Chapter Ten: Locked Vault

The Hunter family’s game was vast, and their sources of capital were equally diverse. However, the principal origins of their wealth were the desert magnates and the banks. The current desert magnates were exceedingly arrogant, their contempt for everything evident in their every action. To them, national power was synonymous with wealth.

Yet, they were sorely mistaken. When our straightforward friend resorted to murder and plunder, these magnates were so terrified they lost all composure. Truly, the arrogant may court disaster, just as the skies bring rain. Using oil as a weapon is never a wise strategy. The world remained a bipolar landscape; both major powers lacked nothing in terms of petroleum. Wielding it as a weapon was nothing short of laughable.

Why did the American empire insist on planting a stake in the desert regions? The world is vast; they could have chosen anywhere. In truth, it was all part of their global layout. Such a crucial oil-producing region could not be simply seized, but exerting control was essential.

At this time, America was weak, and transforming its economy was not an easy feat. They could disregard lagging industrial output, but how were they to solve the problem of mass unemployment? These were issues that demanded solutions.

The Long Island villa, of course, could not compare to White Farm—it was, after all, only a temporary residence. Fortunately, William White was unconcerned. At his age, hamburgers and cola should have been his favorites. In fact, he still ate hamburgers, but these were so high-end that they scarcely resembled hamburgers at all. The ones from school were even worse than those at McDonald's, yet he missed them dearly. One must admit, sentimentality can be quite peculiar.

After lunch, Old Frank brought him a glass of red wine and a plate of cheese, both homemade. The quality was beyond reproach. Texas red wine was robust, much like the character of Texans themselves. It was not particularly suited to cheese—such wine was better paired with the dark cuisine of Texas, while Bordeaux wine was a better match for cheese.

Yet, as the owner of a winery, they did not drink other brands in daily life, much less when entertaining guests. No matter how inferior their wine might be, it was a source of pride. In fact, their wine was quite good and well-known locally in Texas.

His father had always hoped to make the White Winery famous. Sadly, despite all his efforts, it remained a regional brand. Outside Texas, few had heard of it.

Strictly speaking, red wine is just a beverage. Not only in Texas, but even in Bordeaux, there are brands that are popular only in a few small towns. How many brands of red wine are there in Bordeaux? Perhaps only the insiders know the answer.

“Frank, inform them to lock their positions.”

“Young master, are we not going to trade the swings anymore?”

“When gold was thirty-five dollars an ounce, silver was less than two dollars. Now, gold is likely to exceed four hundred dollars an ounce. Frank, what would be the reasonable price for silver?”

“Well, if the ratio between silver and gold remains unchanged, it should be around twenty dollars.”

“You see, there’s still plenty of room for growth. Why should I care about short-term profits? Besides, frequent trading will only draw attention.”

“I understand, young master. Should we increase our position?”

“No, our funds are limited. Much of our money is tied up and cannot be used.”

“Understood, young master. I’ll notify them immediately.”

Funds used for short-term speculation rarely stayed overnight, especially in metals futures, where the uncertain factors were too numerous. When the American trading window closed, London was still open. A sudden event could leave you with nothing but tears.

William White’s decision to lock in his position once again led the Hunter family to a misjudgment. Holding positions overnight was not unheard of, but those who did were usually mine owners or companies with significant silver consumption. Such hedging was typically for modest amounts, not for profit, but to avoid risk.

Silver is an important industrial material. Many factories have real needs for it. If its price swings wildly, they suffer losses. In such cases, paying a premium to lock in the current price is the only way to hedge risk. That, in fact, is the original purpose of the futures market. Like in the securities futures market, going long is not a big issue—the worst outcome is losing money. But short-selling carries tremendous risk. If you cannot cover your position in time, you may face jail time.

It is the same as short-selling stocks: you do not actually possess the silver and must borrow it. If you cannot return it, you will face legal action. At present, most physical silver was in the hands of the Hunter family, so the strength of short-selling was severely limited. Without silver in hand, naked short-selling carried grave legal risks.

Thus, a strange scene appeared in the BY market. Like gold, prices were rising, but silver’s ascent was a steady spiral, with no meaningful corrections. Americans were not unfamiliar with this phenomenon; it had happened with soybean futures in previous years, with the Hunter family at the helm. They had wrecked the futures market so thoroughly that the government had to intervene. The Hunter family’s open profits neared two hundred million dollars.

Such blatant market manipulation went unpunished, which was baffling. From their perspective, having done it once, there was no reason not to do it again—someone would always clean up the mess.

The circle of futures market trading is even smaller than that of the securities market. Since the Hunter family had returned, everyone decided to profit together.

With speculative funds pouring in, the price of silver was pushed even higher—soon reaching the $5.80 range. What? That’s not much of an increase? Don’t kid yourself; leverage had reached nearly thirty times. If you invested five hundred thousand dollars and silver rose ten percent, you would have made more than a million. Even though the price hadn’t risen that much yet, profits were still impressive.

The situation, while not unshakable, was already quite secure. If one could still lose in such circumstances, then the futures market would be filled with wailing. To claim that William White was not anxious would be untrue; he had invested over three hundred thousand dollars—his family’s reserve, their last chance to turn things around. If he could not reverse the tide this time, other means would have to be found.

Old Frank was somewhat excited. In just a few days, their paper profit had exceeded a million dollars. According to the young master, silver could challenge the twenty-dollar mark.

Though that was what the young master said, Frank never really believed it. Taking profits when ahead was always the best policy. Never mind twenty dollars, even if it rose to eight, it would be extraordinary.

Since the discovery of the New World, the ratio between silver and gold had been steadily declining. Initially, it was around one to ten; later, it slid all the way to about one to forty.

During World War II, due to the massive outflow of gold, President Roosevelt launched the Silver Program. For a considerable period, silver was directly linked to the dollar.

The Hunter family’s goal this time was clear: they sought to build a silver empire. If their maneuver succeeded, replacing the Seven Great Families was not beyond reach.