"Mr. Thomas, there's something else I'd like to consult you about," Lin Baicheng said as he set down his coffee cup. "I'm preparing to trade gold futures, and I'd like to know—Goldman Sachs does offer leveraged financing, correct?"
"Of course," Wade Thomas replied immediately, his eyes lighting up. "That's one of Goldman's main businesses."
He leaned forward slightly, curiosity piqued. "May I ask, Mr. Lin, how much capital you plan to invest, and what level of leverage you'd like to use?"
Lin's tone was calm, almost casual. "One hundred million U.S. dollars, with five times leverage."
Thomas blinked in surprise. That was far larger than he'd expected from a foreign client in the entertainment industry, but it was still within his authority to approve.
Before flying to America, Lin had already calculated his total usable funds and how much he could allocate for the gold futures market. His available capital came in two main portions: a $100 million loan from Goldman Sachs, and nearly HK$400 million from selling his Wharf shares and company reserves.
He had already planned out how to distribute it:
Around HK$100 million to quietly acquire shares in Hutchison Whampoa.
Another HK$100 million to fund the acquisition of Rediffusion Television.
About HK$100 million for the development of a new game console.
That left him with limited capital for the gold futures market.
The solution: use the $100 million loan from Goldman as margin capital, and apply five times leverage.
With that structure, his $100 million would control $500 million worth of gold futures contracts. As long as the price of gold didn't fall below 80% of his entry price (a 20% loss), his positions wouldn't be liquidated.
Lin wasn't sure about the exact trading volume of gold futures in this era, but he was certain it was in the trillions. With such a massive global market, no one could possibly target his trades or manipulate prices just to wipe him out.
If the price fell slowly, he could always top up his margin before reaching the liquidation point. The real risk lay only in a sudden crash — which he judged unlikely.
He was confident that over the next few years, gold's overall trajectory would be upward. As long as the early months went smoothly, the rest would simply be a matter of waiting for profits to grow.
Initially, he had even considered using ten times leverage — but that would mean liquidation after just a 10% price drop. If he happened to buy right before a short-term correction, he might lose everything before having time to adjust.
Tenfold leverage was too dangerous. Fivefold, however, was a balanced choice — not too aggressive, not too conservative.
"One hundred million, five times leverage?" Thomas repeated, a smile spreading across his face. "No problem at all."
The amount was well within his $1 billion authorization limit, meaning he could approve it personally without escalation.
"How long do you plan to finance for, Mr. Lin? The longer the term, the lower the annualized interest rate. The shortest period is one month."
Lin nodded. "Could you tell me the specific rates — for one month, three months, six months, and one year?"
"Of course," Thomas said smoothly. "For one month, the annual rate is 15%. Three months, 14%. Six months, 12%. One year, 10%. The yearly rate is the lowest option."
The rates were higher than standard bank loans, but that was to be expected. Regular loans required collateral; leveraged financing did not. The collateral here was the futures contracts themselves, along with Lin's margin.
"I'll go with six months," Lin decided.
A one-year term was cheaper, but he couldn't predict his liquidity needs that far ahead. Paying a little more for flexibility was worth it.
At six months, a $500 million position with 12% annual interest would cost 6% total interest — $30 million. If his trades didn't earn at least 6% profit in half a year, he'd be at a loss. And since his $100 million margin was already borrowed money, the real risk was even higher.
Thomas nodded briskly. "Whenever you're ready, Mr. Lin, just contact me. Once we sign the contract and your funds are deposited into the account, Goldman's financing will be released immediately."
Another lucrative deal — Thomas could barely hide his satisfaction.
"I'll have the funds wired from Hong Kong within a day or two," Lin said. "Once that's done, I'll reach out to finalize the contract."
He paused, then added with a faint smile, "But Mr. Thomas — about Microsoft and Apple. Please don't forget those negotiations. I'd appreciate some good news in the next few days; I can't stay in the U.S. for too long."
Thomas gave a confident nod. "Rest assured, Mr. Lin. You'll have results within a week."
They chatted a bit longer before parting ways, Lin heading to the Star River Games branch office.
That same afternoon, Eric Davis, the American branch manager, signed a deal with Phil Smith's company for 10,000 units of Hong Kong Blocks. Smith immediately paid $14 million upfront.
Lin transferred $10 million to his personal U.S. account and left the remaining $4 million in the branch account.
Star River's U.S. branch was quiet most of the time — its main role was maintaining communication with Western distributors. Lin wanted to change that.
He instructed Eric Davis to use the $4 million to purchase a prime retail property in Los Angeles. The space would be renovated into a flagship store — a place to sell toys, game consoles, and any future merchandise. It would be Star River's first direct sales outlet in America.
Even if there was nothing to sell yet, the property itself was an investment — and the store would give Davis's team something to manage and grow.
Eric Davis accepted the task with enthusiasm. After all, a busier branch meant more responsibility, and more importance for its leader.
The more Star River expanded in the United States, the higher Eric's own standing would rise — and that, to him, was the best motivation of all.