"The leaders of twenty countries and regions have gathered here to establish the Silver Alliance. From this day forward..."
The news reported on TV made many people feel an inexplicable unease. This unease was not stemming from the rise of silver and the fall of gold.
The succession of precious tals is actually not a prolonged process in history.
Humanity occupies a relatively small span in the world tiline, yet in this limited scope, the succession of precious tals has exceeded over ten types.
The replacent of gold by silver, just like every previous revolution, won’t make people feel uneasy.
What truly makes people uneasy is a docunt read out by a reporter on TV; this Silver Alliance seems to intend to introduce a brand new "Silver Coin" as a circulating currency on top of their existing currencies.
This is what truly causes people to feel uneasy.
Gallier’s sudden demise happened just recently, and people seem to vaguely rember how those banknotes skyrocketed and then suddenly were only worth as much as they were in the scrap market, within no ti.
If the Silver Currency is born, it will cause a huge impact on the international market and also have a terrifying influence on international settlent.
Because within this range of twenty countries and regions, whether you are a citizen of Gafura or the Federation, whether you are strong or not, you must abide by the financial rules established by the Silver Alliance.
Perhaps one policy could make you one of the world’s wealthiest, and another could render ten years of your efforts obsolete!
Those doing business with these countries must hold Silver Currency, which also ans it will have a more widespread effect——
Existing currencies are essentially one-to-one, such as Federation Sol, no matter how many outside countries have already reserved Federation Sol as their foreign exchange reserve.
In isolated trades, whether using Federation Sol for settlent or not, it is a one-to-one matter.
But the Silver Currency will disrupt this rule, as people would discover that rely holding Silver Currency allows them to initiate trade and settlent with twenty countries and regions based on a stable exchange rate!
Its convenience will significantly affect more people, for instance, A and B are both doing business with the Silver Alliance, and they don’t even need to trade their goods with a specific independent country or region.
But due to the universality of Silver Currency, they might use Silver Currency for settlent during their trade.
Especially cooperation between exporting and importing countries will be promoted further due to the broader applicability of Silver Currency!
A sells goods to a Silver Alliance country, obtaining Silver Currency.
While B needs to import from the Silver Alliance and simultaneously export goods to A, such that A’s Silver Currency can flow into B’s hands and back into the Silver Alliance, forming a cycle.
As more people join this alliance, eventually the influence of the Silver Alliance and Silver Currency will surpass everything!
This is the reason behind people’s unease. Although most are not clearly aware, they instinctively feel this is not a good thing, but they may not know exactly where the problem lies. They just have this feeling.
The ergence of the Silver Alliance directly caused a plunge in gold; the exchange’s sensitivity to the global financial order was distinctly sharp. Massive amounts of gold were sold off, and silver began a new round of escalation.
"Mr. Lynch... recently, so clients have been asking us if we can operate with silver.", Li leaned on his gemstone cane standing in front of Lynch, his face showing a probing expression.
Many investors in the foundation and companies are interested in the current raging silver, but last ti Lynch vaguely hinted that it might not be so reliable, so Li has been hesitant to make a move.
However, he couldn’t deter too many people unable to see the future, so much so that soone complained about his inactivity at the board eting. Now eting Lynch, he wanted to discuss it with him.
Lynch ignored him, but Li was not annoyed, just stood there shouting.
During this, Li’s secretary ca in to serve coffee, looking at him sowhat sympathetically.
Li’s left leg was broken, missing the optimal ti for treatnt, it was permanently crippled.
Furthermore, prolonged standing would make the previously broken site begin to hurt, and increasingly painful.
At this mont, Li’s forehead was already covered with a fine layer of sweat, yet Lynch still did not have the intention of letting him sit or speak to him.
He stood aside, holding the cane forcefully, standing, waiting for Lynch.
Until the report about the Silver Alliance completely ended, Lynch finally sighed with relief.
He took out a cigarette, seemingly finding an opportunity to walk around. Li quickly hobbled over, took out a lighter to light it for Lynch.
Lynch looked at him, "You know, sotis I wonder, you’ve seen the darkest parts of Bupen, also stood on the rooftop seeing the most beautiful Bupen, why are you still so dumb?"
Li was a bit puzzled, showing a deanor of accepting instruction earnestly, "I don’t quite understand, Mr. Lynch."
Lynch shook his head, "Your mindset is off, that’s why you don’t understand."
"A question, between a regular stone and a piece of gold, which is worth more?"
Li hesitated for a mont, "Certainly the gold is worth more."
Lynch nodded, then asked, "Suppose the gold is worth ten thousand dollars, but soone is willing to pay twenty thousand dollars for the stone, which do you think is worth more?"
Li felt a bit confused. He pondered for a mont and tentatively asked in a low voice, "Is the stone more valuable?"
Lynch did not give him an answer. "Now, if soone else wants to buy this stone for thirty thousand, which do you think is more valuable?"
Li’s attitude was no longer as cautious as before. "The stone should be more valuable."
Lynch asked roughly the sa question again, "If soone else is willing to pay fifty thousand for the stone in your hand, which do you think is more valuable?"
"The stone!" This ti he answered swiftly and decisively.
But Lynch shook his head. "You’re wrong, gold is more valuable."
"When we talk about the value of sothing, we shouldn’t be influenced by its financial ans. A stone is a stone; it will never be more valuable than gold unless this type of stone is rarer than gold and has collectible value."
"Otherwise, no matter how much money it’s worth, it’s essentially not as valuable as gold."
He pointed at Li with the hand holding a cigarette, "Capital turns finance into fraud. We all know that the price of silver is not even one-tenth of gold’s price, but now silver has already approached half of gold’s highest price period."
"Do you think this is normal market behavior?"
Li shook his head, "I know there’s speculation in silver, the Charlie siblings."
"They’ve driven sothing worth one or two bucks up to a dozen bucks. It’s already past the initial windfall period, do you understand?"
"If any more clients ask such foolish questions, make them sign an agreent that they are fully responsible for their choices."
On the surface, Lynch was blaming those clients, but he was also speaking to Li.
Institutions like the Foundation can get leverages from banks by ten to even twenty tis, which ans that even a one percent profit can an a ten percent, twenty percent fluctuation in profit for them.
Everyone thinks silver will surpass twenty bucks, with about fifteen percent more growth potential.
With financial leverage, ten tis ans a 150% profit, twenty tis is a 300% profit.
A 300% profit is enough to make people lose their minds and plunge in.
Li was also envious of this enormous dividend, but on the issue of silver and gold, Lynch did not allow him to act, so he dared not disobey Lynch’s command.
Actually, the Foundation was also making money, and quite a lot, too. After Lynch gave the order to Li, the Foundation started shorting gold.
The apparent earnings have now exceeded 13%, and with leverage, they’ve achieved over a 50% return.
The reason the leverage ratio is so low is that the Foundation also has to be responsible for clients’ investnts; this money is not theirs. They need to keep the capital safe within a reasonable range.
Sotis when investing in such Foundations, investors will sign agreents that consider capital safety clauses.
Violating these clauses can result in severe lawsuits and even astonishing compensations, so not every Foundation dares to act recklessly.
This is a legitimate financial Foundation, so naturally, it won’t act recklessly.
But when it cos to the Foundation’s own funds, they can do whatever they like since they are their own responsibility.
If Li acts recklessly, the Foundation will be investigated, which is inevitable.
Here’s a clarification: If no leverage is used, assuming ten bucks buy a unit of so commodity, even if the price plumts to just one buck, at least the capital is still ’safe’ because it’s there.
But if leverage is used, for example, the leverage adds ten bucks, so it’s twenty bucks buying two units.
Leverage institutions, to ensure their own capital safety and legitimate returns, will coordinate with exchanges to set up safety chanisms, naly, forced liquidation.
When the price of the commodity falls below six bucks, preparations for liquidation begin.
And will be sold at a suitable price.
And this often ans the investor ends up with nothing!
With funds gone, naturally, it is not safe.
Many people go bankrupt playing stocks, speculating in futures, because they not only borrowed but also leveraged!
What Lynch wanted to do was to warn Li not to act recklessly.
He was just about to say sothing when the phone on the table rang. Both of them looked at the phone simultaneously, and at the sa ti, Li’s secretary knocked on the door, sticking his head in, "The call is for Mr. Lynch."
Lynch looked at Li, the latter proactively left his own office...
When Lynch picked up the phone, Mr. Truman’s voice ca through, "Our car is downstairs, there’s an urgent eting at the President’s Mansion that requires your presence, we’re waiting for you."
"This ti, your role is ’Economic Expert’!"
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