Missed 100 million! Take a look at the largest gold arbitrage opportunity in history 150 years ago

Gold has always had the attribute of currency in history, and because of its global characteristics, it has long been used as a means of payment in international trade.

In Japan in the 19th century, an excellent gold trading opportunity appeared.

In the 1850s, the United States needed to establish a new payment system in order to trade with Japan. Until then, payments in international trade were usually based on Spanish silver dollars.

The Spanish silver dollar is also known as the Mexican dollar, or pillar.

But at that time, Japan lacked Spanish silver dollars and used a gold currency system. Therefore, determining the exchange rate between the two became an important part of their trade.

U.S. Navy Commodore Matthew C Perry, who was trading with Japan at the time, accepted the exchange rate of gold coins and Spanish silver dollars provided by Japan, that is, 1 Mexican dollar was exchanged for 1 Japanese silver coin (ichibu). At that time, 4 Japanese silver coins were equivalent to 1 gold coin, so This means that 4 Mexican dollars is equivalent to 1 Japanese gold coin (koban).

But it should be noted that one Mexican dollar at that time weighed almost three times as much as a Japanese silver coin, containing almost 25 grams of silver, while the latter only had 8.5 grams of silver. Such an exchange rate would mean giving up a lot of gains from trade for the United States.

Therefore, in the subsequent renegotiations, Townsend Harris, the first consul of the United States, believed that the currency exchange rate should be of equal weight, which meant 1 Mexican dollar to 3 Japanese silver coins.

Of course, this was opposed by the Japanese, who pointed out that the value of Japanese silver coins is not based on the silver that makes their weight, but the value of the symbol behind them.

This is basically close to the meaning of modern currency. For example, a 1 euro coin has a total weight of 7.5 grams. The material includes 75% copper, 15% nickel and 10% zinc. The total material value is 0.05 euros, but its face value is 1 euro. It is recognized by everyone.

At the insistence of the United States, in 1858, the currency in trade between the United States and Japan began to be calculated by weight, with 3 Japanese silver coins equal to 1 Mexican dollar.

This meant that the value of Japanese silver coins was destroyed, but at the same time, it brought about the best gold trading opportunity in history.

At the previous exchange rate of 1 Mexican dollar to 1 Japanese silver coin, only 4 Mexican dollars could be exchanged for one Japanese gold coin. However, according to the latest exchange rate, a little more than 1 Mexican dollar can be exchanged for one Japanese gold coin, and Japanese gold coins contain 6.3 grams of gold.

You must know that the ratio of global gold and silver is 1 to 15.5. In other words, if you melted 1 Japanese gold coin at that time, you could exchange it for almost 98 grams of silver. Under the new exchange rate, 1 Mexican dollar contained a little more than Silver is well below this level, which creates a huge arbitrage opportunity.

Basically, after trading in Japan with 4 Mexican dollars, an American trader gets 12 Japanese silver coins, and these 12 Japanese silver coins can be exchanged for 3 Japanese gold coins, and the gold of 3 Japanese gold coins can be exchanged for 12 Mexican dollars. Dollar.

In general, arbitrageurs can exchange 4 Mexican dollars for 12 Mexican dollars through constant exchange.

However, Japan has actually been aware of the above risks for a long time, so it introduced a new currency, nishu, which has half the silver content of a Mexican dollar. In other words, 2 nishu can be exchanged for 1 Mexican dollar. In the Japanese currency system, 8 nishu can be exchanged for 1 Japanese gold coin. Using this currency means that 4 Mexican dollars can be exchanged for 1 Japanese gold coin, which is unprofitable.

But the currency met with strong opposition from the United States, and Japan had to abolish nishu a few weeks later.

After that, even though the Japanese government took a series of preventive measures, such as not allowing the sale of gold coins to foreigners and reducing the issuance of Japanese silver coins, it failed to prevent the largest gold arbitrage transaction in history.

By the fall of 1859, this trade reached its peak, with large numbers of merchant ships sailing to Japan carrying Mexican dollars and leaving with Japanese gold coins.

Due to the large number, it is still difficult to accurately count how many Japanese gold coins were taken away. Japanese scholars gave a range between 100,000 and 20 million, which is between 0.63 tons of gold and 126 tons of gold. Even if we take a middle value of 25 tons, it means a lot of wealth.

By the 1860s, the total number of gold mined in the world was about 7,000 tons, and the annual output was only about 190 tons. Therefore, the value behind the gold taken away from Japan at that time was very large.

Months later, Japan initiated measures to end the trade. Although the exchange rate between Mexican dollars and Japanese silver coins remained unchanged at that time, and four Japanese silver coins could still be exchanged for one gold coin, the weight of the gold coin was adjusted to one-third of the previous gold content. The benefits of the above-mentioned arbitrage trade are greatly reduced, and they lose their meaning.

For Japan, this best gold deal in history had serious consequences, almost wiping out all its overseas trade gains for several years. After that, Japan's monetary system underwent a great reconstruction, and many people who held large currency savings suffered a great blow.