Making big profits in gold futures

At the Goldman Sachs headquarters, as soon as Wang Xiuyuan stepped through the main entrance, someone stepped forward to greet him with an incredibly enthusiastic attitude, a stark contrast to his last visit.

Initially, Wang Xiuyuan was somewhat bewildered, but when he noticed the receptionist subtly probing for his next investment plans, he understood the root cause of this unusual behavior.

The receptionist first tried various probes, attempting to glean some reliable information from Wang Xiuyuan, and when that failed, she began recommending various financial investment products.

Wang Xiuyuan, who had an average temper, was soon annoyed by the persistent, clingy receptionist, and an expression of displeasure quickly appeared on his face.

"I have no plans for other investments for the time being. I'll contact Curtis once I've made up my mind. I'd like to be left alone for a while, thank you."

The person responsible for receiving Wang Xiuyuan was a great beauty. To get the opportunity to escort Wang Xiuyuan upstairs, she had provided quite a few 'benefits' to the lobby reception supervisor through sexual favors.

Yes, exactly, trading sexual favors for the opportunity.

The financial industry is just that cutthroat; no opportunity or client resource falls from the sky. You have to use every means to grab, steal, or pry them away.

Even just a few minutes of guiding a wealthy individual is a rare and precious opportunity; it might just lead to a decent piece of business.

But with so many people in reception, why should you be the one to do it?

To be fair, this beauty had worked very hard, but unfortunately, Wang Xiuyuan was impervious to her charms, completely ignoring all her hints.

The beauty originally wanted to exchange a few more words with Wang Xiuyuan, but Curtis happened to enter the VIP room at that moment, cutting her off and leaving her with no choice but to leave quietly.

"Long time no see, Mr. Wang. How have you been lately?"

Curtis gave a stiff greeting after sitting down, which left Wang Xiuyuan quite surprised.

Seeing Curtis's uneasy and fidgety appearance, Wang Xiuyuan instantly felt a surge of tension.

"Curtis, are you okay? We've spoken on the phone many times over the past few months, and you've never offered a single greeting. Did you forget to take your medicine today, or did you take too much?

If there's something, just say it. If it's not urgent, tell me about the profits from those gold futures contracts first. That's what I'm most concerned about right now; other unimportant matters can wait."

Wang Xiuyuan stared straight at Curtis, fearing that Curtis might have pulled some stunt with the gold futures contracts on his own.

Don't think such a thing is impossible. Traders are responsible for managing client accounts, and it is indeed their duty to operate accounts according to the client's requirements.

But this was America, where cases of unauthorized account manipulation and misappropriation of client funds were countless. Every year, a few Wall Street traders were sent to prison for such violations; if Wang Xiuyuan had happened to encounter one... At the mention of those gold futures contracts, the uneasy expression on Curtis's face vanished instantly, replaced by a look of gravity and focus. It was this momentary shift in expression that eased much of the tension in Wang Xiuyuan's heart.

"No problem, Mr. Wang. All the futures contracts in your account were sold off as of this morning.

Our average entry price was $214 per ounce, and the average exit price was $846 per ounce. The account profit is approximately $986 million.

Of course, this isn't pure profit. We still need to deduct the interest from financing and our company's account management fees, which isn't much—less than $20 million.

The biggest chunk is still capital gains tax. That thing is terrifyingly high. You'll need to be mentally prepared when you file your taxes next season."

Confirming that Curtis had followed his instructions precisely and conducted the trades according to his requirements, Wang Xiuyuan couldn't help but breathe a sigh of relief.

A once-in-a-lifetime opportunity like this might not come around again for decades. If he had missed out on this immense wealth because of an unreliable trader, Wang Xiuyuan would likely have been angry enough to blow up the Goldman Sachs headquarters.

"Capital gains tax is indeed high, but there's no way around it. Even if I go on a massive spending spree now, I'd only get a pitiful amount of tax exemptions. Even donations only provide partial exemptions; the bulk of it is unavoidable."

Donate it?

Wang Xiuyuan rubbed his chin. Donating was indeed a good way to effectively avoid taxes, but theoretically, the money donated would no longer be his, and using it would be somewhat troublesome.

America's capital gains tax is like a giant scythe, ruthlessly harvesting dollars.

In other physical industries, there are many ways to implement effective tax avoidance measures, sometimes even to the point of not paying a single cent in taxes.

But the financial industry is special. The money involved is vast, with amounts that can only be described as astronomical, so the financial sector has always been a primary target for the Internal Revenue Service.

In a situation like Wang Xiuyuan's, making a fortune in futures in a short time, there's really no room to maneuver.

In America, the tax rate on futures gains depends on the holding period and income level, mainly divided into short-term trades held for less than a year and long-term trades held for more than a year.

Short-term trades are taxed at ordinary capital gains rates ranging from 10% to 37% depending on the income amount, while long-term trades are taxed at preferential rates ranging from 0% to 20%.

However, there is a special Section 1256 in the American tax system. Most futures trades, such as gold, crude oil, and stock index futures, are subject to the 60/40 rule.

According to this rule, for specific types of futures contract trades, regardless of how long they are held, 60% of the gains are taxed at the long-term preferential rate, and the remaining 40% are taxed at the short-term ordinary rate.

Wang Xiuyuan's profit from this gold futures trade was $986 million. Without a doubt, the tax rate would be the full 20% long-term rate and 37% short-term rate.

Which means he has to pay over $264 million in capital gains tax for this gold futures trade, a combined tax rate of 26.8%.

The thought of paying so much money to the Internal Revenue Service made Wang Xiuyuan feel a pain in his heart so sharp he could hardly breathe.

But as much as it hurt, in America, you can't be short a single cent of the taxes you owe, or you'll be in big trouble—especially since his Chinese heritage made him stand out too much in American high society.

The rulers of America are Anglo-Saxons; of course, in a few decades, Jewish people will also join this echelon.

Anglo-Saxons have the blood of pirate civilization in their veins. Now, when these Anglo-Saxons have money and are in their glory, they put on suits and come ashore, acting like civilized gentlemen.

But when they are short on money, these Anglo-Saxon pirates will not hesitate to take off their suits and commit robbery—the blatant kind, without even a shred of pretense.