Hong Kong Is Trading Gold

Opportunities to buy gold denominated in yuan are new on the market. On October 17 the Hong Kong Chinese Gold & Silver Exchange Societystarted trading gold that is quoted in yuan. This is a world first. China’s currency is the renminbi and the yuan is a denomination of it. The Society is a century-old bullion housewith 171 active members. In an October 14 interview, exchange President Haywood Cheung explained the contract is expected to generate daily HK$ 6 billion (US$ 770 million) in trades. The project started with 25 members, including Hong Kong’s biggest jewelry retailer and the biggest local lender among the banks and jewelers that urged the authorities to take this step.

With investors all over the world looking to buy gold in their search for alternatives to stock declines,the Society’s bullion trading volume has risen from HK$ 31 billion last year, to HK$ 136 billion this year. And besides gold market being in bull phase, the yuan is also on an upward trend. Exchange President Cheung explained these circumstances have outcome a triple demand for this yuan product.And the new yuan product will also allow investors to enjoy hedge gold denomination in other currencies against the yuan.

The Hong Kong Chinese Gold & Silver Society’s decision is part of a more general policy. The Hong Kong Mercantile Exchange, which is backed by the largest lender in the world, has started to trade dollar-denominated gold futures in May this year and plans to offer products in yuan this year as well.

The Chinese central authorities pledge national support for yuan business in Hong Kong now, when investors are affected by the depreciation of the dollar and the tensions in the Eurozone, and actively seeking safer currencies. Experts see gold as a way for people to bet on the yuan, and the Renminbi Kilobar Gold is explained by exchange President Cheung as an important step towards internationalizing the renminbi through attracting both local and international investors.

Local experts expect the influx into gold bars to take away half of the liquidity in Hong Kong. The Society has imposed a daily limit of 300 kilos for physical delivery of gold denominated in yuan. This measure will avoid depletion of currency pool in Hong Kong, as the new yuan product is expected to boost Hong Kong’s profile as an offshore hub. As a future investor in gold, you must know no gold exchange in the world is too remote. When you decide to buy gold and become part of this evolution, experts will help you.

By: JacquelineBrewster

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