Hong Kong Is Building The Biggest Gold Vault And Trading Hub In The World

Tyler Durden's picture

Less than a week after the official launch of the Chinese Yuan-denominated gold fix on the Shanghai Gold Exchange, a historic move which represents "an ambitious step to exert more control over the pricing of the metal and boost its influence in the global bullion market" and which will gradually transform the market of paper gold trading, in the process shifting the global trading hub from west (London) to east (China), overnight Hong Kong's Chinese Gold and Silver Exchange (CGSE) Society revealed plans to do something similar for physical gold when it announced plans for what may end up being the biggest gold vault in the world.

As reported initially by SCMP, the Hong Kong gold exchange has teamed up with the world's biggest bank by both assets and market cap, China's Industrial and Commercial Bank of China (ICBC) to launch gold trading services in the Qianhai free trade zone in September, providing custodial and physical settlement service targeted at commercial users and precious metals traders, according to the exchange head.

Haywood Cheung Tak-hay, the honorary permanent president of the 105-year-old Chinese Gold and Silver Exchange Society, said theexchange has teamed up with ICBC to use its gold vault in Qianhai as a temporary bonded warehouse for Hong Kong traders and manufacturers to store their gold.

A 2011 file photo of honorary permanent president Haywood Cheung Tak-hay
of the Chinese Gold & Silver Exchange Society (centre) while conducting duties
as then president. Photo: Edward Wong

The plan is to replace this temporary facility with a massive, HK$1 billion permanent gold vault facility, including a bonded warehouse, trading floor and related offices areas in Qianhai: that would make it among the largest if not the biggest gold vault and trading hub in the world. The project will take two years before completion, according to Cheung.

“ICBC is the largest of 15 gold importers authorised in mainland China. It is the largest bank in the mainland and has an international branch network which could provide bank clearing and settlement services." It also appears to have an acute interest in the yellow metal.

Cited by SCMP, Cheung said that "ICBC’s Macau branch also handles gold import and export services. Teaming up with ICBC would connect Hong Kong, Macau, Qianhai and Shenzhen as a gold trading hub,” he added.

The new "hub" would capture not only the paper but physical trading as well - as gold storage across - in the wealthiest Pacific Rim countries where the world's biggest demand for gold is currently to be found.

The Chinese Gold and Silver Exchange Society partnered with the Shanghai international gold board last year to provide gold trading and custodial services. Twenty-one Hong Kong financial companies are authorised to trade gold in Shanghai.

The official reason behind the proposed Qianhai facility is to benefit Hongkongers, as it will enable trade in Shanghai and physical settlement in Qianhai. The service is believed to be particularly useful to jewellery manufacturers with operations in Shenzhen. It will also be possible for large dealers to ship their bullion from Shanghai to Qianhai.

"The development of the gold industry will speed up the physical delivery process of gold trading in Hong Kong, Shanghai and Qianhai. Of China’s 3,000 gold-jewellery manufacturers, 70 per cent have factories in Shenzhen, The bonded warehouse in Qianhai, which is next to Shenzhen, would make it much easier for them to access gold when needed," he said.

Currently, jewellery manufacturers must transport gold from Hong Kong and Shanghai to their factories in Shenzhen, in what can be a lengthy process.

The new facility will also allow China's uber wealthy, should they decide they no longer feel "comfortable" storing their millions of gold in Shanghai, to gradually shift it to Hong Kong.

At the same, SCMP reports that the Hong Kong Exchanges and Clearing, which scrapped its gold contract last year owing to low trading volume, is planning to relaunch gold futures trading, according to Chief Executive Charles Li Xiaojia, although a launch date has not been announced.

Cheung said he was not worried about competition from HKEx.

It remans to be seen how successful the new hub will be or whether it will even be completed as scheduled, however one thing is increasingly clear: as the rest of the (developed) world is increasingly exiting the gold trading, bonding, custody and vaulting business, the interest in China, already the world's largest importer of gold, has never been higher. One still wonders how long before China's serial bubble obsession, which moved from housing, to stocks, to bonds, to commodities and back to housing all in under two years, resets its attention on gold - the same gold which with the help of soaring Chinese demand in mid-2011 saw the price of the yellow metal soar to all time highs just shy of $2000.

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raywolf's picture

great choice of locaiton on an over crowded island, with political issues...  prone to typhons.... what can go wrong here...

williambanzai7's picture

The last time we were hit by a typhon it was stopped with a tampon.

Al Gophilia's picture

Gotta get me some of those things and try 'em out. According to the ads, I'll be able to play tennis, ride horses, scuba dive, play volleyball, ride a mountain bike. Unfortunately, the side effects are you can't reverse park and a hankering for heels.

kliguy38's picture

Don't these guys know its a BARBAROUS relic??? My advice is to store tons of fiat paper in your backyard.

MANvsMACHINE's picture

That drastically limits their chances of having a much needed boating accident.

 

SIK :o

peddling-fiction's picture

Do you get to look at your gold via webcam or do you just get a piece of paper saying you own it?

N0TaREALmerican's picture
N0TaREALmerican (not verified) peddling-fiction Apr 25, 2016 4:06 PM

Webcam.    Your own gold is moved to a special webcam room.   It gets kinda creepy after this...

SWRichmond's picture

An actual vault where actual gold is traded by actual people?  THOSE BASTARDS.

More Ammo's picture

I will revert to "If you can't stand in front of it and guard it with a gun, You don't own it!"

peddling-fiction's picture

I guess that is the issue when owning physical gold. You need guns to keep it in your possession.

cowdiddly's picture

Nice ties, Goes nicely with their shit eating grins while they say look at me, I am holding more gold than Canada.

And if the rest of you idiot Western politicians have not figured out you have been played yet, sometimes a picture speaks a thousand words. Read carefully over the door. Oh, and the new physical gold contract is not available for purchase with USD>

Got any Bananas?

http://beforeitsnews.com/gold-and-precious-metals/2015/10/shanghai-gold-...

Yen Cross's picture

   If it ain't in my sunken boat, I don't own it.

  At least there's a another big player on the school yard now.

peddling-fiction's picture

They are getting ready for the Yuan inclusion into the IMF SDR basket this October.

Is there a message here?

Paul John Smith's picture

Yes - people's faith in CIA institutions (IMF) and Jim Rickards is over-played.

matinee55's picture

Smack those crooked bank cartels who have been F the sheeple for decades

Theonewhoknows's picture
Theonewhoknows (not verified) matinee55 Apr 25, 2016 4:07 PM

Hey it's up to us whether we are the sheeple or self-educated, truth-seekers. The important part here is still while knowing how everything is manipulated to make sure you are on the upside. That you with your knowledge make money to be independent and say whatever you want to say while they take savings from the middle-class and make everyone poorer. I think this guy made a good point when he compared different markets according to CAPE and other indicators. On top of that, he pointed to the cycle of capital transfers between developed markets and emerging ones. Worth watching. Especially second half. http://independenttrader.org/trader21-lecture-presented-at-fx-cuffs.html

Bopper09's picture

Breath of fresh air for now, until they repeat history again.  I just hope a few thousand ounces of silver and a hundred or so of gold lets my kids survive.  I know, I didn't start until I was 35 yrs old.  I hopefully still have a bit of time.

buzzsaw99's picture

they can do for the gold price what they did for copper. ;)

koaj's picture

Bigger than Ft Knox? I doubt it (sarc off)

peddling-fiction's picture

Could be smaller, but probably it would have more gold.

N0TaREALmerican's picture
N0TaREALmerican (not verified) Apr 25, 2016 4:04 PM

Another gold exchange?  

ToSoft4Truth's picture

So, would you mail your gold there for safe keeping?

 

 

Yen Cross's picture

  I'd send them a bag of assholes, and that's about it.   If they're lucky, I might include a few hammers.

IronForge's picture

I think the Central Govt of CHN will ensure that Shanghai will be their Country's Main Gold Hub.

There's no way that Beijing will allow for Hong Kong to dictate anything to do with Money, Currency, and Precious Metals on their behalf.

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Apr 25, 2016 4:20 PM

"Wow that valut is huge.  Let me see inside..."

"Don't open that door!!!"

"WTF? Its empty!"

Allen_H's picture

Must be their last gold bar, they going to put it in a safe before the calls are in.

Fuku Ben's picture

And the JPM vault was sold to China and Fort Knox is empty. Federal Reserve Notes and paper gold contracts don't taste very good but there will be plenty of extras for bankrupt US Citizens to light fires with when it gets cold out.

If US Citizens are smart they'll start raising chickens right now. There is always a high demand for chicken feet in China. Maybe they'll trade for gold and you can get some of it back. That is if the globalists don't purposely start a war between China and the US to finish off the bankrupt US Corporation and cut off trade completely.

http://www.wsj.com/articles/SB107844840919747273

Clowns on Acid's picture

This is sooo funny. Building a gold depository! Buffet and Bernanke must be really laughing at this. They are storing barbaric relics and tradition in a Yuge new expensive building....hahahaha.  Smellin like Janet Yellen must be laughing as well, because Stanley Fischer told her to.

Maybe the Fed needs another secret meeting with Obama and Joe Biden to tell them how funny this is....ahahahaha

Paul John Smith's picture

Or, maybe, the Chinese are just as untrustworthy as Americans?

(or, you can take the racist road)

(but I prefer the "it is more likely they are just as corrupt as us" road)

Clowns on Acid's picture

Well net / net...I trust bullion more than digital digits. How about you Chirpy ?

Paul John Smith's picture

Yeah ... because the CCP is so trustworthy.

RaceToTheBottom's picture

The Mecca of Intellectual Property theft is the place you want me to put my Gold?

Convince me why?

Paul John Smith's picture

(I know)

(but a lot of the "alts" hold on to this because they have kids ...)

(and they want to believe SOMEONE will be standing when this shit is done)

(so sorry - really ...)

are we there yet's picture

They could lease the empty vaults at Fort Knox. If they could get in. I am not sure if the FED wold let Obama walk in an take alook around the Fort Knox vaults.

lakecity55's picture

"Reggie, we're going to Ft Knox!"
"To see the gold, Munchkins?"
"No, it's all gone. Tricky Dick got rid of it. It is a giant pot storage facility now!"
"I'll get the zig-zags!"

Consuelo's picture

 

 

When do a pair of those menacing F-22's arrive in Taiwan to set the Chinese straight once & for all - you know, like it's gonna do the Russians?   It's gonna do the Russians, right...? 

Infield_Fly's picture
Infield_Fly (not verified) Apr 25, 2016 5:22 PM

Sure, I reave my goad wif communist guvamint.

 

No prawbrem!!!

Paul John Smith's picture

This reminds me of the triumphal announcement of the "YUGO" back in 1983 ...

The Yugoslavs were so proud of their "western ways" and "partial EU status".

(and then, barely 10 years later, they were all murdering each other)

"But Dan, that's Yugoslavs - tiny country of ignorant white men ..."

(good luck with that paradigm)

(and your China investments)

... AND YES AND DUH - THE USA IS IN BAD SHAPE TOO.

(simply a better pop/clean-arable land ratio)

Paul John Smith's picture

Let me get this straight ...

I don't trust the FEDs ...

(so why, exactly, would I trust the Chinese?)

(especially when they will likely seize my gold once the trade war starts?)

withglee's picture

The plan is to replace this temporary facility with a massive, HK$1 billion gold vault facility and trading hub which would include a bonded warehouse, trading floor and related offices areas in Qianhai: that would make it among the largest if not the biggest gold vault and trading hub in the world.

Is $130 million USA dollars worth of gold "massive"?  That's not even fifty cents per USA person. This goldbug hyperbole is getting out of hand. 


zippedydoodah's picture

You have a comprehension problem. It is the FACILITY that will cost HK$1 billion to build, it is not the amount of gold that it will store.

withglee's picture

You are correct. My face is red.

Uranium Mountain's picture

What happens if that site gets hit with a small tactical nuke?  What would happen to their new gold standard then in 2 years?   Now that would be a black Swan with teeth.

lakecity55's picture

They build it to wiithstand a nuke.

Plus, a certain tribe would never allow Au to be blown up when it could be in Tel Aviv in the double secret Red Shield vault under the Knesset.

Paul John Smith's picture

(I knew someone would bring up the "joooos")

milanolarry's picture

Can't understand why they build the vault in Qianhai, China and not HK. Should one day the CCP want to confiscate all gold in China, there would be no escape.

onmail1's picture

Rise BRICS rise