Reverse short selling 2

The gold price, already lacking upward momentum, thus ushered in its first wave of continuous sharp plunges, even experiencing a massive drop of over a hundred dollars in a single day.

Faced with this situation, investors holding long contracts could no longer sit still and were forced to cut their losses and exit the market one after another.

By March 1980, gold had fallen from its peak of $850 per ounce to $500 per ounce.

In the following six months, gold saw a brief rebound, slowly rising back up to $700 per ounce.

However, from September 1980 to June 1982, the gold price fell from $700 to below $300 within 19 months—a drop of over fifty-eight percent—and gold entered a bear market that would last for twenty years.

"Curtis, right now is absolutely the best time for us to short gold.

Just as you said, regarding the trend of gold in the coming period, the current mainstream market view is generally optimistic and bullish.

This precisely illustrates a point: by shorting gold prices now, it will be easy to find counterparties to take on the bearish futures contracts we sell.

Even if I double the financial leverage this time, nearly two billion dollars worth of futures contracts might be completely digested within a single day.

There is an ironclad rule in this world that always applies: wealth and power are forever held in the hands of a few.

When others are fearful, I boldly charge forward with a full position; when others are frantic, I calmly liquidate and run.

When everyone knows that buying gold can make money, the gold price is only one step away from a collapse."

After listening to Wang Xiuyuan, Curtis simply nodded in silence; Wang Xiuyuan's final sentence had enlightened him.

"When everyone knows that buying gold can make money, the gold price is only one step away from a collapse. This sentence makes so much sense."

Curtis repeatedly muttered the phrase under his breath, as if trying to carve it firmly into his mind.

However, how could he have known that this sentence was not original to Wang Xiuyuan at all, but came from the legendary financial investor Peter Lynch?

The original saying was: [When the aunties at the market are enthusiastically recommending stocks to you, it's time to get out.]

Although the phrasing is a bit crude, it vividly summarizes the hidden crises behind a stock market boom.

While most people who invest in stocks, funds, and futures have heard this saying or its derivatives and can understand the thought it expresses,

understanding it is one thing, but being able to act on it is quite another.

In the face of a frantically rising market, how many people can rationally control their inner greed and choose to liquidate and exit?

There are such people!

But not many!

No matter the country, those who can set aside spare cash to invest in stocks and futures are generally middle-income families or above; at the very least, they don't worry about basic living expenses.

In short, these people are not usually associated with being 'losers.' The biggest characteristic of this group is their tendency to be 'clever for their own good.'

It's not that they don't realize even the most prosperous bull market will eventually fall, but they always self-righteously believe they are among the few smart people who grasp the truth, thinking they can accurately liquidate and escape at the market's peak.

But the actual result is that these people often lose the most in the financial markets. They are the favorite 'leeks' of various market makers and capital, harvested crop after crop.

Financial investment as a whole is a zero-sum game. If someone makes a million dollars in the financial market, then someone else must have lost a million dollars.

The financial market does not create money out of thin air, nor does the money within it disappear into thin air; the financial market is simply a place where this money is redistributed.

A futures contract is essentially a betting contract. Whether you are buying long or selling short, you need someone to sign the contract and bet against you.

"I understand what you mean. I'll go make the arrangements now and strive to complete the position building within three days. Just wait for my good news."

At this moment, Curtis seemed exceptionally excited. Collaborating with a major client like Wang Xiuyuan not only meant earning a large commission but also further building and refining his own trading logic—a very rare opportunity.

Every golden saying that is widely circulated in the twenty-first century was refined and summarized from countless cases. If one were to push the clock back a few years or decades, each golden saying could help one avoid countless pitfalls.

Confirming that Curtis fully understood his decision, Wang Xiuyuan finally felt at ease. Previously, he had been truly worried that Curtis might go against his instructions during the operation.

Every year in America, a massive number of traders run into trouble—countless individuals are laid off and end up on the streets, jump off buildings in suicide, or go to prison for illegal operations.

Is it because the companies these people work for lack supervision? Or because America hasn't introduced legal systems targeting the financial sector?

Both exist, and they are relatively very well-developed.

But why do these situations keep recurring? Logically, in the absence of sudden black swan events, there shouldn't be so many financial professionals breaking the rules.

The sole reason is the inability to control greed.

Rules, from the day they are established, will constantly be broken by people seeking to bypass their constraints to seize more profit.

The stock market, futures market, bond market, and currency market—each financial sub-sector is like a legal casino.

These financial professionals are like professional gamblers responsible for betting on behalf of others. If they lose the bet, the most they lose is their job; if they win, they get a handsome commission. It's as simple as that.

To make big money in the financial market, it's hard to achieve the goal with conventional operating methods. Thus, traders who make big money fall into one of two categories.

Either they use ultra-high financial leverage to amplify their gains and losses, or they believe they've found a once-in-a-lifetime opportunity and go against the tide for a big gamble.

But fighting in the financial market is not much different from gambling in a casino; those who lose everything are always infinitely more numerous than those who win.

Moreover, there are always some gamblers who are desperate to win back their losses. They often resort to extremely aggressive tactics, such as cheating.

Cheating is a common illegal practice in gambling; in the financial industry, it's called insider trading.

If you don't get caught, nothing happens. But if you are caught, it's generally ten years to start with, with no upper limit. Could someone really be so unlucky as to be caught the very first time they cheat?

Some traders manage accounts that are in a profitable state, and the profits are quite substantial.

But some traders are particularly greedy. They aren't satisfied with their share of those profits and want to make a killing in one go. After all, how much can one really make just from a profit share?

So, some traders open accounts in the names of relatives and then directly bet their clients' money against their own, brazenly losing the money to their relatives. This method of operation has already become commonplace in the A-share market.

Wang Xiuyuan signed an account management agreement with Goldman Sachs. This type of proxy trading is considered a relatively reliable method. The biggest difficulty lies in the fact that the client themselves must understand it and give clear instructions for the trader to fulfill their duties.

But one cannot account for those traders who are self-righteous and do not follow the client's requirements in their operations.