Thanks to our readers for pointing out a report that Hong Kong is planning to open a new precious metal depository at its international airport.
The announcement from the Hong Kong authorities came on Wednesday September 2, the same day gold prices moved swiftly higher by some 3 per cent.
Market Watch reported that as part of the move, Hong Kong is planning to pull all its physical gold holdings from depositories in London to what will be a brand new high-security facility at the airport.
The ultimate aim though appears to establish Hong Kong as a key rival to London and Switzerland as a trading base for physical gold. As Market Watch reported:
Efforts will also be made to reach out to commodity exchanges, banks, precious-metals refiners and ETF providers, the reports said. Management firm Value Partners planned to launch an ETF gold fund that will use Hong Kong instead of London as a repository for the gold backing the fund, local reports said Thursday.
Meanwhile, Xinhua wrote that investors could expect the actually physical transfer of gold to begin later this year:
The Monetary Authority is planning to transfer its physical gold reserves stored at other vaults to the depository later this year, the HKSAR government said. The Airport Authority and the Mercantile Exchange also signed an agreement Wednesday requiring all clearing members of the exchange to keep gold-bar stock at the depository.
We certainly missed the story, but apparently so did everyone else. As Mineweb wrote:
But while the news didn’t make major headlines, traders in Hong Kong are very excited by the prospect, as MarketWatch’s Chris Oliver writes, “The facility, industry professionals said, would support Hong Kong’s emergence as a Swiss-style trading hub for bullion and would lessen London’s status as a key settlement-and-storage center.”
We agree, the idea of Hong Kong — and by that notion China — hauling its gold over from London sends a clear message to the market. Not only does it mean the region is preparing to rival Europe in the gold trading game, it’s also a signal that China no longer trusts Europe to manage its gold for it.
Related links:
The renminbi black swan - FT Alphaville
What’s driving paper gold? – FT Alphaville