"Mr. Huang, these are the data from the Gold Department, Securities Department, and Foreign Exchange Department that show abnormal orders recently, especially the one-year bullish data for gold, which has clearly skyrocketed..."

In the office of the chairman of United Overseas Bank, Huang Yizong was looking at the report in his hand and listening to the report of the deputy general manager. From time to time, he frowned and took a pen to mark the time periods, amounts and transaction data with obvious fluctuations.

Next to it were several specially marked custom contracts for bullish gold and silver, each worth more than $5 million.

Obviously, this was an organized collective bullish financial action. The partners were unfamiliar, but he could tell who they were at a glance.

The seats are all from securities companies under United Overseas Bank, and have just been allocated to Qingyun Group.

"Please make an appointment with Mr. Li from Qingyun. I need a private meeting time of half an hour before the practice banquet."

Huang Yizong hung up the phone and asked the former vice president, "What are the specific statistics?"

“In the past three days, a total of $1.7 million was invested, of which $4000 million was used to buy gold six-month and one-year bullish options, and $7000 million was used to buy silver bullish options.

The remaining 6000 million is used to purchase CDS credit default swap contracts for Greece, Ireland, Italy and Ireland.

The bond portfolio includes short positions on the sovereign debt, banks, real estate and other related companies of the above countries. They hope that the bank will invest in the US CDS index to hide their identities.

Huang Yizong frowned, "He is betting on the credit default risk of the five PIIGS countries?"

The term "PIIGS" was not invented by him, but came from the United States in February this year. It means that the debt risks of these five countries remain high and they are at risk of bankruptcy.

Buying a large number of CDS means that investors believe that a default will occur, but it is better than shorting the euro directly because it does not require direct intervention in the European market and will not be blacklisted.

And there is no need to obtain the target's consent. Financial institutions in any country in the world can sell them at will. Theoretically, there is no upper limit. As long as someone is willing to pay the premium, they can buy them without restriction.

For example, before the subprime mortgage crisis broke out, there were tens of trillions of dollars of CDS contracts in the U.S. financial market. The prototype of the big short was to make billions of dollars by shorting such contracts.

Note that this refers to the profits he personally earned. The hedge fund he controlled made profits of over 10 billion U.S. dollars during the subprime mortgage crisis.

It is equivalent to buying insurance and paying a premium to the financial institution every year. If the country/company/individual marked by the CDS does not default, the premium will be wasted.

If a default occurs, the institution that sells the policy will be liable for compensation based on the actual face value.

The $60 million CDS contract for purchasing debt defaults from the five PIIGS countries could normally generate a market size of tens of billions of dollars, but the debt problem of the five PIIGS countries is becoming increasingly serious.

如希拉国债购买基点已经提升至300-400点，也就是账面保费高达3-4%（同期东大约为0.6%），买1亿每年需要缴纳300-400万美元。

Li Zehua did not just stop there. He also placed orders with HSBC, Standard Chartered and other banks to purchase this type of financial product because it is linked to the price of gold.

As I recall, gold prices rose to nearly $11 per ounce at the end of 2000. If the price rises by 2/3 based on the current price, the probability of credit default in the five PIIGS countries will at least double or triple.

Under normal circumstances, investing in CDs is a bet between financial institutions and individuals/institutions, but the beauty of it is that America has made it a platform, and welcomes investors from all over the world to participate in index trading through the platform.

Li Zehua would certainly not miss such a great opportunity. He did not have to hold the bonds personally, and he could reduce the risk through the bank and pay some insignificant handling fees.

The key is that it comes with leverage. After controlling the risks and buying positions, the bank will naturally help him solve the subsequent issues.

Huang Yizong was undoubtedly lucky, because he met a man who traveled from the future and was extremely daring.

When he met Li Zehua with all kinds of questions, the other party offered him a bigger cooperation.

"Due to UOB, DBS and OCBC Bank contacting global mainstream banks such as Morgan, Citigroup, Bank of America, HSBC, Deutsche Bank and other global banks to sign 6-18 month price anchoring contracts with gold production companies?"

Huang Yizong was shocked by the other party's generosity.

Li Zehua spread his hands and said, "I pay the premium, and I am sure that the price of gold will rise rapidly in the next 6-18 months, but I don't have enough funds, so I need the help of financial institutions.

After completing this contract, the insurance premium and handling fee income will be the bank's profit. Isn't that fair?"

This was not something he thought up. After all, he was not a professional in finance. At best, he knew how to make money, but he didn't understand which one was more profitable.

But we have a group of most professional financial practitioners around us, such as the financial investment team of OCBC Bank and the financial analysts of Temasek Holdings. They are the most professional.

When he heard that Qingyun Investment had been making frequent moves recently and frequently invested in the gold and silver futures markets, he immediately came to us.

Li Zehua expressed optimism about the future of gold and silver.

They thoughtfully provided various professional investment portfolios for reference.

Li Zehua also said that he had limited funds on hand and believed that the price of gold futures would fluctuate violently in the near future, and even be bearish in the short term to $1100 per ounce.

With limited funds, one cannot afford the risks brought by drastic fluctuations, so one naturally has to make conservative investments and be ready to switch to short positions at any time.

The bank's financial experts confidently said, no problem, we are the best at hedging risks, you just need to go long or short in the futures market according to your own judgment.

But the long-term bullish principle hasn’t changed, right?
As long as you stick to your vision and are willing to pay a small fee, they can provide the corresponding contract.

Based on the current market production cost of $1000 per ounce of gold and the futures price of $1200, there is a price difference of $200.

To put it simply, the bank will come forward and bring in the gold producers, and the three parties will sign an over-the-counter futures treaty to lock in the price in advance, agreeing to purchase in advance at a price within a reasonable range.

For example, if the current price is 1200, then we can negotiate at 1100-1300 US dollars. Within this price range, as long as the gold producer is willing to accept it, the contract is concluded.

The bank pays a deposit and transfers it to the producer's account. The producer then works hard to mine and, at the end of the contract, delivers the corresponding amount of spot gold to the buyer at the agreed price.

For example, if the agreed price is 1200, and one and a half years later the gold price rises to 2000, that has nothing to do with the manufacturer because it has already received the money in advance and if it fails to deliver the goods it will have to bear a huge amount of compensation for breach of contract.

Of course, the manufacturer/bank can also find a third party to trade with based on the current price, and then transfer the difference to the buyer after deducting the handling fee.

The buyer only needs to pay the margin of the price difference. For example, if the spot price is 1200, and the purchase price within the specified period is agreed with the manufacturer at US$1300 per ounce, the difference is US$100.

The bank provides 5-10 times leverage, so Li Zehua only needs to put up 5-10 US dollars to hold an ounce of gold option contract.

For example, if the current price is 1200 and the price agreed in the contract is also 1200, then theoretically, Li Zehua can buy all the gold spot that the manufacturer is willing to sell without paying a penny.

Because the market will buy the order, which is equivalent to buying at 1200 and selling at 1200, with only a negligible loss in transaction fees.

Once the market price drops, the margin ratio will increase. In the worst case, the leverage will be cancelled or even 200% will be paid, because no one dares to guarantee the spot price of gold.

It will not fall below the mining price. This is not just a simple decision of supply and demand, but also includes a series of other more complex economic factors.

On the other hand, if there is a sustained upward trend, for example, the contract price is 1200 and the spot price is 1400, then not only is no deposit required, but the bank will also actively give him money to spend.

Because banks will also hedge in the market, the higher the price, the higher the profit.

Normally, Li Zehua would not agree to this price!
Because he knew that Sheila successfully obtained more than 1000 billion euros in aid from Europe in May, avoiding debt defaults in the short term and showing signs of market recovery.

Correspondingly, the gold price retreated sharply to around US$1100, and then fluctuated violently up and down until the five European pig countries began to collectively collapse, almost dragging Europe down.

The whole world has finally reached a consensus. After all this time, Hillary Clinton was just an appetizer. The five countries that account for 20% of Europe's total economic output are the big fish. Even if Europe tries to rescue them, it will be useless.

The future economic development prospects of these five countries were doomed to fail, and thus the European debt crisis broke out completely, and continued until the time when Li Zehua was reborn.

When a major world economy began to go bad, investors all over the world went crazy and rushed into the gold futures market with their eyes closed to buy stocks frantically just when the crisis reached its peak.

The gold futures price reached over $1900 per ounce.

So if we talk about option lock-in at the current price, he will definitely suffer a loss because the benchmark market price is $1200, which is $100 higher than the lowest price.

But the banks can’t wait any longer. They are drooling over the tiered premiums and handling fees. When they hear about such a good thing, how can they wait any longer for fear of missing out on the big fish? What if they regret it after this point?
Not everyone believes that the PIIGS countries will definitely default. As long as the European economy is stable, the major economies in the world will be fine, and gold will naturally not continue to rise. The current mainstream market view also tends to believe that the price of gold has peaked. After all, it is terrifying to rise from $800 to $1200 in just a few years. The storm of the financial crisis has gradually passed.

Economic recovery is the mainstream view. As a destination for safe-haven funds, gold will naturally begin to live a long life of decline.

For banks, it is a blessing to have a sucker willing to take over at this time!

Not to mention that Li Zehua holds most of the shares of Qingyun Group. If he can't afford to pay the compensation, he can hand over Qingyun Group to pay off the debt!

The three major funds and the three major banks in Lijiaopo are very jealous. If someone else comes, the sale price will at most be capped at a few hundred million US dollars, because they are worried that the investors will default midway and cannot afford to pay so much money.

But for Li Zehua, the more the better. Don't forget that in addition to the total amount of gold mined each year, there is also a large amount of gold inventory produced in the past. This stuff can be collected freely, and ten thousand tons is not too much.

If the stock price drops, Qingyun Group’s high-quality assets will be used to pay off debts.

rise?

Don’t be afraid, you can still make money.

If sold at $1900 per ounce or above as agreed in the contract.

They can get a maximum of 8% of the premium income and handling fees, which may not sound like much at first glance, but what if this number is magnified to a ton?

One ton is about 3.215 troy ounces. One troy ounce used for gold trading is 31.1035 grams. At $1900, that's about $6100 million per ton.

Then, based on a tiered handling fee premium of up to 8%, the bank takes possession of one ton of output and waits until that price is reached to sell it.

The net profit per ton was approximately $490 million.

If we increase this number to 100 tons or 1000 tons, the net profit will reach hundreds of millions or even billions of dollars.

That’s not all, because Li Zehua and other investors will also buy CDS bonds to hedge risks in case they cannot get enough spot goods at that time.

When the spot price of gold rises to 1900, the default risk of gold producers will skyrocket.

By then, it is possible that the basis point will rise to a terrifying 1500 to 2000 basis points, and a $ million insurance policy will be at that time.

If you want to buy it, you can!

First pay a purchase fee of 5000 million US dollars, and then pay more than 1500 million US dollars in insurance premiums every year. Just this back and forth, the bank is sure to make a profit!
This item alone brings in tens of billions or even hundreds of billions of revenue. Who can resist money?
Because the resources controlled by banks are completely different from those of ordinary people, in order to force gold producers not to default, they will even directly step in and use physical means to deal with those who do not follow the rules.

This is also the reason why Li Zehua wanted to bring together the world's mainstream banks. No matter how powerful you are, can you be more powerful than the top 20 banks in the world combined?
If you dare to breach the contract, you will not be afraid of making money but not having a life to spend it!
Of course, he didn't dare to make so much money alone. When the gold price rose to US$1400 per ounce in the early part of the year, he would come forward to buy a large number of CDS bonds from these banks.

The main goal is to share the benefits equally and make money together!
When the banks receive the bond premiums and calculate the revenue from forcing the gold producers to perform is higher than defaulting, they will stand on the side of Qingyun Group and force the producers to continue to perform...

Huang Yizong was very happy when he saw the contract, but after reading it carefully, he became a little unhappy.

"Mr. Li, your worries are totally unnecessary. UOB alone can buy dozens of tons of spot gold. If you can provide more collateral, it will be no problem for you to buy a hundred tons.

Spot trading, no need to worry about fulfillment at all.”

What this means is that there is no need to find so many outsiders at all, and there is no need to cooperate with more than 20 banks, and each bank will get a share. The temptation of dividing the original huge profits will not be there anymore.

Li Zehua laughed and said, "Mr. Huang, what's a few dozen tons of spot gold? If we want to play, let's play big, like eating up a thousand tons, how about that?"

Huang Yizong only felt a clang, as if his head was hit by a huge object. Even he had a trembling voice, "How much?"

"One thousand tons, based on today's market price of $1200, is equivalent to about $3860 million per ton, or $386 billion."

Li Zehua smiled and said, "If Mr. Huang can come up with so much money alone to implement this plan, then I have no objection. Let's sign the agreement now."

Weird.

He said in his heart: To dominate the gold futures market, you need to have the strength to do so. It is impossible to buy a thousand tons of gold spot. You can only lock in your share in advance through the futures market.

In this process, it is equivalent to telling all your competitors that there is a big player here who holds a thousand tons of gold options. If everyone continues to be bullish, most of the profits will be taken away by him.

Why not take a collective bearish view and eat it up first, then everyone can push it up together and make money, isn’t that great?

But if only 10 or 20 big players come together, that will be the mainstream of the market. Who would be so desperate as to openly go against the world's top 20 banks?
After Huang Yizong heard this, the expression on his face was amazing. After saying a bunch of nonsense, he finally compromised reluctantly.

"Is there no other possibility? Hey~ It's me, Meng Lang. A transaction of this level does require more people to participate and escort it.

It seems that UOB alone cannot meet Mr. Li's needs. Well, let's talk about this contract in detail."

This is the most painful time for a person, seeing the money there but not being able to get it.

On the other hand, Huang Yizong's incoherent speech also deeply irritated Li Zehua, a tycoon with hundreds of billions of assets, who behaved so inappropriately when faced with huge profits slipping away.

If we carry out this plan and really achieve a thousand tons, what will be the result?
Don't doubt the greed of financial institutions. Once they get access to this contract, they will try every means to force manufacturers to take more orders.

If they cannot mine it, they can buy inventory in the spot market. As long as it is profitable, they can even recycle gold jewelry at a high price, melt it into gold bars and sell it to Qingyun Group.

Anyway, there is a guaranteed purchase price there. If you can't afford it, you can use Qingyun Group to pay off the debt. It's just a small loss per ounce. You can lose all the shares of Qingyun Group first.

If Li Zehua were rich enough, the global gold production in 2010 would soar to tons in one go. As for the excess, central banks of various countries would be willing to liquidate their stocks.

Who dares to say that there is no gold in the vault?

The gold content of each ton of our ore is 100%, which is definitely a rich mine. Even if you ask all the mineral experts in the world to verify it, they will find that it has just been mined from the gold vault.

On the contrary, if the price of gold continues to rise, the profit on Qingyun Group's books will reach a terrifying figure. For example, by around 1900, the net profit per ton will be more than 2000 million US dollars.

One thousand tons means more than 200 billion US dollars. Even if this contract is implemented, the manufacturer will definitely falsify the production volume in order to lock in a larger share of stable profits.

For example, if a mine produces 10 tons per year, a timid one may report 30 tons, while a bold one may report 200 tons. Anyway, as long as he is sure that the price of gold will fall, he will dare to report the output. At worst, he can buy it from the market at that time.

Moreover, for options trading at this level, it is difficult for investors to reach the stage of physical delivery, and everyone completes book transactions in financial institutions.

Faced with huge profits of tens of billions of dollars, can Li Zehua still remain calm and composed?
He himself doesn't dare to guarantee it!

When that day really comes, if he is unwilling to give up his interests, does not go to the banks to buy a large number of default swap bonds, and does not let the banks get enough profits, then large-scale defaults are inevitable.

There is still a long way to go before we can actually get the profits on paper.

But how many people in this world can easily distribute huge profits of hundreds of billions of dollars?
Li Zehua was a little confused for a moment. Although he had a lot of assets under his name and more than nearly 60 billion US dollars in cash assets, he had more places to spend money.

He was willing to take this gamble for the future of the group. Perhaps it should not be called gambling. Knowing the chips in advance and being unable to cheat is called capital preservation investment, but the profit is a little bit higher.

It's impossible that the United States would change its national policy just for his mere 20 or 30 billion US dollars, right?
Even if Squid Capital is willing, Ou Meng will not agree. It means that they will invest more than one trillion euros to rescue the market in the next three years just because of the butterfly wings flapping of Qingyun Group.

Not going to save you?

And then watch helplessly as the five countries drag the whole of Europe into the water, and after tens of trillions of euros evaporate, end up in a mess?
What nonsense.

Therefore, as long as the United States wants to divert its own crisis and suppress its global competitors, the European debt crisis is bound to break out!
The price of gold will definitely rise. As long as you control the specific details of the contract terms, the penalty for breach of contract, and the guarantee for breach of contract, this is a transaction that is sure to make a profit.

Li Zehua gritted his teeth and said, "Let's do it." (End of this chapter)