I'm back in 1990

Chapter 191: Shorting Gold

After a flight of more than three hours, Huang Xiaochuan and his entourage arrived at Hong Kong Kai Tak Airport at around 5 p.m. that day.

The temperature in Hong Kong in December is completely different from that in Shanghai. The average monthly temperature here is 21 degrees Celsius. As soon as the three of them got off the plane, they felt a wave of heat hit them. Huang Xiaochuan, along with Zhou Wei and He Wenfeng, bought a set of clothes for each of them in the airport shops and changed into them. The clothes they changed out of were packed into their suitcases and carried by He Wenfeng.

Huang Xiaochuan did not inform Cao Charlie in advance that he was coming to Hong Kong, so no one came to pick him up at the airport. He took Zhou Wei and He Wenfeng directly to the Peninsula Hotel by taxi.

It was Zhou Wei and He Wenfeng's first time in Hong Kong. The dazzling lights and bustling streets were filled with people of all races, black, white, and yellow, making them feel overwhelmed.

The handsome men and beautiful women of Hong Kong were dressed very lightly, in miniskirts and tank tops, leaving Zhou Wei and He Wenfeng speechless.

The two looked at the Hong Kong street scene with incredulous eyes; what they saw deeply shocked them.

Zhou Wei swallowed hard and asked Huang Xiaochuan, "Is this Hong Kong?"

Huang Xiaochuan laughed and said, "Don't take what you see seriously. In fact, Hong Kong people are just like us. They also need to eat, sleep and work. Although their income is higher than that of us on the mainland, the prices in Hong Kong are also higher. They have the same spending power as us on the mainland who earn two or three hundred. However, it would be different if you lived on the mainland with a Hong Kong salary. But very few people have that opportunity."

How much does a Hong Kong person earn in a month?

"Their average monthly salary is about HK$5,000, which is about RMB3,300."

"So many?"

"That's just what you think is a lot. Do you know how much a bowl of wonton noodles costs in Hong Kong?"

Zhou Wei shook his head. He knew that a bowl of wonton noodles in Shanghai cost 1.2 yuan, but he certainly didn't know that in Hong Kong.

"Prices in Hong Kong vary depending on the area. In commercial centers like Central, where rents are high, a bowl of wonton noodles can cost HK$40 or HK$50. In outlying areas like Sha Tin, a bowl of wonton noodles can cost only HK$20."

"Let's say twenty. A bowl of wonton noodles is equivalent to four-thousandths of a Hong Kong person's salary. How much does a bowl of wonton noodles cost in Shanghai?"

Zhou Wei quickly replied, "One yuan and twenty cents."

"Then let's calculate based on the average monthly wage of 300 yuan for ordinary workers in Shanghai this year, which is equivalent to four per thousand!"

Huang Xiaochuan's status as a college student convinced Zhou Wei and He Wenfeng of his calculations, even though they weren't quite sure what four per thousand meant.

That evening, Hong Kong's Phoenix News reported that some former Soviet republics had signed the Agreement on Independence, a prelude to the end of the Soviet Union. After carefully reading the news, Huang Xiaochuan took a shower and had the hotel deliver three late-night snacks. The other two were sent to Zhou Wei and He Wenfeng's room, while his own snack included a bottle of Bordeaux wine. What's food without wine?

The next morning, after having breakfast at the hotel, Huang Xiaochuan asked the hotel to arrange a stretched Cadillac, which hotel VIPs could use for a fee, charged by the hour. Huang Xiaochuan took Zhou Wei and He Wenfeng to HSBC Bank. After getting into the car, Huang Xiaochuan gave each of them a HK$1,000 note.

Zhou Wei and He Wenfeng quickly waved their hands and said no, but Huang Xiaochuan said, "You're accompanying me on a business trip, so consider this your travel allowance! You can buy some gifts to take back to your families later."

It was the first time the two of them had ever seen such a large denomination banknote, and they examined it repeatedly after receiving it.

Huang Xiaochuan then gave them a brief introduction to the Hong Kong dollar.

"This kind of money is different from the money in mainland China in many ways. It is not issued by an official bank. It is issued by several major banks in Hong Kong authorized by the Hong Kong government. So there are three banks in Hong Kong that can print this kind of Hong Kong dollar. And to be precise, this paper is the same as the old banknotes. Can you see the words 'exchangeable on demand' printed on it?"

"That started in 1983 when Hong Kong established a linked exchange rate system that pegged the Hong Kong dollar to the US dollar. When issuing any amount of Hong Kong dollars, the issuing bank must deposit the equivalent amount of US dollars with the Hong Kong Monetary Authority at an exchange rate of HK$780 to US$1, record it in the Exchange Fund account, and obtain a certificate of indebtedness before it can print banknotes."

Holding a HK$1,000 note, Zhou Wei exclaimed in surprise, "You can't believe it? Isn't money issued by the national bank?"

"This involves financial issues. Finance is quite diverse, and different countries and regions have similarities and differences, but ultimately it still comes down to money."

Zhou Wei and He Wenfeng laughed. Indeed, no matter which bank issued it, the banknote in their hands was money!

Before setting off, Huang Xiaochuan had spoken with Min Huifen on the phone and arranged to meet at HSBC headquarters at 10 a.m. today.

At 9:45, Min Huifen was waiting downstairs for Huang Xiaochuan to arrive.

At 9:55, a black, extended Cadillac slowly pulled up in front of the bank, and a bank greeter stepped forward to open the car door.

Min Huifen immediately recognized her client Huang Xiaochuan as the man who came down. Today, he had brought two attendants with him, who looked very capable, like they came from a disciplined military unit. Min Huifen was incredibly envious of their muscular physiques.

She quickly stepped forward to greet Huang Xiaochuan.

"Mr. Huang, welcome back to HSBC."

Huang Xiaochuan nodded slightly in response.

Min Huifen quickly led the way, taking Huang Xiaochuan to the VIP room.

Zhou Wei and He Wenfeng were incredibly surprised, but fortunately, Huang Xiaochuan had told them in the car that banks in capitalist societies value service and believe that the customer is God, so their reception is often extravagant, and they shouldn't take it seriously. Even so, the two were still very surprised.

Before they even reached the VIP room, someone came to guide Zhou Wei and He Wenfeng to the lounge.

"Gentlemen, please come with me to the lounge to rest, please!" The bank staff even gestured for them to enter.

The two looked at Huang Xiaochuan, who nodded and said, "Go to the lounge and wait for me for a while. I'll have someone let you know when I leave!"

Seeing that Huang Xiaochuan had spoken, the two followed the bank staff to the lounge. When they arrived at the lounge, they were shocked again. They never expected that the bank's lounge would not only have tea and water, but also entertainment facilities and a variety of snacks and pastries. Where in mainland banks do you find this? There are only counters, and you have to stand to deposit or withdraw money. There isn't even a seat. Is this the decadent capitalism?

Upon entering the VIP room, Min Huifen warmly greeted Huang Xiaochuan and served him tea before getting down to business.

"Afen, as I told you on the phone before, I'm here this time to short gold futures."

"No problem, Mr. Huang. Our bank will provide you with all the necessary conveniences. You are a long-time customer of ours, and to show our sincerity, we are willing to offer you the maximum leverage ratio."

Huang Xiaochuan smiled faintly. Just listen to these words and don't take them seriously. Banks aren't that kind. Even if the leverage is high, you still have to see if you can afford it. If your principal isn't enough, a one-point fluctuation can cause a margin call, and all the losses will go to the customer. The bank won't lose a single penny. And no matter whether you make a profit or a loss, the handling fee will not be reduced by a single penny. Oh, and there's also the interest on using leverage.

To make a long story short, Huang Xiaochuan stated his demands directly: "Transfer $1.2 million from my account as margin, leveraged 30 times, and liquidate my position if the gold futures price falls by more than 43%."

Min Huifen suggested, "Mr. Huang, our bank can offer you 100 times leverage. Isn't 30 times a bit too little?"

Huang Xiaochuan glanced at her: "Afen, you must have heard the saying, 'A man's greed is like a snake trying to swallow an elephant.' You can never earn enough money."

Min Huifen gave an awkward smile and said, "Mr. Huang, I'll prepare the contract for you right now. Please wait a moment!"