Chapter 589 Gold Reserve
On March 20, Kolo held another national election.
This time Jammeh Bongo represents the Colo People's Party and Thomas Kabore of the Colo Socialist Party competes for the presidential position.
Four years ago, Jammeh Bongo defeated Thomas Kabore in the general election and became the first president of New Kolo.
There is still not much suspense in this election. After three days of voting, the Supreme Court of Kolo finally announced that Jamei Bongo 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 "less developed country" and become the West African economy. The fastest growing country.
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 includes further opening up the financial industry and encouraging people to activate the economy.
First, the Colo Financial Authority will contribute to the purchase of more than $15 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 capital investing in Kolo also needs After first exchanging Kolo shillings through the Monetary Authority, you can obtain the corresponding foreign exchange quota and then you can 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 to prevent foreign investors from short selling at will. In the foreign exchange market, this kind of policy is necessary for countries with insufficient 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 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 15 million ounces from the BFT (British Fortune Times) Fund through the Monetary Authority at a price of US$1,000 per ounce, equivalent to more than 425 tons. Gold bars, with a total value of over $15 billion!
This is also equivalent to helping the BFT Fund to cash out a large part of the gold bars they previously purchased - the initial price for the BFT Fund to purchase these gold was around US$770 per ounce, and the average price was also different. More than $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 high point of the international gold price in the past year and a half - starting from next month, the international gold price will be affected by the subprime mortgage crisis and continue to fall. By the end of October, the gold price will fell below $700 per ounce.
It would not be until early October 2009 that the price of gold would reach $1,000 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 Kolo, politicians in the original military government often died due to “accidents”.
So Thomas understood that he could scold Jammeh in public as much as he wanted, but when it came to matters involving a big shot behind the scenes, it was wisest for him to remain silent.
What's more, although in the short term, the Kolo government will indeed suffer huge losses if it purchases these golds at a price of US$1,000 per ounce, they themselves are not investing in gold to make money, but for long-term holdings. It serves as a national reserve, so from this perspective, this transaction will still have great 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 100 billion Kolo shillings to provide interest-free and low-interest loans to qualified Kolo people through the United Bank for West Africa to help them engage in self-employment and start companies . The maximum interest-free loan amount for individuals is a 10-year loan of Ksh100,000, while the maximum limit of low-interest loans can be as high as Ksh1 million.
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, instead of giving the money directly to individuals .
After all, it is distributed to individuals. With the "tonality" of the people in Kolo, it is likely that they will be spent directly.
Giving them 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 And got rich from it.
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 they will be restricted in all aspects because they owe bank loans, and will eventually achieve the purpose of natural elimination.
......
"Your Highness the Duke, the current international oil price has 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 begun to discuss this. If oil prices continue to rise, then default is the most important thing for them. "The best choice."
Since November last year, Duran Hurst, CEO of BFT Fund, has begun to contact some oil companies in Russia, Southeast Asia and Africa, offering them a total price of up to 100,000 yuan. A super-large order of US$60 billion.
This was extremely tempting for the oil companies who already believed that "oil prices were high" at the time. After all, the BFT Fund was willing to pay 50% of the margin in advance for this, which was as high as 30 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 party needed to provide the BFT fund with a fixed price of US$90 per barrel, with a total value of $60 billion in crude oil spot.
In international transactions, the supply price for large orders of this kind of oil spot is often fixed for a fixed period and is not 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 often about 20%.
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 a measurement.
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 this contract.
(End of this chapter)