Reverse short selling

America's legal tax avoidance measures are actually a rarely used trap; right now, people seem to be completing these so-called tax avoidance measures in a seemingly reasonable and legal manner.

In reality, most people simply pick the tax calculation method with the lowest rate. When those in power want to come after you, they only need to invalidate your chosen method. Once the charge of tax evasion is pinned on you, you're left at their mercy.

Because Wang Xiuyuan has no access to the ultimate power of judicial interpretation in America—or to put it bluntly, he is currently just wealthy, not powerful.

He hasn't yet accumulated enough connections to safeguard his assets, let alone entered America's highest circles of power.

To put it bluntly, Wang Xiuyuan is currently like a child parading through the streets with a massive fortune, possessing no ability to defend against danger.

To protect this massive wealth, his only option is to ensure he leaves no openings.

Even though America is currently in a Cold War with the Soviet Union, the capitalist camp led by America wouldn't act too unseemly, just to demonstrate the superiority of the capitalist system to their rivals.

However, for safety's sake, it's best for Wang Xiuyuan to honestly pay every single cent of his taxes.

He'd better not use those so-called tax avoidance measures—at least not until he has someone at the top of the American pyramid to protect him. Otherwise, if someone wanted to move against him, they'd only need to say the word.

Take Trump, for instance—he's powerful enough, a future President of the United States, yet he was nearly sent to prison by his opponents using tax issues.

If it weren't for the fact that Trump's tax avoidance measures were clean enough, and that three of the lifetime justices on the U.S. Supreme Court were nominated and appointed by him, this President of the United States might truly have been locked up by his rivals.

"Mr. Wang...?"

"Mr. Wang, what are your plans next? Will you continue trading futures or pursue other investments?"

"Your current capital volume is already very large. If you are willing to continue conducting various investment operations through Goldman Sachs, our company can offer the lowest management fees on the market."

Seeing Wang Xiuyuan sitting there in a daze, Curtis couldn't help but speak up to remind him.

"Heh..." Wang Xiuyuan couldn't help but chuckle; this was likely the reason Curtis had come to greet him today.

"This major market trend has peaked. Starting tomorrow, we'll go all-in on a reverse short. This time, we'll use two-times leverage."

Wang Xiuyuan's answer was decisive and firm, as if this plan had been brewing in his mind for a long time.

In his past life, he had read about this financial tragedy of skyrocketing and crashing gold prices in various Hong Kong-themed and urban rebirth novels, and had even specifically gathered information online to understand it.

In January 1980, gold prices reached a historical peak of $850 per ounce before rapidly beginning to plummet, but this outcome was actually predictable.

"Mr. Wang, the bullish sentiment for gold in the futures market is very strong right now, and our peers generally hold an optimistic outlook. Currently, it seems there is still some room for gold prices to rise."

"Isn't it a bit too early for us to pivot to shorting now? Adding leverage seems to make the risk a bit too high."

Curtis advocated for staying bullish, a view that was completely contrary to Wang Xiuyuan's.

Even though their views were worlds apart, Wang Xiuyuan showed no sign of anger.

"Curtis, you're overthinking it. In fact, even if I add one-fold financial leverage now, there won't be any danger. According to trading rules, gold would need to rise another five percent before I'd face a margin call."

"As of now, the price of gold is close to $850 per ounce, which means gold would have to rise at least another forty-two dollars to meet that condition."

"But the question is, given the current market situation, do you think gold still has that much room to grow?"

Curtis was momentarily speechless. Looking only at the five percent increase required for a margin call, it did seem easy to reach; however, once the data was converted, it became clear just how difficult that five percent would be to achieve.

Before this market cycle began, the price of gold had been fluctuating around $200 per ounce.

This forty-plus dollar increase was equivalent to a twenty percent surge in the past. This wasn't a low-probability event that would just happen randomly, especially since the price of gold had already skyrocketed several times over in just a few months, making it even less likely.

Curtis remained silent because everything Wang Xiuyuan said was factual. Furthermore, Wang Xiuyuan followed up with more reasons for shorting.

"Multiple factors have led to the current explosion in gold prices. Rising inflation continues to weaken the purchasing power of the dollar, and dollar-denominated assets are shrinking further."

"If this continues, the US dollar will face major problems. America is one of the two most powerful nations in the world; do you think America will just stand by and watch the dollar continue to depreciate?"

"If you were in control of The Federal Reserve or The White House right now, what would you do?"

"Just watch the dollar die?"

"Of course not. Not to mention the dollar is far from dead, but even if it were, I'd struggle with all my might," Curtis said instinctively.

Wang Xiuyuan pressed further: "So, what is the most direct and effective way to combat high inflation and forcefully pull up the dollar?"

"Raising interest rates!"

"Raising rates makes the dollar appreciate. As the primary reserve currency, the dollar becomes more attractive."

"Even just keeping cash in the bank would yield significant interest, whereas holding gold does not. Therefore, raising rates will directly lead some people to sell off gold, forcing large amounts of capital to flow out of the gold market and into dollar assets."

"Everyone in the financial sector is smart. Once The Federal Reserve introduces a rate hike policy, everyone will realize that gold prices will drop and the dollar will embark on a strong path."

"So, to avoid losses or minimize them, these smart people will definitely scramble to sell their long gold futures contracts and, at the same time, place massive bets on shorting gold."

"Gold will inevitably face an unprecedented crash."

"Exactly, that's it."

Wang Xiuyuan laughed and clapped. Curtis truly lived up to his name as a financial elite on Wall Street; with just a little nudge, he could deduce the next market trend. How could this not pleasantly surprise Wang Xiuyuan?

In his past life, the trend of gold futures was quite similar to what Curtis had deduced.

As the dollar continued to weaken, The Federal Reserve decisively adopted a monetary tightening policy to combat hyperinflation, and this time, the policy was quite aggressive.

Federal Reserve Chairman Paul Volcker hiked the federal funds rate from eleven percent directly to around twenty percent, leading to nine consecutive short-term increases in actual bank lending rates in America.

Seeing this situation, professionals in the financial field and those who borrowed money to trade gold were the first to dump their holdings and flee, with many even placing massive reverse short bets to kick the market while it was down.