Last Updated : 28 April 2011 at 11:15 IST

HKMex set for trading debut on May 18 with 1 kg gold futures

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HONG KONG (Commodity Online): The Hong Kong Mercantile Exchange (HKMEx) has received authorisation from the Securities and Futures Commission and will make its trading debut on May 18, 2011 with the 1-kilo gold futures contract offered in US dollars with physical delivery in Hong Kong.

The ATS authorisation grants HKMEx the right to offer market participants, through its member firms, the use of its state-of-the-art electronic platform to trade commodities. The Exchange will begin trading with at least 16 members including some of the world’s largest financial institutions as well as several well-established brokerages in Hong Kong.

“We are very excited about this historic day. It allows us to establish a liquid and vibrant international commodities exchange based in Hong Kong, linking China with the rest of Asia and the world,” said Barry Cheung, chairman of HKMEx. “Global demand for core commodities has in recent years been driven by Asia, especially China and India. However, market participants in the region have had to rely on Western exchanges for price discovery, bearing the basis risk exposure in the process. Our new platform will offer Asia a bigger say in setting global commodity prices. It will also enable market participants to more actively manage their risk exposures, using products tailored to Asian market needs.”

HKMEx’s broking members at launch include BOCI Securities Ltd, Celestial Commodities Ltd, CES Capital International Co. Ltd, Chief Commodities Ltd, ICBC International Futures Ltd, Interactive Brokers LLC, KGI Futures (Hong Kong) Ltd, MF Global Hong Kong Ltd, Morgan Stanley Hong Kong Securities Ltd, OSK Futures Hong Kong Ltd, Phillip Commodities (HK) Ltd, Tanrich Futures Ltd and TG Securities Ltd. Its three clearing members are Interactive Brokers (UK) Ltd, MF Global UK Ltd and Morgan Stanley & Co International Plc.

Trading hours will run between 0800 to 2300 Hong Kong Time, overlapping commodity markets in Europe and the US. “This helps to promote cross-continent trading and boost liquidity,” said Albert Helmig, president of HKMEx. “It also offers participants extensive opportunities for hedging, arbitrage and effective risk management.”

In the pipeline are standardised products which will either be physically or financially settled, covering precious and base metals, energy, agriculture and commodity indices.

HKMEx is uniquely positioned to take advantage of the liberalisation of the renminbi in Hong Kong, according to a press release. “China’s pilot scheme for the settlement of overseas direct investments in the Chinese currency has not only increased cross-border trade settlement and liquidity, but also created a strong demand for renminbi-denominated investment instruments,” said Mr Helmig.

All transactions on HKMEx will be cleared through London-based LCH.Clearnet – a leading independent clearing house serving major international exchanges. HKMEx has attracted shareholders from around the globe including China’s ICBC and COSCO Group as well as Russia’s En+ Group, among others.

“We are very fortunate to have such a strong shareholder base in addition to a board of directors who are of the highest calibre in their own fields. Our management experience, together with cutting-edge technology, market focused products, and Hong Kong’s strategic location and infrastructure will ensure HKMEx a promising future,” said Mr Cheung

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Will Posted On : Apr 28, 2011 6:47 PM

The Three Knives in America’s Back Is Gold cheap or expensive? The easiest way to determine if gold is cheap or expensive is to use a simple method often used to determine the value of foreign currencies. This technique is known as the bread index or the modern version is the ‘Mac’ index. To determine if a currency is cheap and worth purchasing, the savvy investor can compare the price of a standard loaf of bread, or as some prefer the price of a standard ‘Big Mac’ burger in that country and compare that to the price of same in their own country. This simple technique gives the investor a basic idea of where the currency is and in which direction it might be heading. Applying the same simple technique to the price of gold we can get a clear picture of where gold is today. Back in the 1930R42;s when the dollar was still a promissory note for 1/20th of an ounce of gold and therefore gold was priced at 20 dollars an ounce, a loaf of bread would have cost between 7 – 10 cents or thereabouts. Today, gold which is no longer used to back any major currencies in the world and therefore has no intrinsic value above its demand in industrial and jewellery markets, is currently trading at $1,500 dollars an ounce. A loaf of bread can be purchased for between $1.50 – $2.00 Using the $2.00 mark for the price of a loaf of bread we can see that gold is possibly $1,100 over priced. This does not factor in the point that back in the 1930R42;s gold was valued as actual money and yet today is merely a non tarnishing metal. Another way to cross check this method for accuracy is to use the CPI index. It is a simple process which involves a ridiculously simple calculation. To estimate how much a loaf of bread that cost $2.00 in 2011 would cost back in the 1930R42;s, multiply the current cost of bread by the ratio of the 1930R42;s average CPI, which was 14, divided by the 2000R42;s average CPI which is 196. It comes out at roughly 14 cents, which is fairly close. As I believe that gold is actually worth less than $400.00 I am going to do the same CPI based cross reference using the figure of $300.00. So if we multiply $300.00 by the 1930R42;s average CPI of 14 and then divide that by the average CPI for the 2000R42;s of 196 we get $21.42. An ounce of gold in the 1930R42;s was worth $20.00. Again very close. Now we can use one final piece of analyses to remove practically all doubt about the true value of an ounce of gold. Gold has traditionally been used as money for one simple reason. The reason being that it is a non-tarnishing, non-perishable substance. In other words it does not lose it’s value as a desirable substance. By the same same token it will not gain value in real terms either. It is therefore a stable store of wealth. It is this inherent stability in its value that has made it an ideal form of money through out history. The Old Testament states for example that at the time of King Nebuchadnezzar one ounce of gold would buy you 350 loaves of bread. If you were to bulk buy 350 loaves of bread in today’s money you would expect to be able to haggle the price down to a buck a piece. So once again even if we track back 2600 years we get a price for gold at between $300.00 and $400.00 dollars an ounce. Here I have used three completely different yet robust methods of basic analyses to establish the true worth of an ounce of gold as of 2011. I conclude therefore that gold should be correctly priced at around $300.00 based on gold as actual money, which ‘officially’ is no longer the case. What this analyses shows is that gold is indeed a stable store of wealth. It also shows that the apparent demise in the value of the dollar is an illusion created by an artificially high gold price. I have traded gold for many years and have monitored the gold price on a daily basis for more than a decade. I have heard every excuse there is for the current gold bull market, none of which have any grounding in reality as far as I am concerned. The same can be said for oil. The world is presently awash with oil. OPEC have again recently cut production due to oversupply and yet the price of oil still keeps rising, why? The price of gold and oil are both locked on to the dollar because both commodities are priced in $$$$. Speculation is the only factor involved in their obscene over pricing despite the fact that there is no shortage in supply of either commodity. To usher in a NWO (New World Order), a global currency will be required. For this to occur the dollar, the worlds reserve currency, must be broken. The price of gold/oil, together with historically low interest rates and of course the printing press, are the three knifes in the back of America. These are the weapons currently being employed against the dollar. As the price of oil and gold are artificially pushed ever higher and interest rates remain at historical lows and the Federal Reserve, with Helicopter Ben at the helm, continues to print money out of thin air, the value of the dollar continues its apparent death spiral. I must therefore conclude that those who have allowed themselves to be persuaded, through fear-mongering, to buy gold and oil futures as hedges against inflation, are actually helping to fuel that very inflation they trying to hedge against. The death of the dollar has become a self fulfilling prophecy and like all self fulfilling prophecies, it is driven purely by fear. FEAR ALONE IS DRIVING DEMAND FOR OIL AND GOLD. To those people I say this, in respect to gold:- Once the dollar is finally dead, and let’s face it, unless something drastic happens to change the course of the dollars’ decline, dead it will be, who will buy your gold from you and at what price then? When the dollar has ZERO value, what will your gold be worth then? GOLD IS NOW AT LEAST $1,100 OVER BOUGHT.

Dale A Trynor Posted On : May 10, 2011 3:13 AM

You are missing some serious points.During a currency crisis gold actually becomes money again and this is why. And for example if you take British pounds into a US grocery store you can not spend them there, would that mean that British pounds are not money, so why should it be any different of a gold coin.And even Beavus and But head can be learn't to understand that a gold coin can be sent into a mint and they will get their cash sent to them at any time with a bit of a time delay. Although you might have to address the box for them and add the postage.Thats the thing about if we get a hyperinflationary currency crisis, that many will actually take the gold coin knowing they can exchange for cash at any time when they actually need the cash to spend at that very moment, rather than take the cash that will lose 1/2 its value in a month.But its too much difficult to explain that to most people now or they are just set up in a way that they can not.So yes when cash actually goes worthless gold and silver can and will become money along with bartering even if all currencies go worthless.We now have goldmoney , c-gold and other online sources that allow you to electronically pay in grams and or milligrams of gold at much cheaper prices than either Pay Pay and or far cheaper and easier to use than wiring if only others would accept its use and it gets more expensive when you convert to local currencies.And yes you can have your gold delivered when you get enough but goldmoney is a bit to expensive and hard here and that destroys some of its advantages. Cash is for fast local spending while gold, silver is for savings and international spending.It is the money, not of any country, but the world itself. And yes when something like gold becomes useful as money it will increase its value no different than any new or increased use will increase the value of anything in limited supply unlike tvs that get cheaper with increased demand and production.And look at the evidence these two metals have been manipulated down in price and look at all the stuff on silver I just do not have time to type that one all up, its huge.

Wolf Posted On : May 09, 2011 3:22 AM

> The Old Testament states for example that at the time of King Nebuchadnezzar one ounce of gold would > buy you 350 loaves of bread. If you were to bulk buy 350 loaves of bread in today’s money you would > expect to be able to haggle the price down to a buck a piece. No. Today, the low range for a loaf of bread is $3.50 - the high is $4.00 plus. So, 350 loaves is about $1400 which makes the price of an ounce gold about right.

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