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Albert Sung is the author of the Katchum Macro-Economic Blog, monitoring breaking economic news from a day to day basis. He started investing in 2008 because of the economic crisis and holds a masters degree in chemical engineering. Previously, he worked several years as a process engineer at... More
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  • Hong Kong Starts Trading Silver 5 comments
    Jan 4, 2013 3:44 PM | about stocks: SLV

    As you may recall, one of my first blog posts in 2012 was about me going to Hong Kong and trying to buy silver at Hang Seng Bank. They told me I couldn't buy silver, only gold.

    Now, finally, an ETF started to trade silver in Hong Kong. As you can see in the article below, silver is becoming more and more important in the mainstream media. Investors are getting aware that precious metals have a key role in our society.

    I bet you that there are a lot of Hong Kong people waiting to buy a load of silver in Hong Kong. And what's important is that these ETF's in Asia are actually backed by the real physical metal!

    "ETF Securities on November 28 began offering three new precious metals exchange-traded funds (ETFs) on the Hong Kong stock exchange. The ETFs are: Physical Silver ETF, Physical Gold ETF, and Physical Platinum ETF. They track London benchmarks.

    According to Fred Jheon, Managing Director and Head of Asia Pacific at ETF Securities, the firm is the first ETF provider to offer a suite of precious metal products to the Hong Kong exchange that are backed by the physical metals. The HK exchange currently has three other instruments that track gold, including GLD, the world's largest gold tracker.

    "We are pleased to welcome ETF Securities and their three commodity ETFs to the Hong Kong ETF market," said Calvin Tai, Head of Trading at HKEx in a public statement. "The introduction of the first ETFs on silver and platinum will further enrich our product offerings in precious metals. These three new ETFs are also in line with our corporate strategy to diversify by adding asset classes to our equities and equities-related products."

    The stock codes for these new ETFs are: ETFS Physical Silver ETF (3117), ETFS Physical Gold ETF (2830), and ETFS Physical Platinum ETF (3119). HSBC will hold the bullion in their vaults and meet 'good delivery standards' set by either the London Bullion Market Association (LBMA) or the London Platinum and Palladium Market (LPPM), according to ETF Securities officials.

    The annual expense ratios for these new ETFs are 0.39 percent for the gold ETF, 0.5 percent for silver and 0.6 percent for platinum."

    Disclosure: I am long AGQ.

    Stocks: SLV
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Comments (5)
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  • dieuwer
    , contributor
    Comments (2946) | Send Message
    If you can, I suggest watching the price ratio of the physical gold ETF and GLD.
    4 Jan 2013, 07:27 PM Reply Like
  • Katchum
    , contributor
    Comments (613) | Send Message
    Author’s reply » Good idea, maybe you're worried about dilution?


    Hong Kong ETF Gold = 4000 ounces = 6.6 million dollars
    GLD = 71 billion dollars


    Price ratio = 0.01%


    Probably this is an insignificant ETF. But it will grow in time and more importantly, it gives me a means to trade silver at Hang Seng Bank.
    4 Jan 2013, 07:39 PM Reply Like
  • dieuwer
    , contributor
    Comments (2946) | Send Message
    No, the share price ratio. if GLD/PHYS is dropping, it means GLD is most likely pure paper as compared to pure physical.


    I'll make some graphs to show my point... link will follow in a new reply.
    4 Jan 2013, 07:44 PM Reply Like
  • dieuwer
    , contributor
    Comments (2946) | Send Message
    Here you go: http://seekingalpha.co...
    4 Jan 2013, 08:00 PM Reply Like
  • Katchum
    , contributor
    Comments (613) | Send Message
    Author’s reply » Interesting, didn't know that. Why is GLD dropping 3% in 5 years against real gold?


    Maybe because of dilution?


    2007: 9 billion dollars market cap (470 tonnes)
    2008: 18 billion dollars market cap (650 tonnes)
    2009: 24 billion dollars market cap (970 tonnes)
    2010: 40 billion dollars market cap (1115 tonnes)
    2011: 53 billion dollars market cap (1217 tonnes)
    2012: 70 billion dollars market cap (1340 tonnes)




    Can't be, because CEF had 1 million ounces of gold in 2008 and now 1.6 million ounces of gold in 2012. And they didn't have dilution.


    Then I searched on the internet and saw that GLD has an insurance fee of 0.4% per year. That's the real cause and is acceptable to me. You need to pay people to hold your gold safe.


    I'm not talking about if the gold is there or not though, that's another topic.
    5 Jan 2013, 04:56 AM Reply Like
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