Rebirth of England.

Chapter 589 Gold Reserve
On March 3, Kolo held another national election.

This time it is still Jammeh Bongo representing the Colo People's Party who competes for the presidency with Thomas Kabore of the Colo Socialist Party.

Four years ago, Jammeh Bongo defeated Thomas Kabore in the general election and became the first president of New Kolo.

This time, there was still not much suspense in the general election. After three days of voting, the Supreme Court of Kolo finally announced that Jamei Bongo had received up to 69% of the votes and was successfully elected.

This proportion is more than the votes he received four years ago.

After all, during the four years of Jammeh Bongo's administration, Kolo's economy has developed rapidly, and people's income has grown rapidly. It has taken off the label of "underdeveloped country" and become the country with the fastest economic growth in West Africa.

Perhaps the only good news for Thomas Kabore is that according to Kolo's constitution, this will be Jammeh Bongo's last presidential term...

If Thomas Kabore can still insist on participating in the general election, the success rate will be higher.

When Jammeh Bongo started his second term, he launched a new Kolo Economic Promotion Plan, which mainly included content to further open up the financial industry and encourage people to activate the economy.

First, the Colo Financial Authority will contribute to the purchase of more than $150 billion worth of gold as its reserves.

This is a necessary preparation before they further open up the financial industry. After all, Kolo still implements strict foreign exchange control policies. Ordinary people are restricted from exchanging foreign currencies. Foreign investment in Kolo also needs to be exchanged through the Monetary Authority first. After Kolo Shilling, you must obtain the corresponding foreign exchange quota to be able to exchange foreign exchange after applying.

This is also because Kolo was only a small country before, and its economy was very underdeveloped. Most countries in Africa also have such a financial system, because they have really suffered losses in this, and this policy prevents foreign investors from shorting the foreign exchange market at will. It is necessary for those countries that lack strength.

Now Colo's goal is to become the financial center of West Africa in the future, so opening up their financial industry is a must.

For the sake of its own financial security, a certain amount of gold reserves and foreign exchange reserves are necessary, otherwise it is easy to be shorted.

First of all, the international oil price has currently exceeded 108 US dollars per barrel. Therefore, the Colo Petroleum Company, which continues to frantically increase the production of offshore oil fields, has brought extremely high income to the Colo government.

With these revenues, the Kolo government purchased more than 1000 million ounces of gold bars from the BFT (British Fortune Times) Fund through the Monetary Authority at a price of US$1500 per ounce, equivalent to more than 425 tons of gold bars, with a total value of more than 150 One hundred million U.S. dollars!
This is also equivalent to helping BFT funds cash out a large part of the gold bars they previously purchased - the initial price for BFT funds to purchase these golds was around US$770 per ounce, and the average price did not exceed US$800 per ounce... …

This transaction made the BFT fund earn a profit of 25%!
It can be said that the current price has almost reached the highest point of the international gold price in the past year and a half - starting from next month, the international gold price will fall all the way due to the impact of the subprime mortgage crisis, and by the end of October, the gold price will fall below US$10 per ounce.

It would not be until early October 2009 that the price of gold would reach $1000 an ounce again.

However, the Colo Socialist Party, as the opposition party, will not have any criticism at all for this move of the Jammeh government - after all, Thomas Kabore is not stupid, he knows who is behind the BFT fund...

Kolo's political scene has only been stable for a few years. Before the new Koro, politicians in the original military government often died due to "accidents".

Therefore, Thomas understands that he can scold Jammeh in public as much as he wants, but when it comes to matters involving a big shot behind the scenes, it is wisest for him to remain silent.

What's more, although in the short term, the Colo government will indeed suffer a huge loss if it buys these golds at a price of US$1000 per ounce, they are not investing in gold to make money, but holding it as a national reserve in the long term. From this perspective, this transaction still has huge profit potential.

Moreover, the gold of the BFT fund itself is stored in the underground vault of the headquarters of the United Bank of West Africa. This will also be used as the storage location of the gold reserves of the Kolo Financial Authority. Therefore, after this transaction is completed, the gold does not even need to be exchanged. place……

After increasing its gold reserves and foreign exchange reserves, the Kolo government was able to guarantee the exchange rate of the Kolo shilling.

Next, they will encourage people to participate in economic activity.

The Kolo government will allocate a special fund of 1000 billion Kolo shillings to provide interest-free and low-interest loans to eligible Kolo residents through the United Bank of West Africa to help them engage in self-employment and start companies. The maximum amount of interest-free loans for individuals is 10 Kolo shillings for a 10-year term, and the maximum amount of low-interest loans can be up to 100 million Kolo shillings.

In fact, this measure is to stimulate the domestic economy. After all, the Kolo Shilling itself is issued by the United Bank of West Africa with the permission of the Monetary Authority.

After the Colo government made money through oil extraction, they chose to provide interest-free and low-interest loans to the people to help them run industries and start businesses to increase their incomes, rather than giving the money directly to individuals.

After all, it is distributed to individuals, and given the "tonality" of the people in Kolo, it is likely that they will be spent directly.

And distributing it to them in the form of loans can urge them to work hard.

Of course, it is very likely that many people will still be unable to pay in the end, but this is also a way for them to "screen" the people. Those hard-working or capable citizens will naturally not only work hard to repay their loans, but also become rich as a result.

For these people, Kolo will continue to provide strong support in the future.

As for those who are lazy and just want to spend money to enjoy...

Naturally, due to the bank loan, it will be restricted in all aspects, and eventually achieve the purpose of natural elimination.

……

"Your Highness the Duke, the current international oil prices have entered the 'default window' of our purchase orders, but for the time being, those oil companies have not started to propose defaults..."

After hearing the words of BFT Fund CEO Duran Hurst, Barron smiled and said:

"I believe they have already started to discuss this. If oil prices continue to rise, then defaulting on the contract is the best option for them."

Since November last year, Duran Hurst, CEO of BFT Fund, has begun to contact some oil companies including Russia, Southeast Asia and Africa, and has offered them super large orders with a total price of up to 11 billion US dollars.

This was very tempting for the oil companies who already believed that "oil prices were high" at that time. After all, the BFT Fund was willing to pay 50% of the margin in advance for this, which was as high as 300 billion US dollars!

The agreement they signed with these eight large oil companies at that time was that within half a year from March to September this year, the other parties were required to provide the BFT Fund with crude oil spot prices at a fixed price of US$8 per barrel, with a total value of US$3 billion. .

In international transactions, the supply price for large orders of this kind of oil spot is often fixed for a fixed period and at a fixed price, and it is not said to be adjusted in real time according to the oil price.

So what if the oil price fluctuates after the order is signed?
Because these orders always have a proportion of liquidated damages, which is usually about 20%.

So if the oil price suddenly rises sharply, the seller will definitely break the contract immediately after weighing it and deciding that it is more cost-effective to pay liquidated damages.

If oil prices suddenly plummet, the acquiring party will also make such calculations.

Now, after the oil price exceeds 108 US dollars per barrel, it has reached the "default window" of the agreements signed by the BFT fund and these oil companies.

In other words, if the price continues to rise now, it will be more cost-effective for these oil companies to choose to default and pay the BFT fund 20% of the liquidated damages than to continue to execute the contract.

(End of this chapter)