Bullion is generally priced in accordance with the current market value (or "spot" value) plus a premium, which varies according to the kind of bullion.
Gold is a heavy, yellow, metallic chemical element and is considered to be a precious metal. Being malleable and ductile it finds use in the manufacture of a wide range of products right from jewellery to electronics. Its chemical symbol is Au - a derivation from Aurora or dawn.
Interest determination is one of Hong Kong Gold Market's characteristics. The determination of interest is done once a day at 11:00 during weekdays and at 10:30 on Saturday. Positive interest arises when the demand for physical gold exceeds the supply. Buyers cannot get hold of gold are awarded interest paid by sellers who cannot deliver gold. Negative interest arises when the supply of physical gold exceeds the demand for it.
As a result, sellers who do not get sale proceeds are awarded interest paid by buyers who do not have sufficient cash to pay sellers. Even interest arises when supply and demand for physical gold or cash are in equilibrium - that is neither party has to pay the interest. Interest is quoted in Hong Kong dollars per ten taels.
Internationally, the weight of gold or gold articles is usually expressed in troy ounces. 1 troy ounce = 1.097 ordinary ounce Further, one troy ounce is in turn equivalent to 31.1042 grams.
The purity of gold articles/bullion is generally described in three ways. The three terms that can be used to describe the purity of the metal are - per cent, fineness and karats. While karats, one of the more commonly used terms, measures the number of parts of gold per 24 parts of the whole, fineness tries to measure the parts of gold per thousand, whilst per cent tries to measure the parts of gold per 100.
"London Gold" means purchasing or selling a claim on gold with purity not less than 99.5%. The size of transaction is at multiple of 100 ounces. The minimum size for one contract is 100 ounces. The trading hours of Loco-London gold market extend almost 24 hours during a business day. No commission is charged for transactions except for trading at fixings.
As an active participant in gold market, SHKBCL contributes market quotations to the Reuters and provides almost 24-hours service to our clients. All price quotations are in US dollars with bid and offer spreads made to cope with prevailing market conditions and each quotation is usually valid for 10 thousand ounces.
There is no commission charge on transactions except for those traded at fixings which are determined twice a day in London at 10:30 and 15:00, that is Hong Kong time 18:30 and 23:00. (Hong Kong time 17:30 and 22:00 in London summer time)
Generally, sellers of London gold receive interest while buyers pay interest. Currently, those who hold long positions have to pay 6%* per annum interest while those who hold short positions receive 3%* per annum interest. (*Interest rates are subject to change)
Theoretically, the conversion between Hong Kong Gold and London Gold is based on the following formula, Hong Kong Gold Price = London Gold Price x 1.191336 x USD/HKD T. T. Rate
On every 100 taels transacted, HK$20 is charged as commission on single turn basis and HK$7 is levied per day as a custodian fee on each open contract carried forward.
Remarks: All dealings in gold with our company will be subject to the company's "STANDARD TERMS AND CONDITIONS OF BULLION TRADING".
