Gold Futures Contacts – Hong Kong Style
Gold Futures Contacts – Hong Kong Style by Rory – The Daily Coin
Hong Kong has been attempting to bring a gold futures trading market to commodities since the 1980’s. With two previous failures under their belt it seems the time is right for another run and it appears it will succeed.
There are significant differences with the previous attempts by the Hong Kong Exchange (HKEX) as well as differences from the CME offerings on the COMEX. The most significant difference would be physical settlement of gold instead of cash settlements. The COMEX, operated in Chicago by the Chicago Mercantile Exchange (CME) Group, has long settled gold “futures contracts” in cash. This is one of the reasons we see problems around options expiry dates, not to mention the confirmed rigging of the “market” operated by the CME Group.
As SCMP recently reported
This time around, trading has picked up, along with a rise in the price of precious metals, as investors sought sanctuary amid increasing political instability in the US and around Asia, and while valuations of global equities looked excessive.
Another big change is the allowance of physical settlements in gold futures, instead of cash settlements like the two previous attempts, which attracted end investors to the trades, said Yeung.
The two gold futures, introduced on July 10, had a combined 29,074 contracts traded as of last Friday, or 856 contracts on average everyday.
“The price of gold has been volatile recently, which has increased the need for investors to hedge their investments,” said Jasper Lo Cho-yan, the chief strategist at King International Financial. “The yuan has strengthened against the US dollar, which has attracted investors to the yuan-denominated gold futures.”
Another significant difference are the trading hours. The HKEX will only be allowed to trade for 16 hours a day as opposed to the 23 hours a day the COMEX is active.
We can only hope there are more changes on the way and wish the HKEX all the success in the world, anything to take business away from the CRIMEX and the rigged casino operating in Chicago. As this market matures over the next two-three years we may see more miners moving their gold through his exchange which would help to balance the scale and, hopefully, move us closer to actual price discovery.
hat tip/smaulgld.com for bringing this to our attention.