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Taiwan with Chris Linen

February 23, 2017

Chapter 90 in the exclusive series for Dynamic Commodities- becoming a commodities trader

The word in the gold market was that the central bank of Taiwan was about to buy a huge amount of gold for their reserves. When a central bank puts out the word that they wish to buy or sell gold reserves, the dealers of the world descend on the capital city like bees on honey. There is little commission when executing a massive buying or selling program. Many times traders will do the transaction gratis. However, the power of knowing the quantity, when the transactions will take place and positioning in front of the order was worth a mint in those days.

Chris Linen and I made travel reservations to meet in Taipei the minute we heard about the planned purchase. Furthermore, Chris Wilson, through his connections at Salomon Brothers hooked us up with the right guy linked to the central bank to help secure the order. Therefore, Linen and I met in the hotel in Taipei on a Sunday. We would have lunch with H.C. Chou the next day. As a result, we were excited. The rumor was that the central bank was preparing to buy several million ounces of the yellow metal for shipment to their vault in Taiwan. The power of an order of that magnitude cannot be understated. It could be worth $10-$20 million for Philipp Brothers.

H.C. Chou met us at our hotel in the center of the hot and dirty city. Traffic in Taipei is appalling. It can take hours to get anywhere in a taxi!  There is an underlying current of tension and absurdity in the city.

Chou was in his late sixties and he did nothing to dispel that notion. He was a very tall man, about 6’2’’, odd for an Asian, but not for someone from Taiwan. He had a glass eye and a very strange aura.

Hence, we went to lunch to talk about the deal. The custom was to eat first and talk after. So, Chou ordered. A plate of fried baby birds arrived at the table and he proceeded to eat loudly sucking the eyes out of the birds.  He motioned for us to join in the feast. It was quite a sight, watching the glass eye bounce around as the former deputy governor of the central bank of Taiwan slurped his way to ecstasy. Other entrees arrived, all local foods meaning not the kind of fare Chris and I were accustomed to eating. Abalone and winter meat, I was afraid to ask what that was, and other odd looking dishes. Chou chowed down seriously while Chris and I picked at our plates.

After a time, he was not only slurping but hocking up phlegm and blowing his nose all over the place. It was all quite appetizing! When the meal was finally coming to an end, Chou told us the deal was ours. All he would need was one million dollars in a suitcase to clear the way for the order. Chris and I knew there was no way that would be possible. The FCBPA or Foreign Corrupt Business Practices Act prohibited any payments, gratuities or bribes to current or former foreign government officials.

Consequently, we went back to the hotel and called Marty Kaufman who got angry. He told us to go back and get the deal without the payment. We told him that was impossible. Chou needed to chow down on cash. We left Taiwan empty handed the next day, after many martinis in a dark and dingy strip club. A few weeks later, the deal was complete. We heard through sources that Goldman Sachs arranged the order through Henry Kissinger. Especially relevant, Kissinger Associates knew how to operate in that part of the world and I guess how to shield his clients from exposure to the FCBPA.

Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities

 

Post Series: Origin Of A Commodities Trader

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