- Hong Kong’s new gold trading platform will allow investors to trade in units as small as a single gram
- The Year of the Pig is expected to see continued gains for gold prices, according to the Chinese Gold and Silver Exchange Society
Hong Kong’s local gold exchange will introduce in March a new trading platform called GoldZip which will allow investors to trade in units as small as a single gram for HK$300 (US$38), in an effort to raise the appeal of the yellow metal among younger retail investors.
Chinese Gold and Silver Exchange Society president Haywood Cheung Tak-hay told the Post that GoldZip will adopt blockchain technology to enable trading in amounts smaller than 1 tael, the current minimum trade on the exchange.
The platform will accept Hong Kong dollars, US dollars and yuan.
“The new platform will attract more retail and tech-savvy investors to trade spot gold,” he said.
A single tael, equivalent to 37.5 grams, goes for HK$12,532.80. Enabling trade in single gram lots will lower the cost of buying gold to as little as HK$328, before commission fees.
“At a minimum investment price of HK$328, parents can help their children to use their lai see money to buy gold. Young employees can also spend a few hundred dollars every month to buy gold as a type of saving and investment,” he said.
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“We would like to see GoldZip help gold trading become more popular among retail investors, young people and even children. With more people trading gold, the turnover will increase and it will boost Hong Kong’s status as an international gold trading centre.”
One teenager, Brandon Ng, who receives about HK$4,000 in lai see cash every year, said he would be tempted.
“If it is about HK$300 per gram, I will invest in the new gold products to capture the opportunity of a rising value of gold in future. If I can win a fortune, I will buy a big meal for my family and friends from the gold investment,” said the 16-year-old.
Cheung announced the launch of GoldZip on Friday, which coincides with a ceremony to mark the first trading day of the Year of the Pig.
The gold exchange will begin registering traders for the new platform starting later this month, ahead of the trading debut in March.
The platform will enable investors to place their trades online or over the phone through a gold broker who is a member of the Chinese Gold and Silver Exchange Society. Each trade will entail a commission of 0.01 per cent of the value of the order.
Investors can store their physical gold at the exchange or take physical possession for off-site safekeeping.
“I believe the product will suit the tastes of local retail investors who like to trade smaller amounts. I expect we can have an annual turnover of five to 10 tonnes of gold from this new platform in the first year of trading,” Cheung said.
Jasper Lo, chief of investment strategies at Eddid Securities and Futures, says young investors as well as those who have never bought or sold gold will be interested in the new platform.
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Among its advantages, he said inexperienced investors can use the platform to help gain experience and trading knowledge, eventually building up to bigger positions over time.
“The new platform can help attract some new investors to trade gold at a few hundred dollars to test the market, before they will make a big bet on gold. This will help bring in more business to gold traders in the long run,” Lo said.
Cheung said gold prices are expected to rise this year, helped by the consequential shift in monetary policy by the US Federal Reserve at its January 30 policy meeting, where it signalled interest rate increases are on hold. He added that the yellow metal will also benefit as a safe haven amid the uncertainty of the US and China trade war.
“I believe the gold price could go up above the current level of US$1,318 an ounce to reach US$1,500 per ounce later this year,” Cheung said.
Lo also believes gold prices will inch higher this year, driven by a softening US dollar and the pause in the Fed rate tightening cycle.
“In addition, Japan will have a new emperor in May while the country will host the Olympic Games next year. The market believes Japan will accumulate more physical gold to mint into gold coins to celebrate these two major events,” Lo said.
Despite the possible appeal of GoldZip to young investors, not everyone was impressed.
Frudi Chan, 12, who received HK$3,000 in lai see money, said he will not be putting any of it into the new gold product.
“Gold is not a tender currency. I will not invest my lai see money in it. I prefer time deposits,” Chan said.