Hong Kong to Get a New Silver Trading Platform

on Nov 21, 2012

While China was recently reported as looking to open its gold market by introducing new services on the Shanghai Gold Exchange (SGE), it would seem that developments in precious metals trading in South-East Asia will not remain limited to gold, with Hong Kong likely to get a new silver trading platform in 2013.

**Hong Kong’s Silver Trading Future**
On 20 November 2012, Resource Investing News reported that the Chinese Gold & Silver Exchange Society (CGSE), a physical gold marketplace, was going to launch a new silver trading platform in Hong Kong. The announcement was made last week, when the CGSE hosted its First Annual CGSE International (Silver) Conference, with CGSE president Haywood Cheung speaking about the Loco Hong Kong Silver Contract, a new silver trading platform which the CGSE is planning to launch in the first quarter of 2013.

China Daily reports that the new platform will be denominated in Hong Kong dollars, with the minimum contract size and minimum delivery unit being 10 and 30 kilograms, respectively. An airport-based precious metals vault at the Hong Kong International Airport will serve as a depository, facilitating the physical delivery of silver. The CGSE has also indicated that at some point it would also introduce yuan-denominated silver trading under the new platform.

**Silver Prospects**
The society expects that two to three million ounces of silver per day will be traded on the platform within the first six months following the launch. “As another precious metal besides gold, we envisage that the new platform would elicit demand from institutional investors to hedge or arbitrage,” noted Mr Cheung, as quoted by China Daily. “Silver price movement in the future has the potential of outperforming gold and that is why it is attractive to institutional investors.” The CGSE sees silver price reaching $40 per ounce in the first half of 2013, from about $32 an ounce currently.

!m[The CGSE To Launch Electronic Trade In Q1 2013 ](/uploads/story/867/thumbs/pic1_inline.png)China Daily quotes Bruce Wong, research director at Plotio Bullion as seeing silver price going up to as much as $45 per ounce next year with investors “accumulating silver to hedge against the US dollar’s depreciation amid the various monetary quantitative easing programs.”

**CGSE Expanding in Mainland China**
In addition to setting up a silver trading platform in Hong Kong, the CGSE, whose history dates back to 1910, is seeking expansion in mainland China, with Reuters reporting on November 13 that the society was in initial talks with Chinese officials to set up a bonded warehouse on the mainland in an attempt to boost business with exchanges and traders there. “We are definitely interested in setting up warehouses in the mainland,” Mr Cheung told Reuters in an interview. “Officials for Qianhai have said that initially this can be considered and is a good idea.”
The CGSE is also in talks with the SGE to pool accredited gold bar providers so as to further boost business in mainland China. Reuters quotes Mr Cheung as seeing spot gold rising to $2,000 an ounce in the first quarter of 2013.


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