1 Kilo Gold Futures Start Trading On Hong Kong Merc

Tyler Durden's picture

As of 8 pm Eastern, the Comex' monopoly to the precious metals futures is over. As we reported previously, today, at 8 am local time, is when the Hong Kong Mercantile exchange would start trading the inaugural Asian precious metal futures contract: the 32 ounce /1 kilo/ gold futures. In the first 30 minutes of trading it appears to have been a subdued session, with just 22 contracts changing hands in the August 2011-June 2012 frame. How this trading will impact prices: nobody knows (yet). The spot price of gold has barely budged in the past hour. That said, now that PM futures fragmentation is starting, we expect that within 2 years we will have various deranged HFT algos trading tonnes of gold, quote stuffing globally, and otherwise creating one of the most volatile trading environments imaginable. 

And since we know you are asking: the margin schedule for the HKMerx will be kept and listed by the same LCH.Clearnet that hikes and lowers Irish and Portuguese bond margins by 10% on an almost weekly basis. Let see now how the Comex hikes its gold margins with impunity if it has competition that keeps margins "artificially" low, and provides disgruntled Comex clients with an alternative venue that accepts far less cash collateral to trade.

It's called competition Chicago: get used to it.

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Rynak's picture

So, what's the good news? *looks around*

EDIT: Okay, the article has now been edited. Competition, okay. In the previous article, all the usual big players were onboard, including JPM. So, my naive question is this: Besides of margin handling, what will stop those players doing what they did and still do on comex?

dlmaniac's picture

When will they get silver trading started next?

Concentrated power has always been the enemy of liberty.'s picture

as soon as wen jibao has gotten his "consensual" BJ from Blythe...

Urban Redneck's picture

32.15oz,  roughly 1/3 of a 100oz bar, or 1/12 of a std delivery bar.  Opens the delivery door to a lot more players both physically and economically.

Missiondweller's picture

Don't know why someone would junk you, seems like a damn good question.

XenoFrog's picture

You must be this tall to ride...

TooBearish's picture

Ty- any chance you have the BBG symbol for said contract?

The Feds Connection's picture

Got a great piece lined up. I know i am not a longtime member, but how can i submit an article for reviewing? Thanks in advance

tickhound's picture

Post it here, first.  This is fight club after all.  Let some get their licks in and see if you get up.

The Feds Connection's picture

By The Feds Connection

Dominique Strauss-Kahn is effectively finished as a political force, even if he doesn’t draw a guilty verdict in New York, where a 32-year-old maid says she was attacked and forced to perform oral sex on him.

He’s finished as IMF chief and his candidacy against Sarkozy also looks to be in ruins.

The IMF chief certainly has enemies in high places who will be cheering his predicament. He had recently broke-free from the "party line" and was changing the direction of the IMF. His road to Damascus conversion was championed by progressive economist Joesph Stiglitz in a recent article titled "The IMF's Switch in Time". Here's an excerpt:

"The annual spring meeting of the International Monetary Fund was notable in marking the Fund’s effort to distance itself from its own long-standing tenets on capital controls and labor-market flexibility. It appears that a new IMF has gradually, and cautiously, emerged under the leadership of Dominique Strauss-Kahn.

Slightly more than 13 years earlier, at the IMF’s Hong Kong meeting in 1997, the Fund had attempted to amend its charter in order to gain more leeway to push countries towards capital-market liberalization. The timing could not have been worse: the East Asia crisis was just brewing – a crisis that was largely the result of capital-market liberalization in a region that, given its high savings rate, had no need for it.

That push had been advocated by Western financial markets – and the Western finance ministries that serve them so loyally. Financial deregulation in the United States was a prime cause of the global crisis that erupted in 2008, and financial and capital-market liberalization elsewhere helped spread that “made in the USA” trauma around the world....The crisis showed that free and unfettered markets are neither efficient nor stable." ("The IMF's Switch in Time", Joseph Stiglitz, Project Syndicate)

So, Strauss-Kahn was trying to move the bank in a more positive direction, a direction that didn't require that countries leave their economies open to the ravages of foreign capital that moves in swiftly--pushing up prices and creating bubbles--and departs just as fast, leaving behind the scourge of high unemployment, plunging demand, hobbled industries, and deep recession.

Strauss-Kahn had set out on a "kinder and gentler" path, one that would not force foreign leaders to privatize their state-owned industries or crush their labor unions. Naturally, his actions were not warmly received by the bankers and corporatists who look to the IMF to provide legitimacy to their ongoing plunder of the rest of the world. These are the people who think that the current policies are "just fine"  because they produce the results they're looking for, which is bigger profits for themselves and deeper poverty for everyone else.


This is an excerpt of the first alinea's, deleted title for the moment.

tmosley's picture

It never struck you they might be the same person?

People use different handles on different sites sometimes.  Sure I don't, but that is because I am stupid and let people cyberstalk me for some reason.

Cognitive Dissonance's picture

Yes it did strike me. That was why I offered the courtesy of asking if s/he was the original author, a Mike Whitney in fact. As opposed to accusing the person of hijacking someone else's work.

tmosley's picture

lol, I read the first reply and that somehow colored my perception of your post.

Sorry about that. 

The Feds Connection's picture

It is, also on http://www.counterpunch.com/whitney05162011.html which is my primary platform.

I have taken an interest in zerohedge recently as i have received alot of e-mails suggesting i should visit this website. Tyler might be interested to receive a copy aswell before it is published online.


tickhound's picture

Way to get up swingin', Mike. 

Dapper Dan's picture

Welcome Mr. Whitney, I have read many of your articles from Counter Punch over the last year and a half and very much enjoyed them.   It would seem we are like minded. Out of curiosity how long have you been a fight club spectator?


For the ZH Crew

From your April 11 2011 article about Bernanke strikes again.

Mike Whitney  QE2 was never intended to lower unemployment. Bernanke has been pulling the wool over our eyes from the get go. The real goal was to buoy stocks with the hope that inflated asset prices would increase the "wealth effect" and trigger another credit expansion. But that hasn't happened because consumers are deleveraging and are still up to their eyeballs in debt.  So, QE2 has just turned out to be more corporate welfare for Wall Street; another handout to the folks who blew up the financial system.

A Man without Qualities's picture

The question is whether DSK was pushing a more radical change at the IMF in order to further his chances of beating Sarkozy?  Although I support any plans to reform the IMF, I do doubt the sincerity of DSK - does this matter? 

spanish inquisition's picture

Odds are we will never know about his sincerity or motivation. I was listening on BBC that he is housed in an empty wing and on suicide watch.

tickhound's picture

tl dr

jk!  See?  Its fun!

"Naturally, his actions were not warmly received by the bankers and corporatists who... plunder of the rest of the world. These are the people who think that the current policies are "just fine"

Naturally, certain people like to keep certain things a certain way... or else.

nmewn's picture

Well, at least you self identified.

I, for one, look forward to the exchange of philosophy & ideas to be judged on the merits.

I hope to see you as a contributor, welcome to Fight Club ;-)

Double down's picture

Good stuff!  Here is your first junk 

TooBearish's picture

IXCQ1 is BBG for august contract ...

The Gold Theory's picture

Now all they need is a Max Chong pushing them to buy gold to crash the fed.

tickhound's picture

Interesting to see these two ponzi trade with one another.

Regardless... bearish for $ hegemony.

Poor Fed lovers.  And things were going so well with the 3% hollywood $ rally and all...

binky's picture

The good news is that maybe this contract will be manipulated less (or not at all) and gold (with increasing volatility) will become a more suitable hedge against US Treasury Bonds. 



Rynak's picture

Besides of margins, how much manipulation can happen would depend on the rules - are they much different to comex?

Cognitive Dissonance's picture

That said, now that PM futures fragmentation is starting, we expect that within 2 years we will have various deranged HFT algos trading tonnes of gold, quote stuffing globally, and otherwise creating one of the most volatile trading environments imaginable.

Military doctrine. During war or the critical time leading up to (or winding down from a losing) war, if you can't control something, destroy it. Since PMs are the arch enemy to fiat and because they are losing control of it, expect them to try everything they can to destroy it's reputation as a wealth preservation refuge of last resort. Do that by making it extremely volatile, driving people away from that terribly unreliable and frighteningly unpredictable Gold and Silver.

The process started a while back with Silver.

Confuchius's picture

The always fatal flaw of control freaks of whatever stripe is hubris.

The pathetic delusion that everything, everywhere can always be "controlled".

That delusion has spelt the demise of every empire, fiat currency and army the world has ever known.

GOSPLAN HERO's picture

Asia loves PM!

I like it.

Oracle of Kypseli's picture

We do too.

CD's assertion does not apply to physical as during volatility, the smart ones will BTFD. That will accentuate the uptrend as more physical goes out of circulation 

Cognitive Dissonance's picture

All I am asserting is that they will try to destroy Gold and Silver's reputation. I did not say they would succeed. I said....

....expect them to try everything they can.....

Regardless of success or failure, volatility will scare off some people, thus buying the fiat Ponzi a bit more time.

When facing total annihilation and complete loss, the idea of only suffering a partial loss, even if it is delusional and it means even more people will suffer because the collapse will be drawn out, looks very appealing.

We are, after all, dealing with sociopaths here.

Bay of Pigs's picture


Not to mention the Peak Troll activity we've seen here and elsewhere on the PM's lately. It is nearly all fear based.

I know I've never seen anything close to this in the last 12-15 years I've been following gold and silver. 

Fiat2Zero's picture

There's some serious "Masters of the Universe" panic going on. Fire in the COMEX.

akak's picture

It is also interesting to note, as others have here recently as well, that the entire focus of the anti-PM, pro-bankster trolls used to be gold, but has dramatically and virtually completed shifted to silver as of late.  Methinks that somebody is seriously running scared.

In other news, it appears that MethMan has taken a short-term sabbatical from ZH, in order to finish up some graduate courses at Troll U.

Fiat2Zero's picture

The additional $1-$2 swing (down) in silver prices may have bought them a few weeks.

It may actually speed things up though since the artificial low brings in the volume buyers to scoop things up.

My local coin dealer, who I buy gold and silver from just has a few 100 oz englehards, and a funny old box of "assorted 1 oz rounds": Buffalos and things like USS Arizona commemorative coins that look like they've seen action.

He's seriously cleared out down to just the junk drawer.

Oh that and I got a tiffany sugar pot (at melt, sterling), and almost bought a silver serving tray with Condoleeza Rices name on it (as well as a bunch of other famous people).

Rynak's picture

When facing total annihilation and complete loss, the idea of only suffering a partial loss, even if it is delusional and it means even more people will suffer because the collapse will be drawn out, looks very appealing.

What people call "egoism" always has first been concerned with others losing, and secondly with oneself gaining. Phrased another way, it is more about others having less, than it is about oneself gaining. It's not restricted to economics but a generic psychological thing. People with this mindset will prefer oneself gaining little and the other losing little, over both gaining much - heck, they will even prefer oneself losing little and the other losing much, over an actual gain. Their illusion of winning mainly comes from comparing their resulting situation to the opponent, instead of comparing actual gains. In the big picture (both time and space), what people call "egoism" really is much closer to "sadism", rather than "only being concerned with one's own gain".

Oracle of Kypseli's picture

@ CD


What I meant was that they can easily discourage and drive away paper players on margin, but it's more difficult to discourage physical buyers who can use a bear raid as an opportunity to buy more coins or bars.