on the china exchange

The Exchange, except for the Pacific War years of 1941 to 1945, provides services to investors on every trading day. In January 1980 when the Soviet army invaded Afghanistan, the price of gold soared to a record high of HK$4,855.00 per tael on 18 January, before plunging down to a low of HK$3,590.00 on 23 January, marking a sharp volatility of $1,200.00 in only a few days. Unable to cope with this severe fluctuation, all major gold markets suspended trading. Thanks to great versatility and a sound market system, the Exchange was the only market in the world where trading continued as usual. In early February 1983, plummeting oil prices, tightening of the US Federal Reserve's monetary policy and rising rates brought great volatility to the price of gold again. Gold markets in the US and Singapore suspended trading but the Exchange remained open. The above incidents fully demonstrate the Exchange's ability to ensure trading continuity.

As for liquidity, investors have realized their gold bullion and closed out gold positions smoothly and swiftly over the past decades. Not one complaint has been reported. One significant example is that on 15 January 1970, the Exchange abandoned the then prevailing 945 fineness and adopted 99 fineness as the standard for pure gold. It was a step to meet demand of the gold jewelry industry. At that time, the people of Hong Kong had more than 100,000 taels of 945 fineness gold between them, and the Exchange bought all 945 gold by paying a price based on the 99 fineness standards. Consumers got the full value of their gold investments, and there were no disputes. This piece of history illustrates our members' integrity and the high liquidity of the Exchange. Note: 945 fineness is a 94.5% gold bullion; 99 fineness is a 99% gold bullion.

Depth is best used to describe our strength. While the Exchange is subject to varying market situations due to fluctuation in gold prices, the strength we display in market strong runs is impressive. In the early 1980's when the gold market staged stellar performance, more than 2 million taels of gold were traded on the Exchange daily. History shows that our member firms are establishments of great strengths. They can cope well with large trade volumes in a bullish market.

Hong Kong has secured a key position in the international gold market. This important role is attributed to a number of factors. They include political stability, free trade, a respect for private ownership, a sound and established legal system, good communications networks, sophisticated telecommunications facilities, a strong financial system and a stringent regulatory system. Yet another important factor worth noting is that Hong Kong spans across the Asia time zone and it provides pricing information for the gold market after the close of New York market and before the opening of the London market. Because of this connection, international investors can continue their trading, hedging or arbitrage activities in Hong Kong. Effectively, the emerging of Hong Kong gold market turns the trading of gold around-the-clock.