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Offshore Guide
Gold Trading HK
Honk Kong gold trading history
The Hong Kong gold market has grown to a status of international importance since the mid 1970s. It is now a vital component in the world's gold trading market.
Gold trading in Hong Kong started as early as 1910 when a company was incorporated by a small group of money changers and traders. The name of the company was "The Gold and Silver Exchange Company" and the principal business was to trade in gold and silver among the traders themselves. In the following few years, the management of the company continued moving forward to expand the trading activities and, in 1918, the name of the company was changed to "The Chinese Gold & Silver Exchange Society" ("the Exchange"). Subsequently, the Exchange made various proposals to the Government and was eventually given permission by the authority to offer facilities to the public for trading in gold bullion. The fineness of the bars was 990 parts per 1,000 fine gold and the Exchange was effectively the first gold trading exchange established in the world.
In 1947, two years after the Japanese occupation (1941-1945) of Hong Kong, the Importation and Exportation of Gold (Prohibition) Regulation was enacted in compliance with the exchange control regulation in the Sterling Area. Buying and selling gold bullion was prohibited under the new legislation and trading in the Exchange was suspended. After a careful review, the Government agreed later in the year that the Exchange could resume trading in industrial gold of 945 fine instead of gold bullion of 990 fine.
In view of this development, the Honking-Macau gold trade was subsequently established. The business was undertaken exclusively by Mount Trading (owned jointly by Jardine Matheson and Samuel Montagu), Commercial Investment (a subsidiary of Wheelock Marden) and Premex (with major shareholders in Switzerland and Panama). Special licences were granted to these three companies by the Government to import gold, mainly from London, into Hong Kong for transhipment and sale to Macau.
The gold business in Macau was handled by Wong On Hong (owned by Dr Cheng Yu Tung of Chow Tai Fook) under a franchise granted by the Portuguese Government. The quantity of gold imported into Macau was relatively substantial despite the small population in the tiny Portuguese colony. It was generally acknowledged that after the metal was sold to traders in Macau, the bulk of the quantity was shipped back to Hong Kong through a network of unofficial channels to take advantage of the price differential.
The Hong Kong Macau trade lasted for twenty-seven years until January 1974 when the gold market in Hong Kong was liberalized following the dissolution of the Sterling Area in 1972. This development, coupled with the abolition of exchange controls, allowed international trading in gold to commence in Hong Kong. Aided by the telecommunication infrastructure already developed and facilities available in the financial community, the Hong Kong gold market rapidly gained international recognition. Both the volume of business and the number of counterparties increased steadily in the following years.
By the late 1970s, the loco London gold market was firmly established in Hong Kong with the physical presence of practically all the major bullion houses and banks in the world. They included Johnson Matthey, Mocatta, N. M. Rothschild & Sons, Samuel Montagu, Sharps Pixley, Derby and Engelhard from London; Credit Suisse, SBC and UBS from Switzerland; Deutsche Bank and Dresdner Bank from Germany; Bache Securities, Bank of America, Bank of Boston, Bank of Nova Scotia, Bankers Trust, Citibank, Dean Witter Reynolds, Merrill Lynch, Morgan Guaranty Trust, Republic National Bank of New York, Shearson Lehman Brothers, Shun Loong Bear Stearns and Wardley Acli from North America.
Additionally, several international bullion brokers set up offices in Hong Kong to provide dealing prices from Europe. Reuters and AP Dow Jones also extended their operation in the territory to supply various dealing equipment required for the growing business.
The successful development of loco London gold trading in Hong Kong complemented the tael gold business conducted on the Exchange. The level of activities greatly increased in the following few years and a record high daily turnover of nearly 4,000,000 ounces on the Exchange and in the loco London market was reached in 1981. A substantial amount of interest in trading in gold was generated from a wide cross-section of local people in Hong Kong ranging from traders and manufacturers to investors and speculators.
In April 1984, the Hong Kong Bullion Dealers Club (HKBDC) was founded with the prime objective of developing professional ethics and conduct of bullion dealing in Hong Kong. Mr. Robert Sitt (Samuel Montagu Hong Kong) was elected President while Mr. Dick Gazmararian (Mocatta Hong Kong) and Mr. Yip Lai Shing (Sun Hung Kai Securities) were elected First and Second Vice President respectively. To help strengthening the relationship between Hong Kong and other major bullion markets, senior members of the bullion industry in the world were appointed Honorary Presidents of the Club. They included Mr. Robert Fell (Commissioner for Securities & Commodities Trading, Hong Kong), the Late Dr Woo Hon Fai (President, Chinese Gold & Silver Exchange Society, Hong Kong), Mr. Rudolf K. Schriber (Credit Suisse, Zurich), Mr. Fritz Plass (Deutsche Bank, Frankfurt), Mr. Robert Guy (N. M. Rothschild & Sons, London) and Dr Henry Jarecki (Mocatta Metals Corporation, New York).
The world gold market has stagnated gradually since the mid 1980s subsequent to the deflationary policy and fiscal measures adopted by the G-7 nations. The volume of business in Hong Kong has also shrunk drastically in the past 10 years. Nonetheless, confidence in the bullion industry has been returning lately and major international markets are staging a comeback. The time is opportune to review the existing structure of the gold market in Hong Kong.
The Hong Kong gold market has grown to a status of international importance since the mid 1970s. It is now a vital component in the world's gold trading market.
Gold trading in Hong Kong started as early as 1910 when a company was incorporated by a small group of money changers and traders. The name of the company was "The Gold and Silver Exchange Company" and the principal business was to trade in gold and silver among the traders themselves. In the following few years, the management of the company continued moving forward to expand the trading activities and, in 1918, the name of the company was changed to "The Chinese Gold & Silver Exchange Society" ("the Exchange"). Subsequently, the Exchange made various proposals to the Government and was eventually given permission by the authority to offer facilities to the public for trading in gold bullion. The fineness of the bars was 990 parts per 1,000 fine gold and the Exchange was effectively the first gold trading exchange established in the world.
In 1947, two years after the Japanese occupation (1941-1945) of Hong Kong, the Importation and Exportation of Gold (Prohibition) Regulation was enacted in compliance with the exchange control regulation in the Sterling Area. Buying and selling gold bullion was prohibited under the new legislation and trading in the Exchange was suspended. After a careful review, the Government agreed later in the year that the Exchange could resume trading in industrial gold of 945 fine instead of gold bullion of 990 fine.
In view of this development, the Honking-Macau gold trade was subsequently established. The business was undertaken exclusively by Mount Trading (owned jointly by Jardine Matheson and Samuel Montagu), Commercial Investment (a subsidiary of Wheelock Marden) and Premex (with major shareholders in Switzerland and Panama). Special licences were granted to these three companies by the Government to import gold, mainly from London, into Hong Kong for transhipment and sale to Macau.
The gold business in Macau was handled by Wong On Hong (owned by Dr Cheng Yu Tung of Chow Tai Fook) under a franchise granted by the Portuguese Government. The quantity of gold imported into Macau was relatively substantial despite the small population in the tiny Portuguese colony. It was generally acknowledged that after the metal was sold to traders in Macau, the bulk of the quantity was shipped back to Hong Kong through a network of unofficial channels to take advantage of the price differential.
The Hong Kong Macau trade lasted for twenty-seven years until January 1974 when the gold market in Hong Kong was liberalized following the dissolution of the Sterling Area in 1972. This development, coupled with the abolition of exchange controls, allowed international trading in gold to commence in Hong Kong. Aided by the telecommunication infrastructure already developed and facilities available in the financial community, the Hong Kong gold market rapidly gained international recognition. Both the volume of business and the number of counterparties increased steadily in the following years.
By the late 1970s, the loco London gold market was firmly established in Hong Kong with the physical presence of practically all the major bullion houses and banks in the world. They included Johnson Matthey, Mocatta, N. M. Rothschild & Sons, Samuel Montagu, Sharps Pixley, Derby and Engelhard from London; Credit Suisse, SBC and UBS from Switzerland; Deutsche Bank and Dresdner Bank from Germany; Bache Securities, Bank of America, Bank of Boston, Bank of Nova Scotia, Bankers Trust, Citibank, Dean Witter Reynolds, Merrill Lynch, Morgan Guaranty Trust, Republic National Bank of New York, Shearson Lehman Brothers, Shun Loong Bear Stearns and Wardley Acli from North America.
Additionally, several international bullion brokers set up offices in Hong Kong to provide dealing prices from Europe. Reuters and AP Dow Jones also extended their operation in the territory to supply various dealing equipment required for the growing business.
The successful development of loco London gold trading in Hong Kong complemented the tael gold business conducted on the Exchange. The level of activities greatly increased in the following few years and a record high daily turnover of nearly 4,000,000 ounces on the Exchange and in the loco London market was reached in 1981. A substantial amount of interest in trading in gold was generated from a wide cross-section of local people in Hong Kong ranging from traders and manufacturers to investors and speculators.
In April 1984, the Hong Kong Bullion Dealers Club (HKBDC) was founded with the prime objective of developing professional ethics and conduct of bullion dealing in Hong Kong. Mr. Robert Sitt (Samuel Montagu Hong Kong) was elected President while Mr. Dick Gazmararian (Mocatta Hong Kong) and Mr. Yip Lai Shing (Sun Hung Kai Securities) were elected First and Second Vice President respectively. To help strengthening the relationship between Hong Kong and other major bullion markets, senior members of the bullion industry in the world were appointed Honorary Presidents of the Club. They included Mr. Robert Fell (Commissioner for Securities & Commodities Trading, Hong Kong), the Late Dr Woo Hon Fai (President, Chinese Gold & Silver Exchange Society, Hong Kong), Mr. Rudolf K. Schriber (Credit Suisse, Zurich), Mr. Fritz Plass (Deutsche Bank, Frankfurt), Mr. Robert Guy (N. M. Rothschild & Sons, London) and Dr Henry Jarecki (Mocatta Metals Corporation, New York).
The world gold market has stagnated gradually since the mid 1980s subsequent to the deflationary policy and fiscal measures adopted by the G-7 nations. The volume of business in Hong Kong has also shrunk drastically in the past 10 years. Nonetheless, confidence in the bullion industry has been returning lately and major international markets are staging a comeback. The time is opportune to review the existing structure of the gold market in Hong Kong.
Honk Kong gold trading history
the chinese gold silver exchange socity
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