Chapter 115: God Feeds the Meal

They say new year, new beginnings. At the beginning of 1980, Carter deeply understood the meaning of this old saying.

In January 1980, the U.S. stock market, or more accurately, the commodity trading market, was buzzing with activity. Over the past six months, the Hunter brothers had been stirring up storms in the BY market, and on the grand stage of this era, they were increasingly moving closer to the center stage.

As the saying goes, "Silence is golden." However, the Hunter brothers, who stepped into the limelight of the times, clearly violated this principle. Going against the grain, they naturally wouldn't fare well.

Looking back, the first challenge to the Hunter family, the pioneers or troublemakers of this era, came from the New York Mercantile Exchange. In order to curb the madness of the Hunter family, they took preventive measures, claiming to prevent market manipulation, and first introduced regulations stating that the net position of silver futures contracts should not exceed 500 contracts, effectively limiting the number of silver futures contracts that could be purchased.

But the Hunter family's response was: Is that all?

With numerous supporters within the family and strong support from Saudi Arabia, they shrugged off these regulations. They simply split the contracts they bought among different family members' accounts or even Saudi accounts. Such minor restrictions were completely inadequate.

In the first round of confrontation, the New York Mercantile Exchange was defeated!

And then, as the old saying goes, "Out with the old, in with the new." After the New York Mercantile Exchange retreated in defeat, the leading authority, the U.S. Commodity Futures Trading Commission, stepped in!

Hearing that the Hunter family was acting arrogantly with support from Saudi Arabia, the commission decided to investigate their relationship with the Saudis. Were the Hunter family acting as puppets for Saudi interests, betraying their country and helping them undermine the U.S.?

Facing these accusations, the Hunter family cried foul and even retaliated by accusing the commission of being unconstitutional and engaging in authoritarianism.

While shouting their innocence and throwing mud, the Hunter family continued to borrow money to buy silver frantically. They completely disregarded the leading authority. Thus, the showdown continued into January.

The Chicago Mercantile Exchange, which had been watching from the sidelines, witnessed the humiliation of the leading authority and felt deeply that "if the sovereign is humiliated, the minister dies," immediately taking action.

Margin calls, increase!

"You have money to buy silver, right?! I'll raise the margin for futures contracts and see how much you can afford!"

The margin for silver futures contracts skyrocketed from $1,000 to $6,000. Simultaneously, notices demanding the Hunter family to replenish the margin shortfall were issued.

Upon receiving this news, the Hunter family was shocked. Replenishing $5,000 for each contract was an astronomical figure for them. This was like striking at the heart of a snake, but looking at the vast amount of silver they already controlled and the potential profits on their books that could drive anyone insane, Nelson Hunter gritted his teeth and said, "Borrow the damn money!"

While the Hunter family continued to borrow from various securities firms and banks on Wall Street, Carter, more than 1,600 kilometers away in New York, was startled by the actions of the Chicago Mercantile Exchange.

Although the regulations of the Chicago Mercantile Exchange seemed to target only silver, the situation with gold was not much better!

A standard silver futures contract was for 5,000 troy ounces with a margin of $1,000. At a silver price of $2 per ounce, the margin rate was not bad, at around 10%. But who knew silver prices would rise so fast? In 1976, an ounce of silver was only $4.3!

The margin that was initially applicable, when recalculated against the silver price skyrocketing to $50 per ounce, easily revealed that the margin rate had dropped to around 0.4%, which translated to a leverage ratio of about 250 times!

This leverage was even more exaggerated than Carter's 50x leveraged gold. Similarly, if the margin for silver futures was no longer applicable, would it be applicable for gold?!

The relationship between the approximately 1.8% margin rate for gold futures and the 0.4% margin rate for silver was akin to the relationship between the elder brother and the younger brother. In Carter's eyes, both of these seemed like extremely peculiar futures commodities, resembling financial bugs.

Carter, who was enjoying the show, panicked upon hearing that the Chicago Trading Commission had discovered the loophole in the silver futures margin rate. He thought, logically, if they patched the loophole for silver, should they also patch it for gold?

In Carter's understanding, they definitely should! The nature of these two bugs was exactly the same: one line of code (raising the margin) and changing two characters (silver to gold), and it would be ready to use, a completely effortless task. There was no reason to just patch the silver loophole and ignore gold!

The Hunter family was wealthy enough to borrow money to patch the margin after it increased. But what about himself? If the margin for gold futures followed suit, wouldn't he, with his small assets, be in deep trouble?!

All the money he could borrow had been used up when buying gold futures. Where else could he borrow money to patch this hole?!

"Hey! Julian! Gold, gold! Sell it off quickly!!!"

Frantically picking up the phone, Carter's tone trembled with fear. After dialing Julian's number, he immediately issued the order to close the position.

This thing, he couldn't afford to keep it anymore! And, so far, he had made quite a bit of profit.

Because just before the market opened today, the price of gold had already reached $685. Compared to when he bought it, the profit per ounce had reached $151. What was this concept? It was roughly equivalent to increasing by 50% on the base of over twenty million in paper profits.

Selling off now, thirty million! Thirty million dollars!!!

Carter didn't know whether the tremble in his voice when he uttered the words "sell off" was out of fear or excitement. This was simply the epitome of the classic saying: life and death are in the hands of fate, and fortune lies in the heavens!

To Carter now, the Chicago Trading Commission was like heaven. Any movement or action from it could directly affect Carter's life or death.

If the Chicago Trading Commission were to propose an increase in margin at this moment, not just for silver, but even if it just added "and gold" after "silver," Carter would be doomed this time. He couldn't say "no" and didn't have the money to patch this hole. The only outcome would be a dead end.

But fortunately, it didn't add that damn "gold"! Instead, it woke Carter up, made him alert, and forced him to make a decisive choice between "immediate sell-off" and "delayed sell-off."

And this choice was about to bring him real profits of over thirty million dollars! As the core factor that prompted Carter to make up his mind, the Chicago Trading Commission's move was somewhat like forcing you to eat when you were hungry. You couldn't refuse this thirty million profit.

Just as cold sweat was creeping up Carter's back, wetting his clothes quietly, Julian, who heard Carter's instructions, was also shocked. He blurted out:

"Have you seen the news?!"