Hong Kong is all that glitters with a new super gold vault open to the world

Within three years Hong Kong will see a new building at its international airport housing some 2,000 tonnes of gold bars worth about HK$2 trillion (US$260 billion) at today’s prices.

The super vault and its contents are part of a government plan to make Hong Kong a leading international gold trading centre. And already it’s making good progress in this direction.

Earlier in the year the Shanghai Gold Exchange (SGE) opened its first offshore delivery vault in Hong Kong and the London Metal Exchange in September approved three storage facilities in Hong Kong. China is the world’s biggest bullion consumer and the move by the SGE is seen as a step towards reducing the reliance on the US dollar and promoting the wider use of the yuan in international trade.

In his annual policy address last month, Chief Executive John Lee unveiled policies to increase the city's capacity for holding bullion and establish a central clearing system for gold to revive Hong Kong's status as a global hub for gold trading. He reiterated his ambitious plans at the British Chamber of Commerce (Britcham) summit earlier this month by inviting gold traders to set up refineries here and by supporting the creation of a local gold industry trade association.
Currently, local gold is stored in bank safe deposit boxes and in the Hong Kong International Airport Precious Metals Depository which has a capacity for 150 tonnes. The depository has been providing secure storage and physical settlement services to central banks, commodity exchanges, bullion banks, precious metal refineries and issuers of exchange-traded funds (ETFs) since 2009.

The depository, located near the airport’s cargo facilities, is expanding its capacity step by step initially to 200 tonnes and eventually it will reach its goal of 2000 tonnes by 2028, ranking it among the top 10 largest gold storage facilities in the world. The big ones, of course are the Federal Reserve Bank of New York with 6,000 tonnes and the Bank of England with 5,000 tonnes. The famed Fort Knox in Kentucky holds about 4,000 tonnes.

The international gold trading platform, CME Group has approved and licensed three warehouse facilities in Hong Kong – Brink’s Inc., Malca Amit Secure Logistics and Loomis International (HK) – for storage of kilo gold bars which can be used in settlement of CME gold kilobar futures contracts. Their storage facilities are located at the Hong Kong International Airport (HKIA), Tsuen Wan and Kwai Chung.

The Chinese Gold and Silver Exchange (CGSE), founded in 1910, is Hong Kong’s only physical gold and silver exchange, and is run by its members as a society, hence the name Chinese Gold and Silver Exchange Society. The Exchange is operated through a subsidiary company called ‘Hong Kong Precious Metals Exchange Limited’, established in 1994.

The gold industry in Hong Kong is much larger than one envisages and involves more than trading and storing but also includes processing. There are, for example, 13 CGSE accredited refineries in Hong Kong for its various deliverable contracts.

Gold refining is the process of purifying raw gold to remove impurities and separate it from other metals or materials with the goal to produce high-quality gold, often reaching 99.9 per cent or higher. This process is crucial for ensuring that gold meets the highest purity standards for various applications, including jewellery and electronic appliances.

All of the refineries are locally owned, except for one and most are accredited to produce 99 Tael Gold bars and 999.9 One Kilo bars, and a smaller subset of the refineries are accredited to produce 999.9 Five Tael bars.

Internationally, two gold refineries in Hong Kong that are also on the London Bullion Market Association (LBMA) Good Delivery List for gold: German refiner Heraeus which operates a refinery in Fanling, and Swiss refiner Metalor operating a precious metals refinery in Kwai Chung. Both have an annual gold refining capacity of 200 tonnes.

In keeping with its reputation of being the financial hub of Asia and a world player in international finance, the gold industry is poised to strengthen Hong Kong’s position in world rankings. Hong Kong is competing with established hubs like London and New York, as well as emerging markets in Singapore and Dubai. By expanding its gold storage and trading capabilities, Hong Kong is positioning itself to capture a greater share of the global gold market, especially in Asia.

Gold industry publication, BullionStar noted that the local operations of the international bullion banks, the vaults and transport providers, and the futures exchanges have all benefited from Hong Kong’s strategic position as a gateway to the Chinese Mainland and the SAR’s use by China as a gold trade entrepôt. A robust gold market would complete Hong Kong’s financial ecosystem and attract more international capital.

The Chief Executive quoted a Chinese proverb at the Britcham summit that goes, "real gold is not afraid of the melting pot", adding that the gold market is not afraid of whatever volatilities are thrown up to test us. Hong Kong is a survivor and has jumped every hurdle placed before it.

Overall, Hong Kong's pursuit of becoming a leading gold trading centre is a strategic response to global shifts and regional needs, firmly establishing its role as a vital link between international markets and the Chinese Mainland's demand.

Mark Pinkstone

** The blog article is the sole responsibility of the author and does not represent the position of our company. **

As Hong Kong has been developing in leaps and bounds, so has its medical services increased to meet local demands.

And with planned new hospitals in the Northern Metropolis along with current expansion and construction development, expertise is expected to increase and the dreaded waiting times for patients will be considerably reduced.

Hong Kong is poised to be the medical centre of Asia.

Currently, Hong Kong has about 36,000 beds in 43 public hospitals and 14 private hospitals. And already they are overcrowded, aided undoubtedly by an increasing aging population. Patients have to wait up to two hours for a consultation in public hospitals and up to a year or more for onward specialised bookings for appointment.

But that is about to change. Opening on December 11 in Tseung Kwan O will be the 400-bed Chinese Medicine Hospital of Hong Kong run by the Baptist University under the umbrella of the Health Bureau of the government and not to be confused with the Hospital Authority which runs all public hospitals and clinics in Hong Kong.

This is a major breakthrough for Chinese medicine (CM) to be fully integrated with research into western-Chinese medicines while serving the community. It will be the flagship for the 18 Chinese medicine clinics already operating in all districts in Hong Kong.

In its first year of operation, it will provide only outpatient 25 beds and day-patient services and six specialised CM services – internal medicine, external medicine, gynaecology, paediatrics, orthopaedics and traumatology, and acupuncture and moxibustion. It will also provide 12 special disease programs including those for elderly degenerative diseases and stroke rehabilitation.

Inpatient services will start from late next year, with other services expanding year by year, including the remaining 11 special disease programs. It is expected that by the end of 2030, the hospital will provide full inpatient services with its 400 patient beds, as well as outpatient services of 400 000 annual attendances.

Construction is also well underway and above the foundations for the North District Hospital (NDH) extension in Sheung Shui. The expansion of NDH mainly covers the construction of a new hospital block, refurbishment, alteration and addition to existing hospital building, and the provision of associated internal roadworks as well as external and landscaping works. Upon completion of the expansion project in about 2028, the hospital will provide about 1,500 additional beds, atop of its 680 existing beds.

And then comes the mother of all hospitals: The Northern Metropolis Hospital in Ngau Tam Mei, south of Yuen Long, is developing a new integrated medical teaching and research hospital which will become the flagship hospital of the Northern Metropolis with about 3 000 beds, providing comprehensive healthcare services for the new population in the area.

Last year in his policy address, the Chief Executive John Lee announced plans for developing a new integrated medical teaching and research hospital which will become the flagship hospital of the Northern Metropolis, providing comprehensive healthcare services.

The area is a goldmine for development. Representing about one third of Hong Kong’s total land area, existing agricultural land and fishponds will be turned into a massive hub for international scientific and technical research and development.

In the First Hospital Development Plan, there are three projects in two clusters, including the expansion of North District Hospital, the redevelopment of Prince of Wales Hospital, and the extension of Operating Theatre Block for Tuen Mun Hospital. It is anticipated that a total of 1 950 additional beds and other hospital facilities will be provided by 2031 in the New Territories after the completion of the three projects, bringing the physical bed capacity in the east and west clusters in the New Territories to about 12 000 beds.

Most importantly on the backburner is a decision by the Chief Executive in Council (ExCo) last year that a site of about two hectares be reserved in the San Tin Technopole (between Yuen Long and Sheung Shui) for healthcare facilities “which may include private hospital use.”

A private hospital in the New Territories opens up many possibilities, including medical tourism.
The Chinese medical hospital will draw in many tourists from the mainland and Asia seeking medical help through traditional Chinese and western medicine methods. A tourism hospital situated along the Chinese boundary will boost tourism figures ten-fold.

A case in point is the Bumrungrad International Hospital in Bangkok, Thailand. It is a classic example of how the private sector can benefit in healthcare. Founded in 1980, Bumrungrad International Hospital has been a global pioneer in providing world-class healthcare services and international patient support for nearly four decades. The hospital is an internationally accredited, multi-specialty hospital listed on the Stock Exchange of Thailand since 1989. It is, perhaps the largest private hospital in Southeast Asia, caring for more than 1.1 million patients annually from more than 190 countries.