Your Offshore Guide
Offshore Guide
Gold Trading HK
The Physical Gold market
Chinese people are great lovers for gold or "kam" as it is called in Chinese. Articles produced with the yellow metal ranging from rings to watches and earrings to bracelets are worn by Chinese as a symbol of wealth and kept as stored value. In the old days, false teeth were made of gold and this remains the practice among some of the older people in China, Taiwan and Hong Kong. For affluent Chinese families, gold figurines representing fortune, prosperity and longevity as well as gold figures of Buddha are displayed in their homes. On auspicious occasions such as the New Year in the Chinese lunar calendar, gold-related phrases are used to express our good wishes. "Kam Ngan Moon UV and "Kam Yuk Moon Tong" are commonly used to indicate the wish that our houses would be full of gold and silver or gold and jade.
Gold has also long been considered by the Chinese as a hard currency. With the constant changing of power of the many emperors, dynasties and ruling parties in China, the metal has been bought and hoarded as a hedge against political uncertainties and as a kind of life insurance.
Tael bars with a fineness of 990 produced by acceptable melters of the Chinese Gold & Silver Exchange remain the most popular item among consumers. These bars are bought and sold over the counters of hundreds of local banks, jewellery shops and money changers. Bid and offer prices follow closely the spot prices quoted in the Exchange and bars of 999.9 fine in various sizes are also available at a premium.
The liberalization of gold trading in Hong Kong in 1974 added a new dimension to the local physical market. Good Delivery bars were imported from London and Switzerland and gained gradual acceptability in Hong Kong. In the early stage of development, prices were based on spot loco London quotations plus a CIF premium which varies according to sizes and purities of the bars. The price structure has now changed and these imported bars are sold in Hong Kong at tael gold prices quoted in the Exchange plus a swap premium. Assuming that the spot price quoted in the Exchange is HK$3,495 per tael and that the swap premium is HK$40 per tael, the following formula illustrates the price calculation for 1 kilobar of 999.9 fine:
Price (1 kilobar) - (3,495 + 40) x 32.1507 x 0.9999 1.20337
= HK$94,435.90
Additional to the acceptable melters of the Chinese Gold & Silver Exchange, Johnson Matthey, Metaux Precieux S.A. Metalor and Hereaus are also engaged in the precious metal refining business in Hong Kong. They have established refineries in the territory and produce gold bars of 9999 fine, gold chemicals and other precious metal products to cater for the requirements of the local jewellery, electronic and the electroplating industries.
The steady economic growth in Hong Kong since the mid 1980s has greatly increased the income of the people and this has in turn stimulated a higher level of gold offtake. The per capita consumption of 7.66 grammes in 1994 was the second highest in the Asia-Pacific region. The table appended below provides the estimated offtake by the largest consuming countries in Asia.
Additional to gold bars of various sizes and purities, international bullion coins and medals are also marketed extensively in Hong Kong. These include the Canadian Maple Leaf, American Eagle, Australian Nugget, British Britannia, Chinese Panda and South African Krugerrand. The selling premium of these coins fluctuates marginally at around 3.75% over the intrinsic value of gold and sales have been relatively steady. The importation of gold coins into Hong Kong from various countries during the past five years.
The South African Krugerrand gold coin was the first bullion coin introduced to Hong Kong by International Gold Corporation, Johannesburg, in the early 1970s. Subsequently, other bullion coins were imported and sold in the territory. Hong Kong issued the first gold coin in 1975 to commemorate the first visit of Her Majesty the Queen and His Royal Highness The Prince Philip, Duke of Edinburgh, to the colony. Gold coins with a face value of HK$ 1,000 were made legal tender for the payment of any amount with effect from 5th May 1975. The coins are in 22 carat gold and are available in both proof and uncirculated versions.
Each coin measures 28.4 mm in diameter and weights 15.976 grammes. Other gold coins with identical specifications subsequently issued are related to the legendary animals of the Chinese lunar calendar. One of the most important festivals in the lunar calendar is the New Year which begins on the first day of the first lunar month. The years are represented by 12 animal symbols that are repeated in a cycle. The animals of the 12-year cycle are the rat, ox, tiger, rabbit, dragon, snake, horse, goat, monkey, cockerel, dog and pig. The first day of the lunar year falls either in January or February.
According to the legend, people born in the Year of the Rat, for instance, are generally optimistic, sociable and sentimental. Rat persons adapt easily to a new environment and have critical minds and rich imagination.
The issue of the coins in a series to mark the 12 lunar years fell in the western calendar years 1976-1987. The obverse of each coin bears the symbol of one of the 12 animals and the reverse displays the portrait of Her Majesty The Queen.
To commemorate the second visit (1986) to Hong Kong of Her Majesty Queen Elizabeth II and His Royal Highness The Prince Philip, Duke of Edinburgh, the Government issued a gold coin bearing the new Raphael Maklouf portrait of Her Majesty The Queen.
The 1975 and 1986 Royal visit coins and the series of coins to mark the twelve lunar years were the only legal tender gold coins issued by the Hong Kong Government. This set of fourteen coins will become unique in the history of Hong Kong when the sovereignty is returned to China in 1997.
Aside from selling gold coins, a number of local banks in Hong Kong offer their customers facilities for investing in gold. The Hong Kong and Shanghai Banking Corporation (Hong Kong Bank), for example, offers three different ways for their clients to invest in their "Wayfoong Gold" which include "Wayfoong Passbook Gold", "Wayfoong Statement Gold" and "Wayfoong Gold Bars".
Wayfoong Passbook Gold and Wayfoong Statement Gold are not required to be backed up by physical gold. All transactions made also do not involve any physical gold.
There are absolutely no charges other than the actual buying or selling price at the time of transaction. HongkongBank guarantees to buy back any amount of Wayfoong Gold at the current quoted price (provided the Wayfoong Gold Bars are not damaged). Wayfoong Gold Bars cannot be directly transferred to Wayfoong Passbook Gold or Wayfoong Statement Gold.
Whether the customers choose to invest in Wayfoong Passbook Gold, Wayfoong Statement Gold or Wayfoong Gold Bars, they can carry out transactions either by cash, cashier's order or by Current or Savings account transfer.
Wayfoong Passbook Gold and Wayfoong Statement Gold Holdings may be used as collateral for a Current Account overdraft.
All gold transactions are recorded in a special Gold Passbook and each transaction entry gives details of quantity, date and market price. There is no risk of loss through theft or misplacement of passbook. Overall, it is a convenient way to invest in gold without any security or storage problem.
The parent company of Hong Kong Bank, HSBC Holdings Plc, also owns Midland Bank PLC, one of the five fixing members of the London Bullion Market Association. In this capacity, they are actively engaged in loco London gold trading in the world market.
Po Sang Bank and other members of the Bank of China Group, Standard Chartered Bank, Hang Seng Bank and Wing Hang Bank offer similar types of passbook gold trading facilities to their clients.
Hong Kong does not have any gold mine production. Gold required for industrial and other uses is imported directly
from producing countries in the world or from other trading centres. The metal is shipped to Hong Kong in various forms and purities to suit different applications. For jewellery manufacture and gold refining, large standard bars and kilobars of 995.0/999.9 fine are normally imported. For the electroplating and electronic industry, gold is consumed in fabricated or semi-fabricated forms including gold alloys, gold wires and chemical gold products. Dores and scraps with lower gold contents are also imported by local refiners in Hong Kong, particularly from neighbouring countries in the region.
In 1994, Hong Kong imported officially 326.10 tonnes of gold with a total value of HK$31,200 million (US$4,050 million). The major sources of supplies are North America, South Africa, Switzerland, United Kingdom, Australia and Canada.
During the past five years, Hong Kong imported a total of 1,364 tonnes of gold in different forms and purities from various countries. Judging from past experience, standard large bars of 999.9 fine are supplied by North America while kilobars of 999.9 fine are shipped from South Africa, Europe and Australia. Breakdown statistics covering the importation of gold bullion into Hong Kong during the period of 1990-1994 are summarised in the table appended below:
On the export side, Hong Kong was the leading physical gold distribution centre in Asia while the Hongkong-Macau gold trade lasted. This special role played by Hong Kong has gradually diminished since the mid 1970s following the liberalization of gold markets in neighbouring countries. However, the unofficial export trade has been re-established as a result of higher Chinese demand since the mid 1980s. Hong Kong, being the gateway to China, has become the leading supplier of gold in various forms to people living in the Mainland.
Over the last few years, traditional gold hoarders in Hong Kong and in other countries in Southeast Asia have become more price sensitive and they tend to take advantage of the short-term price volatility and trend. On the run up in the price to US$400 an ounce in May 1995, liquidation by Asian physical gold hoarders was experienced and this practice is expected to prevail until a long-term rising price trend develops.
Chinese people are great lovers for gold or "kam" as it is called in Chinese. Articles produced with the yellow metal ranging from rings to watches and earrings to bracelets are worn by Chinese as a symbol of wealth and kept as stored value. In the old days, false teeth were made of gold and this remains the practice among some of the older people in China, Taiwan and Hong Kong. For affluent Chinese families, gold figurines representing fortune, prosperity and longevity as well as gold figures of Buddha are displayed in their homes. On auspicious occasions such as the New Year in the Chinese lunar calendar, gold-related phrases are used to express our good wishes. "Kam Ngan Moon UV and "Kam Yuk Moon Tong" are commonly used to indicate the wish that our houses would be full of gold and silver or gold and jade.
Gold has also long been considered by the Chinese as a hard currency. With the constant changing of power of the many emperors, dynasties and ruling parties in China, the metal has been bought and hoarded as a hedge against political uncertainties and as a kind of life insurance.
Tael bars with a fineness of 990 produced by acceptable melters of the Chinese Gold & Silver Exchange remain the most popular item among consumers. These bars are bought and sold over the counters of hundreds of local banks, jewellery shops and money changers. Bid and offer prices follow closely the spot prices quoted in the Exchange and bars of 999.9 fine in various sizes are also available at a premium.
The liberalization of gold trading in Hong Kong in 1974 added a new dimension to the local physical market. Good Delivery bars were imported from London and Switzerland and gained gradual acceptability in Hong Kong. In the early stage of development, prices were based on spot loco London quotations plus a CIF premium which varies according to sizes and purities of the bars. The price structure has now changed and these imported bars are sold in Hong Kong at tael gold prices quoted in the Exchange plus a swap premium. Assuming that the spot price quoted in the Exchange is HK$3,495 per tael and that the swap premium is HK$40 per tael, the following formula illustrates the price calculation for 1 kilobar of 999.9 fine:
Price (1 kilobar) - (3,495 + 40) x 32.1507 x 0.9999 1.20337
= HK$94,435.90
Additional to the acceptable melters of the Chinese Gold & Silver Exchange, Johnson Matthey, Metaux Precieux S.A. Metalor and Hereaus are also engaged in the precious metal refining business in Hong Kong. They have established refineries in the territory and produce gold bars of 9999 fine, gold chemicals and other precious metal products to cater for the requirements of the local jewellery, electronic and the electroplating industries.
The steady economic growth in Hong Kong since the mid 1980s has greatly increased the income of the people and this has in turn stimulated a higher level of gold offtake. The per capita consumption of 7.66 grammes in 1994 was the second highest in the Asia-Pacific region. The table appended below provides the estimated offtake by the largest consuming countries in Asia.
Additional to gold bars of various sizes and purities, international bullion coins and medals are also marketed extensively in Hong Kong. These include the Canadian Maple Leaf, American Eagle, Australian Nugget, British Britannia, Chinese Panda and South African Krugerrand. The selling premium of these coins fluctuates marginally at around 3.75% over the intrinsic value of gold and sales have been relatively steady. The importation of gold coins into Hong Kong from various countries during the past five years.
The South African Krugerrand gold coin was the first bullion coin introduced to Hong Kong by International Gold Corporation, Johannesburg, in the early 1970s. Subsequently, other bullion coins were imported and sold in the territory. Hong Kong issued the first gold coin in 1975 to commemorate the first visit of Her Majesty the Queen and His Royal Highness The Prince Philip, Duke of Edinburgh, to the colony. Gold coins with a face value of HK$ 1,000 were made legal tender for the payment of any amount with effect from 5th May 1975. The coins are in 22 carat gold and are available in both proof and uncirculated versions.
Each coin measures 28.4 mm in diameter and weights 15.976 grammes. Other gold coins with identical specifications subsequently issued are related to the legendary animals of the Chinese lunar calendar. One of the most important festivals in the lunar calendar is the New Year which begins on the first day of the first lunar month. The years are represented by 12 animal symbols that are repeated in a cycle. The animals of the 12-year cycle are the rat, ox, tiger, rabbit, dragon, snake, horse, goat, monkey, cockerel, dog and pig. The first day of the lunar year falls either in January or February.
According to the legend, people born in the Year of the Rat, for instance, are generally optimistic, sociable and sentimental. Rat persons adapt easily to a new environment and have critical minds and rich imagination.
The issue of the coins in a series to mark the 12 lunar years fell in the western calendar years 1976-1987. The obverse of each coin bears the symbol of one of the 12 animals and the reverse displays the portrait of Her Majesty The Queen.
To commemorate the second visit (1986) to Hong Kong of Her Majesty Queen Elizabeth II and His Royal Highness The Prince Philip, Duke of Edinburgh, the Government issued a gold coin bearing the new Raphael Maklouf portrait of Her Majesty The Queen.
The 1975 and 1986 Royal visit coins and the series of coins to mark the twelve lunar years were the only legal tender gold coins issued by the Hong Kong Government. This set of fourteen coins will become unique in the history of Hong Kong when the sovereignty is returned to China in 1997.
Aside from selling gold coins, a number of local banks in Hong Kong offer their customers facilities for investing in gold. The Hong Kong and Shanghai Banking Corporation (Hong Kong Bank), for example, offers three different ways for their clients to invest in their "Wayfoong Gold" which include "Wayfoong Passbook Gold", "Wayfoong Statement Gold" and "Wayfoong Gold Bars".
Wayfoong Passbook Gold and Wayfoong Statement Gold are not required to be backed up by physical gold. All transactions made also do not involve any physical gold.
There are absolutely no charges other than the actual buying or selling price at the time of transaction. HongkongBank guarantees to buy back any amount of Wayfoong Gold at the current quoted price (provided the Wayfoong Gold Bars are not damaged). Wayfoong Gold Bars cannot be directly transferred to Wayfoong Passbook Gold or Wayfoong Statement Gold.
Whether the customers choose to invest in Wayfoong Passbook Gold, Wayfoong Statement Gold or Wayfoong Gold Bars, they can carry out transactions either by cash, cashier's order or by Current or Savings account transfer.
Wayfoong Passbook Gold and Wayfoong Statement Gold Holdings may be used as collateral for a Current Account overdraft.
All gold transactions are recorded in a special Gold Passbook and each transaction entry gives details of quantity, date and market price. There is no risk of loss through theft or misplacement of passbook. Overall, it is a convenient way to invest in gold without any security or storage problem.
The parent company of Hong Kong Bank, HSBC Holdings Plc, also owns Midland Bank PLC, one of the five fixing members of the London Bullion Market Association. In this capacity, they are actively engaged in loco London gold trading in the world market.
Po Sang Bank and other members of the Bank of China Group, Standard Chartered Bank, Hang Seng Bank and Wing Hang Bank offer similar types of passbook gold trading facilities to their clients.
Hong Kong does not have any gold mine production. Gold required for industrial and other uses is imported directly
from producing countries in the world or from other trading centres. The metal is shipped to Hong Kong in various forms and purities to suit different applications. For jewellery manufacture and gold refining, large standard bars and kilobars of 995.0/999.9 fine are normally imported. For the electroplating and electronic industry, gold is consumed in fabricated or semi-fabricated forms including gold alloys, gold wires and chemical gold products. Dores and scraps with lower gold contents are also imported by local refiners in Hong Kong, particularly from neighbouring countries in the region.
In 1994, Hong Kong imported officially 326.10 tonnes of gold with a total value of HK$31,200 million (US$4,050 million). The major sources of supplies are North America, South Africa, Switzerland, United Kingdom, Australia and Canada.
During the past five years, Hong Kong imported a total of 1,364 tonnes of gold in different forms and purities from various countries. Judging from past experience, standard large bars of 999.9 fine are supplied by North America while kilobars of 999.9 fine are shipped from South Africa, Europe and Australia. Breakdown statistics covering the importation of gold bullion into Hong Kong during the period of 1990-1994 are summarised in the table appended below:
On the export side, Hong Kong was the leading physical gold distribution centre in Asia while the Hongkong-Macau gold trade lasted. This special role played by Hong Kong has gradually diminished since the mid 1970s following the liberalization of gold markets in neighbouring countries. However, the unofficial export trade has been re-established as a result of higher Chinese demand since the mid 1980s. Hong Kong, being the gateway to China, has become the leading supplier of gold in various forms to people living in the Mainland.
Over the last few years, traditional gold hoarders in Hong Kong and in other countries in Southeast Asia have become more price sensitive and they tend to take advantage of the short-term price volatility and trend. On the run up in the price to US$400 an ounce in May 1995, liquidation by Asian physical gold hoarders was experienced and this practice is expected to prevail until a long-term rising price trend develops.
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