Chapter 438 - Madness (1/2)
Haru was in his office in Longinus Investment after he had finished his cafe. He didn't have a plan to make a branch for his cafe since this cafe was purely for his enjoyment. It was good that he made money, but he didn't care much whether it was a loss either. He read the data that Ayase had collected for him and had made his decision.
”Boss, are you really sure that you're going to do this?”
Ayase looked at Haru with a serious expression. He really wanted to sigh at this moment, and he really wanted to stop his boss from making such a ridiculous decision.
Haru looked at the screen on the computer and said, ”My decision is final. No matter what you're going to say I won't change my decision.”
”But....” Ayase had a worried expression on his face. He hesitated for a while then tried to persuade him. ”It's too risky to use your 10 million dollars (Haru had changed his two billion yen to 20 million dollars) to speculate on London gold. This is not real gold and 100 times the leverage ratio is a very risky transaction. Once the price of gold is dropped for a few times then 10 million dollars will disappear.”
Haru was serious when he made this decision. It was a bet and he knew that he could lose, but he could also win this bet. He saw an opportunity and he had decided to bet his money on it. He was going to open his transaction on London gold.
Transaction on gold futures is different from other futures markets since it has 15 times leverage. That means when you make one million USD transaction commodities, you only need to have a 66,000 USD deposit which is considered a high-risk investment.
London gold has leverage up to 100 times ratio. Only a one percent margin is required, and the investment cost can be reduced to 1% of the actual cost. That is to say, you can use a 10,000 USD deposit to get one million USD in goods.
In terms of income, if you buy one lot at 1,000 USD per ounce (one lot equals 100 contracts). For example, you set 100 times the leverage of London gold and you buy one lot at 1,000 USD per ounce at 1,000 USD. If you sell it at 1,400 US per ounce, then it will generate a profit of 40,000 USD, which means that you can make 40,000 USD with only 1,000 USD.
It is absolutely very low investment with high returns. However, the risk is also very scary.
Why?
Because gold futures have a limit, but London gold is different since it doesn't have a limit. You can have more profit, but you can also have more loss in this transaction. Luckily, the risk can be controlled with stop loss.
It was because with such a low investment that Haru could get such a high yield that made him very ambitious. Coupled with fundamental factors, he also knew about the futures that made him willing to take such a high-risk transaction.
”I want to use 10 million USD to invest in this and leave the other 10 million just in case this transaction fails. I have seen after the financial crisis, the global currency depreciated, the United States quantitive easing, the European debt crisis frequently showed signs, and the gold market showing a bullish trend.” Haru looked at Ayase and said, ”I want to give it a try.”
Ayase looked at Haru and sighed. He really felt troubled to have such a young boss, but who made Haru his boss? He sighed and asked, ”100 times?”
”100 times!” Haru answered firmly.
”Okay, then, I'll place an order.....” Ayase very hesitated at this moment.
”C'mon!” Haru said. He stood behind Ayase watching him use 10 million USD in security deposits in exchange for 1 billion USD in 10,000 contracts.