CGSE to launch spot, yuan based Silver trade in HK next year

Growing demand for silver prompted Chinese Gold and Silver Exchange Society to launch a spot silver trading service in the first half of next year in Hong Kong.

CGSE also said it would consider launching yuan-denominated silver trading later under this new platform. The silver contract will be traded in 10 kilograms as one board lot while physical delivery must be at least 30 kilograms.

The CGSE is the only authorized spot gold exchange in Hong Kong. The CGSE currently offers spot gold trading denominated in both the Hong Kong dollar and yuan.

The CGSE launched the "Renminbi Kilobar Gold Contract" trading platform in 2011 that facilitated gold trading in the yuan currency for the first time in the city.

Analysts said Hong Kong became a distribution center for industrial-use silver as 4,000 tonnes of fine silver were exported last year from local shores.

The daily transaction volume of silver trade is estimated to reach between two million and three million ounces next year, boosted by the new spot trading in the metal, they added. Silver is the only metal that has industrial use and is also a safe haven for investors.

On April 28 last year, prices hit a record $50 per ounce as global uncertainties boosted demand.

The precious metals trading society expected the trading platform to facilitate silver trading on an average of around 2 million to 3 million ounces per day in the first six months after the launch; and it predicted the silver price to reach $40 per ounce in the first half of 2013.

The CGSE will invite five accredited assays to act as the liquidity providers to facilitate smooth trading under the new silver trading platform.

The CGSE is a self-regulated precious metals trading society established in 1910 that consists of 171 member firms; 30 of which are bullion group members.