Golden Spoon Investment Portfolio - Chapter 446

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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446. Hmm. So such a fund existed.

Moscow Kremlin Conference Room.
The soaring ceiling and walls adorned with ornate golden patterns, lined with heavy oak panels, seemed to embody the resplendent glory of the Russian Empire itself.
At the long, lustrous mahogany table, with Ivanov, the Russian President, seated at the center, Yevgeny Popov, the Prime Minister, and Andrey Sinitsyn, the Central Bank Governor, sat across from one another.
The atmosphere of the expansive and majestic conference room hung heavy, reflecting the dire circumstances Russia now faced.
President Ivanov, who habitually enjoyed alcohol and perpetually bore a flushed complexion, spoke with visibly taut nerves.

“So you’re saying the government bond auction was held, but no one wanted to purchase them, and it failed?”

Governor Sinitsyn, a man of portly build, perspired profusely despite summer being still distant, and answered with an expression of profound distress.

“Yes. Contrary to expectations, the bid rate fell short of even 10 percent.”

Prime Minister Popov, seated across from him, abruptly interjected.

“Perhaps the incentives offered to encourage bond purchases were insufficient.”

Governor Sinitsyn’s temples flared as Popov, the very architect of this catastrophe, brazenly suggested that the bond issuance failed because insufficient benefits were provided.
He longed to retort that poor management of subordinates had caused this disaster, but he restrained himself and replied instead.

“The interest rate offered in the bond auction announcement was 50 percent. Despite offering such extraordinarily high rates, the failure to sell government bonds indicates there is another reason.”
“What is it?”

At President Ivanov’s question, Governor Sinitsyn hesitated briefly before answering cautiously, gauging the room.

“While investors could receive high interest rates, the concern that Russia’s economy might collapse at any moment is far greater.”

Before the words had even finished, the hot-tempered President Ivanov slammed his palm forcefully against the conference table and roared.

“Russia going bankrupt? What kind of absurd nonsense is that!”

Governor Sinitsyn reflexively hunched his shoulders and hastily offered an explanation.

“Of course, I believe such a thing will absolutely never occur, but foreign investors perceive the situation differently.”

Governor Sinitsyn cast a subtle glance toward Prime Minister Popov across from him.

“With the talks with the United States falling through and the International Monetary Fund negotiations collapsing, Russia’s CDS premium has skyrocketed to record levels.”

Credit Default Swap, commonly referred to as CDS, was a financial derivative designed to allow investors to recover their principal investment if bonds issued by a nation or corporation defaulted.
In essence, a rising CDS premium—the fee itself—signified that the default risk of the underlying bond had grown proportionally.

“What makes this even more dire is that with the failure to issue government bonds, the outflow of foreign investment capital, which is already hemorrhaging at an alarming rate, will only accelerate.”
“Mm.”

Watching President Ivanov emit a low, guttural sound, Chairman Sinitsyn continued in a grave tone.

“If this trajectory continues, we won’t survive four months before our foreign exchange reserves are completely depleted.”
“I believe I received a report just days ago stating we still had 14 billion dollars remaining. Am I mistaken?”

As President Ivanov furrowed his brow and looked at him, Chairman Sinitsyn provided the explanation.

“That is correct. However, approximately 4.5 billion dollars consists of gold bullion that cannot be readily liquidated, leaving us with only 9.5 billion dollars in actual liquid reserves.”
“….”
“Considering that over 2 billion dollars in foreign currency is flowing out each month while government bond issuance remains blocked, even if we stretch it to four months at best, we cannot survive beyond year’s end.”
“Ugh.”

President Ivanov let out a groan, his arms crossed tightly.
Observing his deeply furrowed expression, Chairman Sinitsyn offered counsel in a grave tone.

“Unless we stabilize the situation quickly before it’s too late, we may very well face a state bankruptcy crisis.”

Yet President Ivanov’s expression darkened with reluctance.

“Are you suggesting I should now grovel before the International Monetary Fund and those American bastards?”
“I understand your reluctance, but at this point, there is no alternative.”

Chairman Sinitsyn made another attempt to persuade the visibly displeased President Ivanov.

“Mm….”

As President Ivanov wore an expression of deep deliberation, Prime Minister Popov suddenly interjected.

“While it’s true our position is disadvantageous, if we capitulate to every demand from the United States and the International Monetary Fund, the domestic economy will sink further and political chaos will ensue. Particularly given that we’ve already raised taxes excessively to reduce fiscal deficits. If we push for additional tax increases now, not only will it be difficult to pass through the Communist Party-controlled parliament, but public discontent will explode.”

With that, Prime Minister Popov continued speaking with passionate intensity.

“Above all, if we appear to back down helplessly here, it will deal a grave blow to the President’s authority.”

Ivanov’s face, proud and unyielding, hardened like stone.
Even as Sinitsyn watched with a stern expression, frustrated that Ivanov was creating obstacles when the situation was already difficult enough to manage, the Central Bank Chairman’s disapproval was evident.

“What if things become irreversible!”
“Who said we should maintain confrontation to the bitter end?”

Popov spoke with an infuriatingly casual tone.

“If we appear desperate, we’ll have no choice but to be dragged along. In a tug-of-war, if we step back at the right moment, we can preserve our dignity while minimizing losses.”

Sinitsyn furrowed his brow and retorted irritably.

“Didn’t you hear that it will be difficult to endure four months in these circumstances!”
“There is a way to obtain more dollars, which is why I’m saying this.”

At the sudden remark, Sinitsyn looked up as if asking what nonsense this was.
Ivanov, who had been wearing an expression of deep concern, also leaned forward and asked.

“Is that truly possible?”
“It is.”

Popov answered with confidence, meeting their gazes.

“Tell me what method you’re referring to.”

Sinitsyn, equally curious, watched Popov intently without speaking.
Popov regarded both men with an air of composure before speaking.

“We sell the 470 tons of gold bullion stored in the vault.”
“…!”
“In that case, the available foreign currency in cash would increase from 9.5 billion dollars to 14 billion dollars. We would have ample time to negotiate with the other party, would we not.”

Sinitsyn’s expression soured at Popov’s self-satisfied shrug, as if he had accomplished something remarkable.

“We’re talking about 470 tons—not one or two tons. Not only would it be difficult to dispose of such a quantity of gold bullion, but even if we managed to sell it, the market price would plummet and we would suffer enormous losses.”

When selling pressure increased in the market, prices naturally declined—it was an immutable law of economics.
As President Ivanov’s expression darkened with disappointment, Prime Minister Popov parted his lips with a self-satisfied smile.

“If we purchase all 470 tons from a single source at international market rates, there would be no problem whatsoever.”

Chairman Sinitsyn’s eyes widened as he pressed for clarification.

“You’re saying they would purchase all that gold bullion—without any discount—at market rates?”
“That’s correct.”
“Preposterous. Absolutely absurd.”

Chairman Sinitsyn scoffed dismissively, yet President Ivanov leaned forward with a glimmer of desperate hope.

“Which entity are we discussing?”

Prime Minister Popov straightened his shoulders with confidence and replied.

“The Eldorado Fund.”

President Ivanov tilted his head in confusion.

“A fund? Not a central bank of another nation?”
“Precisely.”

President Ivanov’s eyes narrowed with skepticism as he posed his question.

“Can such an entity truly command 4.5 billion dollars?”
“The name may be unfamiliar to you, but it is a fund operated by a heavyweight figure on Wall Street. With assets under management exceeding hundreds of billions of dollars, there would be absolutely no difficulty in settling the gold payment.”
“Interesting. I was unaware such a fund existed.”

As Prime Minister Popov spoke with the authority of an Eldorado Fund spokesman, President Ivanov turned his gaze toward Chairman Sinitsyn, his eyes silently demanding verification.

“Though they only became prominent in recent years, they have earned a formidable reputation—beginning with Mexican peso investments and continuing through the Asian financial crisis, where they achieved extraordinary returns without a single failed investment.”

Chairman Sinitsyn answered with evident reluctance.
He had no desire to support Popov’s position, yet he could not bring himself to lie.

“Moreover, they are renowned as IT venture investors, having already earned tens of billions of dollars through IPOs. The fund owner’s investment acumen is so formidable that George Hamilton of the Quantum Fund himself has acknowledged their superiority.”

Popov didn’t miss the opportunity and quickly added his own comment.
Even those ignorant of economics knew of George Hamilton and the Quantum Fund, who had brought the Bank of England to its knees, so President Ivanov let out a small exclamation of admiration.

“He must be quite an extraordinary figure.”
“He said he would pay 500 million dollars upfront upon contract signing, so there’s no need to doubt his ability to pay.”
“Ah, I see.”

At the mention of a 500 million dollar advance payment, President Ivanov’s expression brightened considerably.

“If we sell the gold reserves to secure additional dollars, it seems we’ll be able to breathe a bit easier. What do you think?”
“…It seems we might gain another month or two of breathing room.”

Andrey Sinitsyn, answering reluctantly, added with a note of concern.

“Even so, we’ve only bought ourselves time. If we don’t address the fundamental problems, we won’t be able to avoid the worst-case scenario.”

Though he emphasized the crisis once more, unfortunately President Ivanov was only delighted that he could extinguish the immediate fire at his feet.

“Popov, as you say, if we bow our heads here, we’ll be dragged around by them forever. Great Russia cannot afford such a sight.”
“Absolutely correct, sir. If we demonstrate our willingness to dispose of gold reserves in large quantities to secure dollars, they will realize we won’t back down easily and may abandon their aggressive stance.”
“Haha, indeed.”

Watching Popov flatter and President Ivanov laugh in satisfaction, Andrey Sinitsyn shook his head inwardly.
He wondered if the United States and the IMF would truly cooperate as expected.

“Even if we sell the gold reserves, we’ll need more dollars, so let’s proceed with issuing new government bonds.”

President Ivanov, having regained his confidence, spoke with renewed assurance.

“Considering there was no demand even when we offered 50% interest rates, it will be difficult to achieve the desired results even with a re-bid.”

When Andrey Sinitsyn expressed skepticism, Popov interjected again.

“Then why not simply offer higher interest rates?”

Andrey Sinitsyn furrowed his brow, barely suppressing a sigh.

“With default concerns pervasive in the market, even adding 10 to 20 percent more in interest rates won’t bring buyers.”
“Then what if we simply double the interest rate? Wouldn’t that tempt potential buyers?”

Andrey Sinitsyn, rendered speechless by such an absurd proposition, let out a hollow laugh.

“If we do that, we’d have to pay interest equal to the principal itself. The losses would be far too substantial.”

In truth, before even considering losses, the method made no sense whatsoever.
Government bonds with a hundred percent interest rate? Where in the world did such a thing exist?
At that moment, President Ivanov openly sided with Prime Minister Popov.

“Given the urgency of the situation, issuing government bonds this way just once shouldn’t pose a significant problem, would it?”
“Regardless, the losses are simply too great. Moreover, we risk sending a dangerously misleading signal to the market that default is imminent.”

Andrey Sinitsyn objected with a troubled expression, but President Ivanov pressed forward with stubborn resolve.

“It’s only this once, after all. And once negotiations with both the United States and the International Monetary Fund are concluded, external concerns will evaporate immediately. So do as I say.”

An oppressive gaze, heavy as a weight bearing down, fixed upon Andrey Sinitsyn.
Seeing that he sought only temporary measures rather than genuine solutions, Andrey Sinitsyn felt his chest tighten with frustration.
Yet he could not defy the President’s orders, so he barely managed to part his reluctant lips and respond.

“…Understood.”

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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