Rebirth 1980: Marrying my sister’s best friend at the beginning

Chapter 599 The Federal Reserve raises interest rates!
William's reaction shocked everyone in the room, and everyone's eyes focused on him!

"William, what happened?" the fat old man asked immediately.

This man's name is Volker, one of William's partners, and a well-known financial tycoon on Wall Street. He plays an important role in the entire financial circle.

This time, in order to defeat Li Yi and others in one fell swoop, William invited Walker over.

William was silent for a moment, and then said with an embarrassed expression: "The Federal Reserve has raised interest rates!"

As soon as these words came out, the expressions of everyone in the room changed.

"Is the news accurate?"

William nodded and said: "The Federal Reserve just held a press conference, and Paul (Federal Reserve Chairman) personally announced the interest rate increase plan. They decided to increase the federal funds rate target range by 25 basis points to 0.5%-0.75%, and "

"And what?"

“And Paul also said there will be at least three rounds of interest rate hikes before the end of the year!”

"Three rounds?"

Now everyone can't sit still. The Fed's interest rate hike is not good news for them.

The biggest fear of being long in gold is that the Fed will raise interest rates. The reason is simple, because the Fed's interest rate hikes will cause the price of gold to fall, and continued interest rate hikes will be a disaster for them.

Many people do not understand the logic here and cannot understand the relationship between the Fed's interest rate hikes and the rise and fall of gold prices. In fact, this is directly related to the financial properties of gold.

Now that gold has lost its currency properties, many people invest in gold for asset hedging. In other words, gold is an important safe-haven asset in the eyes of many people.

Let's put it this way, when the currency depreciates rapidly or the situation is unstable, many people invest in and hold gold in large quantities. At this time, the price of gold will rise.

However, if the Federal Reserve raises interest rates, it will usually lead to a strengthening of the U.S. dollar, because higher interest rates will attract more investors to buy U.S. dollars, thereby pushing up the U.S. dollar exchange rate.

So gold usually has an inverse relationship with the U.S. dollar, so when the U.S. dollar strengthens, the price of gold tends to fall.

This is one reason why gold prices often fall before the Federal Reserve raises interest rates.

"William, didn't you say that the White House has no intention of adjusting the federal funds rate?" Volcker said with a gloomy face.

"Volcker, you know, the White House can't control the Federal Reserve!" William said helplessly.

Before they took action, they had indeed had a phone call with the White House's economic adviser, who also made it clear that the White House had no intention of adjusting policy for the time being, but said that it might introduce a series of measures to reduce inflation after the year.

William thought at the time that their operation would only take a week to achieve the goal, and the White House's policy adjustments after the year would not affect them at all, so he confidently and boldly attacked Li Yi.

But they never expected that the White House did not take any action, but the Federal Reserve took action and caught them off guard.

After a brief silence, Walker said in a deep voice: "Then what should we do now? Should we continue to make more money or leave the market?"

"withdraw!"

"But if we terminate the plan now, we will lose at least hundreds of millions of dollars!" Walker said with an ugly face.

In order to push the price of gold to the current $620, they have invested $50 billion and then used 20 times leverage to move the market.

Although they have only used one-third of their funds, they have purchased more than 650000 gold futures contracts at an average price of $61500 per lot, or $615 per ounce.

Based on their current gold holdings, if the price of gold per ounce dropped by $1, their losses would be $6500 million.

If you want to cut your flesh and leave the market now, the losses will be beyond imagination.

"Then we must withdraw. Once the market reacts, it may be too late for us to withdraw!" Then William continued: "But although we will suffer losses, they will not be big!"

"why?"

"Don't forget why we want to snipe that Hong Kong Islander. We are just doing a favor to our friends. There is no reason to put money in, right?"

Walker's eyes lit up, thinking of the 10 billion US dollars transferred over there, he immediately said: "Yes, we are just helping out on a voluntary basis. No matter what the outcome is, our friends on Hong Kong Island will have to bear it!"

Whether it's a dead fellow Taoist or a dead poor Taoist, these ghost guys can still figure it out.

The people of the British-owned group in Hong Kong Island never thought that they had been sold out.

After determining who should bear the loss, William immediately said in a deep voice: "Kum, sell the futures contract in our hands immediately at the listed price of $600 per ounce!" William ordered in a deep voice.

"Yes!"

After hearing William's order, the hearts of everyone present were bleeding.

They finally pushed the price of gold to US$620 per ounce, but now they are taking the initiative to cut the price to escape, and directly bring the price back to the pre-opening state.

Even if the gold futures contracts in hand can be successfully sold, the loss will be more than $15 per ounce, and the overall loss will exceed $10 billion.

That’s a billion dollars!
What's more, the news of the Federal Reserve's interest rate hike has been announced to the public, and most people in the circle should have gotten the news by now.

Those who play gold futures probably don’t know the impact of the Fed’s interest rate hikes.

As expected, those speculators who bought futures contracts at high prices are waiting to get out of the market!
Although they directly lowered the price by $20 per ounce, judging from the current situation, they may not be able to withdraw smoothly.

After all, they hold so many gold futures contracts that it is difficult to find the right person to take over.

Sure enough, things developed as William expected.

When the news of the Federal Reserve's interest rate hike was announced, the entire gold futures market went into chaos.

Before William and others could react, many speculators sold gold futures contracts at low prices, and the prices dropped significantly.

But now that everyone knows the news about the Fed's interest rate hike, even those who have not chosen to leave the market dare not easily increase their positions. Everyone is watching the attitude of William, a major customer.

After all, as long as they don't let go, everything will turn around.

However, when William's people also began to sell the futures contracts in their hands, the speculators who followed the long position became desperate.

When these speculators saw that someone was doing long gold, according to past rules, the price of gold would be pushed up to a certain height in the short term.

So those people want to follow the trend and drink some soup. As long as they throw away the futures contracts in their hands before the banker smashes the market and leaves the market, then they can make a small profit.

But I didn't expect that this gold war only lasted a few hours, and it suffered a devastating blow when the Federal Reserve raised interest rates.

Now the dealers are not playing anymore. Everyone is panicking and selling the futures contracts in their hands at low prices.

So many people are selling contracts, and in order to ensure that they can clear their positions as soon as possible, the price is not the lowest, only lower!
Soon, the price of gold futures in the New York gold futures market fell below $600 per ounce.

If we look at the broader market, this price just formed a perfect parabola compared to when it opened in the morning.

It's just that there were high points when prices rose, but now there is no end when they fall.

You must know that this is the first time the Federal Reserve has raised interest rates, and there will be a second and third time in the future. The price of gold will also plummet with these interest rate hikes.
(End of this chapter)