculators had a lot of fun and some big profits (and losses) trading price swings in gold, silver, copper, nickel and oil.


Source: Bloomberg XAU gold and XAG silver

Three famous speculators were Nelson Bunker Hunt and his brothers Lamar and Herbert — who tried to corner the silver market using futures contracts in the late 1970s. Around the time that gold hit $850 per ounce (1980 dollars), the futures price for silver reached $50 per ounce. The Hunt brothers became billionaires.


Bunker and Lamar Hunt - Source: Denverr Post/Getty Images

They were sons of famous oilman H.L. Hunt, one of the richest men in the world. H.L. Hunt had three families, two of which were secret. His three wives had a total of 14 children. The two brothers came from the first of the three families.

Bunker Hunt first tried oil and became the richest person in the world in the 1960s with oil concessions in Libya, but Colonel Qaddafi nationalized those properties in 1973.

During the inflation of the 1970s Bunker and his brother started to buy silver and silver futures contracts in large amounts. By the late 1970s the silver price reached $50 ($184 in 2024 dollars) from $6 two years earlier. The brothers bought more and more silver, using bank loans collateralized by inherited oil properties. According to an SEC investigation the Hunt brothers had accumulated control over one-third to two-thirds of all silver supply.

But on March 27, 1980 they missed a margin call of $100 million and silver collapsed. Eventually the brothers declared personal and corporate bankruptcy. Because H. L. Hunt had created trusts for his offspring the brothers and their siblings were able to live comfortably. Herbert is still alive at 94 years old.

Many speculators followed the Hunt brothers, riding the boom and bust cycle.

Today we have seen a surge in inflation and gold and silver prices have followed, reaching about $2050 and $22 per ounce respectively. But we have not seen rampant speculation like the early 1980s. The 1980 gold price of $850 per ounce would be $3,200 today.

It seems odd that speculation in precious metals is muted this time, because there has been an inflation surge and a large expansion of central bank-driven money. But more popular assets like real estate, AI, tech stocks and bitcoin have soaked up dollars that might have gone into speculating on gold and silver in another era.

Or maybe rampant speculation in gold and silver is yet to come.


Hilliard MacBeth



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