Hong Kong gold exchange expanding into Chinese free trade zones

With the establishment of a new gold price mechanism at the Shanghai Gold Exchange earlier this week, the wheels are now being set in motion for expanding the use of gold and gold services throughout every part of China’s dominion.  And on April 24, the Hong Kong gold exchange teamed up with the world’s second largest bank, the Industrial and Commercial Bank of China (ICBC), to launch physical gold exchange services in the first of many free trade zones.

The Hong Kong gold exchange has teamed up with 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 the exchange 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. The service is considered useful for companies using gold to fashion decorative items, as the yellow metal can be stored before being fashioned into jewellery and other gold products at factories in Shenzhen.

The local gold bourse plans to build a HK$1 billion permanent gold vault facility, including a bonded warehouse, trading floor and related offices areas in Qianhai, however 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,” Cheung said.

“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. – South China Morning Post

China has already announced that all along the new Silk Road, and in free trade zones that they are creating with local and international partners, banking facilities would be constructed to aid in both trade and commercial investment, which over time would promote the use of gold in the process.

Late last month, a document published over at the Shanghai Gold Exchange (SGE) reported on new agreements made between Kazakhstan and China regarding development and trade along the Silk Road initiative.  And at the core of these talks was the need for a strong gold component, both in development of the global overland and route, and in the foundation of trade.

In essence, what this validates is that there is now a strong belief that sometime in the future, trade along the Silk Road will be done using gold for payments rather than currencies. – The Daily Economist

The world is rushing headlong into a return of the gold standard, with the West working overtime to delay this inevitability as long as possible.  But with the global currency wars nearing their completion, and central banks having to resort to negative interest rates just to keep their economies afloat, more and more producing nations will find the allure of China’s agenda of a gold based system enticing, and will mean that even more economies will move Eastward and towards a banking system that not only welcomes the return of a gold standard, but is involved in implementing it.

Kenneth Schortgen Jr is a writer for Secretsofthefed.comExaminer.com,Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.