Bunker - Part One
Don Stott
The saga of the Hunt Brothers, or at least two of the 15 kids by several marriages and liaisons of the old man, H.L Hunt, of necessity must begin with the father. H.L. Hunt was born in Illinois, and left home at age 16. He did a lot of things, such as mule-skinner, logger, and farm worker. He seemed to be a gifted card player. He always played and gambled with cards. Hearing of the El Dorado oil strike in Arkansas, he moved to Lake Village, where he began playing and gambling again. He decided to take a crack at the oil business, and his first well was a success. A friend gave H.L. a tip about a new field in East Texas. He struck it rich, and became the largest independent producer to that time. He eventually moved to Dallas, where he stayed.
H.L. Hunt began his marital career in a normal way, by marrying Lyda Bunker. Bunker Hunt was one offspring of that marriage, being born Feb 22, 1926. H.L. seemed to have a love for women and sex, because while married to Lyda, he also consorted with, and produced children from Frania Tye, and Ruth Ray. The children by these other women were no accidents. H.L. actually believed he was such a genius, that he owed it to the world to fill it with as many of his genes as possible. Lyda died, and he then married Ruth, who gave him 4 children.
One of Bunker's brothers was Hassie, who looked exactly like his old man, and became the apple of his eye, leaving Bunker to helplessly compete for his father's love and attention. Hassie was a millionaire by age 21, thanks to his "inherited" ability to spot oil, but suffered a mental breakdown. After numerous treatments by experts from one coast to the other, Hassie had a prefrontal lobotomy performed on him, which left him an invalid. The old man then shifted his attention to Bunker's younger brothers Herbert and Lamar. Bunker became the object of H.L.'s anger and frustration, belittling, ignoring, and criticizing Bunker without end. Bunker got a job at Hunt Oil, but the old man never let him forget that he considered him a stupid ignoramus.
Bunker got fat, probably because of the old man's treatment, dropped out of college, and decided that he was a natural at discovering untapped oil fields, which of course had best be left to trained geologists. He drilled $11 million worth of dry holes. The old man was not impressed, and said that he could find more oil with a road map, than Bunker could with a platoon of fancy geologists. Bunker didn't give up. $250 million worth of dry holes later, he hit it big…in Libya. The Sarir Field held an estimated 11 - 13 million barrels of oil, and half of it belonged to Bunker. The other half belonged to British Petroleum, but his half was worth a cool $5 billion, or more than twice the old man's entire fortune. Bunker became, overnight, the world's richest private individual. But he was still broke, due to the debts he had encountered with all the dry holes, plus there were no pipelines to carry the Libyan oil. Bunker borrowed from his Dad to stay afloat for a bit longer.
Bunker Hunt, is in no way like his father. No secret families, one wife of many decades, plus four children and many grandchildren. Bunker loves food, and has weighed in at close to 800 pounds it is said. When I met him back in 1980, he wasn't that heavy, but between his sloppiness, cheap clothes, and overweight, he looked like he might have been almost homeless. Nevertheless, Bunker Hunt is a truly fine, Christian man, who has spent his money on hundreds of worthy causes, and besides, like, me, he loves ice cream! Bunker became a board member of the John Birch Society, it is said, contributing $250,000 a year to that outfit. He has a herd of racing horses, and is quick with figures, but rarely gives to politicians.
Back in 1970, Bunker became obsessed with the future of the paper dollar, which he decided wasn't too good. A commodities broker named Alvin Brodsky was visiting, and as he looked around the kitchen, where they were all seated, he asked Bunker, pointing to the table, utensils, and food, if he thought he could buy them for the same price a year later. "No," was the answer, and Brodsky then said, "You should consider silver." Bunker's Libyan oil venture was paying him $30 million a year, tax free, and silver was about $1.50. Between the Vietnam War, American riots, Mid-East turmoil, and in Libya, a left wing, dictator, named Colonel Muammar el-Qaddafi was threatening to nationalize Bunker's holdings. Things looked a bit grim to Bunker. It was still illegal to own gold, which left silver for hard money enthusiasts to consider. Slowly at first, only five or ten thousand ounce lots (!), which were really small change to the Hunts.
Within three years, silver had doubled to $3 per ounce. The old man had started HLH Food Products some years before, and a scandal had erupted. Bunker and Herbert thought that one of the old man's closest friends was stealing him blind. They did a wiretap job, and hired detectives to prove it. They got caught, and in January of 1973, were indicted on a charge of obstruction of justice. Not a pleasant development. As if the indictment wasn't bad enough, in May of 1973, Col. Qaddafi indeed did nationalize Bunker's oil fields, announcing that he wanted to give America, a "slap in the face." Depressed at the world's conditions, Bunker decided to go really heavy in silver. Bunker, brother Herbert and step brother in law Randy Kreiling came together and bought in full bore, as was the Hunt custom. They bought, literally millions and millions of ounces of silver. Their first order was a December 1973 contract for 20 million ounces. By early 1974, the Hunts had accumulated contracts for 55 million ounces of silver, or from seven to nine percent of the estimated total world supply. They had more silver than anyone on earth, except possibly a few governments or possibly the exchanges themselves.
Before we go much further, please note that the Hunts had 55 million ounces of silver UNDER CONTRACT, and they intended to take delivery of it, as anyone of you readers who have contracts should do. Why? Because the exchanges have but a fraction of the physical silver they have under contract. While the Hunts had to put up $160,000 million to take delivery, they had it. But the exchanges didn't have much more than that. If everyone today took delivery of their silver contracts, where would the exchanges get it? They don't have but perhaps half of it in physical, or maybe even less. Would they offer dollars as a replacement, due to a lack of physical? Would they simply fold and leave everyone out in the cold?
It's always wise to get in before it begins to rain, not after one gets wet. If it looks like rain, the clouds are heavy and dark, one could reasonably expect to get wet if one stayed outside. If the fact that the Comex has but a miserly supply of physical to meet their obligations. Shouldn't everyone want to take delivery? Isn't that similar to seeing dark clouds and hearing thunder off in the distance? Isn't remaining in contracts rather than taking physical delivery, similar to storing surplus assets in paper dollars, rather than physical gold and silver? Of what value is a silver contract, if it begins to rain physical delivery requests, and there isn't any? Paper, paper, paper, and of what value is it if there's nothing in back of it?
Of more than casual circumstances to be dealt with, was, in Hunt's case, where in the world would one store 55 million ounces of silver? That should pose little or no problem for small time people like you or I, but in the Hunt's case, it was problematical. First of all, if they took delivery in their state of Texas, they would be liable for a 4 3/4% tax, and they certainly didn't want to have that assessed on them. They decided to store it in Switzerland. Simple? Not really, but it was pretty comical, they way they did it. H.L's second family, of which Kreiling was part of, lived on a 2500 acre ranch east of Dallas. It was called the "Circle K." Kreiling recruited a dozen of the Circle C cowboys, and had a shooting match. The winners received a special assignment, and that was to ride shotgun on 40 million ounces of silver destined for Switzerland. Fifteen million ounces would remain in the US in the exchange warehouses in Chicago and New Jersey.
Guns in hand, they flew to New York, where three chartered 707's waited for them. The 707's had tape over their insignia, and only the "N" numbers showed. Can't be too careful. It took three big jets to haul 40 million ounces of silver. In the dead of night, a convoy or armored trucks appeared with the silver, and it was loaded onto the 707's. Upon arrival at Zurich, another group of armored trucks met the plane, and off-loaded the silver…under the watchful eyes of the Circle K cowboys, of course. But there was too much silver for the Zurich bank vaults, and some of it was stored in Swiss warehouse. Cost of the movement? $200,000. Storage fees? Half Cent per ounce per month. More next week. Protect yourself.
March 17, 2005
Don Stott has been a precious metals broker since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com
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