Chapter 589 Gold Reserves

On March 20, Kolor held another national election.

This time, Jammeh Bongo represented the Kolor People's Party and competed with Thomas Kaboré of the Kolor Socialist Party for the presidency.

Four years ago, Jammeh Bongo defeated Thomas Kaboré in the general election and became the first president of the new Kolor.

And this election still did not have much suspense. After three days of voting, the Kolor Supreme Court finally announced that Jammeh Bongo won 69% of the votes and was successfully elected.

This proportion is more than the votes he received four years ago.

After all, in the four years of Jammeh Bongo's rule, Kolor's economy has developed rapidly, and the people's income has increased rapidly. It has taken off the hat of "underdeveloped country" and has become the fastest growing country in West Africa.

Perhaps the only good news for Thomas Kaboré is that according to the constitution of Kolor, this will be Jammeh Bongo's last term as president...

If Thomas Kaboré can still insist on participating in the election at that time, the success rate will probably be a little higher.

When Jammeh Bongo began 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 Kolo Financial Authority will invest in the purchase of gold worth more than $15 billion as its reserves.

This is a necessary preparation before they further open up the financial industry. After all, Kolo still implements a strict foreign exchange control policy. Ordinary people are restricted from exchanging foreign currencies. Foreign capital invested in Kolo also needs to first exchange Kolo shillings through the Financial Authority and obtain the corresponding foreign exchange exchange quota before they can exchange foreign exchange after applying.

This is also because Kolo was just a small country before, and its economy was very underdeveloped. Most African countries also have such a financial system, because they have really suffered losses on this. Preventing foreign capital from shorting the foreign exchange market at will is necessary for those countries with insufficient strength.

Now Kolo's goal is to become the financial center of West Africa in the future, so opening up their financial industry is necessary.

In this way, for the sake of its own financial security, a certain amount of gold reserves and foreign exchange reserves are necessary, otherwise it is easy to be shorted Kolo shillings.

First of all, the international oil price has exceeded $108 per barrel, so the Kolo Oil Company, which has been frantically increasing the production of offshore oil fields, has brought extremely high income to the Kolo government.

It is also with these incomes that the Kolo government purchased more than 15 million ounces of gold bars, equivalent to more than 425 tons, from the BFT (British Fortune Times) Fund at a price of $1,000 per ounce through the Financial Administration, with a total value of more than $15 billion!

This is also equivalent to helping the BFT Fund cash out a large part of the gold bars they purchased before - the initial price of the BFT Fund to purchase these gold bars is about $770 per ounce, and the average price does not exceed $800 per ounce...

This transaction made the BFT Fund earn a 25% profit!

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 fall all the way due to the subprime mortgage crisis, and by the end of October, the gold price will fall below $700 per ounce.

It will not be until early October 2009 that the gold price will once again reach $1,000 per ounce.

However, the opposition Kolo Socialist Party will not have any objection to the move of the Jammeh government - after all, Thomas Kaboré is not stupid, he knows who is behind the BFT Fund...

Kolo's political arena has only been stable for a few years. Before the new Kolo, politicians often died in the military government due to "accidents".

Therefore, Thomas understands that he can curse Jammeh in public, but it is wisest for him to remain silent when it comes to the big man behind him.

Moreover, although in the short term, the Kolo government will indeed suffer a huge loss by purchasing these gold at a price of $1,000 per ounce, they are not investing in gold to make money, but to hold it for a long time as a national reserve. Therefore, from this perspective, this transaction will still have a huge profit margin.

Moreover, the gold of the BFT Fund is stored in the underground vault of the headquarters of the United Bank of West Africa, which will also serve as the safekeeping place for the gold reserves of the Kolo Financial Authority. Therefore, after the deal is reached, the gold does not even need to be moved...

After increasing its gold reserves and foreign exchange reserves, the Kolo government can guarantee the exchange rate of the Kolo shilling.

Next, they will encourage the people to participate in economic activities.

The Kolo government will allocate a special fund of 100 billion Kolo shillings to issue interest-free and low-interest loans to eligible Kolo people through the United Bank of West Africa to help them engage in self-employment and start companies.

The maximum amount of interest-free loans for individuals is 100,000 Kolo shillings for a 10-year period, and the maximum amount of low-interest loans can be up to 1 million Kolo shillings.

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 Financial Authority.

After the Kolo government made money from oil mining, they chose to provide interest-free and low-interest loans to the people to help them run industries and start businesses to increase their income, rather than directly giving the money to individuals.

After all, if the money is given to individuals, given the "tone" of the people of Kolo, they may just spend it directly.

And giving it to them in the form of loans can urge them to run their business with heart.

Of course, it is very likely that many people will still not be able to pay it back in the end, but this is also a way for them to "screen" the people. Those hardworking or capable citizens will naturally not only work hard to repay the loan, but also get rich.

For these people, Kolo will continue to strongly support them 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 loans to banks, and ultimately achieve the purpose of natural elimination.

…

"Your Highness, 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 default..."

Hearing the words of BFT Fund CEO Duran Hurst, Barron smiled and said:

"I believe they have already started to discuss this. If the oil price continues to rise, then default is the best option for them."

Since November last year, BFT Fund CEO Duran Hurst has begun to contact some oil companies including Russia, Southeast Asia and Africa, and threw them a super large order with a total value of up to 60 billion US dollars.

This was extremely tempting for the oil companies that already believed that "oil prices were high" at the time. After all, BFT Fund was willing to pay a 50% margin in advance for this, which was as high as 30 billion US dollars!

At that time, the agreement they signed with these eight large oil companies was that from March to September this year, the other party needed to provide BFT Fund with a fixed price of US$90 per barrel and a total value of US$60 billion in spot crude oil.

In international transactions, the supply price of such large orders of spot oil is often fixed for a fixed period and price, and will not be 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 penalty ratio, which is often around 20%.

So if the oil price suddenly soars, the seller will definitely break the contract immediately after weighing it and paying the penalty.

If the oil price suddenly plummets, the acquiring party will also make such a weighing.

Now, after exceeding US$108 per barrel, the oil price has reached the "default window" of the agreement signed between the BFT Fund and these oil companies.

In other words, if the price continues to rise, then these oil companies will choose to default and pay the BFT Fund a 20% penalty, which will be more cost-effective than continuing to execute the contract.