Western Gold Window through the Great Firewall Dream Ends

HKMEx

The newly established Hong Kong Mercantile Exchange (HKMEx) collapsed and shut down just after two years! The western world had their hopes high especially after a New York Mercantile Exchange (NYMEX) former vice-president was its first president.

Some western investors saw HKMEx as a great opportunity to infiltrate China’s Great Firewall and gain access to the massive Chinese gold market. Allow me to elaborate more by telling you this; the Chinese titan built a virtual great wall worthy of association with the well-known wonder of the world that wasn’t penetrated by the western “free-market” culture. Communist China isolated its cyberspace from the western world and allowed only strictly censored content. Moreover, the Chinese governments isolated the populace from western ideas that didn’t match their communist views with an iron fist.

Western tacticians and strategists saw Achilles’ heel in this economic stronghold, a particular region ready for action named Hong Kong. It is a Special Administrative Region (SAR) under Chinese sovereignty, but it has unique circumstances. Both, the West and China need to do business together, and they don’t like each other. The U.S. and Europe wanted China to open its gold market more for their products, and China wants the same without opening their domestic gold markets to the West. They both want take the best of the Free Market, and both doesn’t want to suffer from its drawbacks.

Hong Kong was a safe haven for those who fear prosecution by the Chinese Communist Party and a refuge during the Chinese Civil War. Many corporations moved there during the 1950s to continue their business in a better environment. Before that, Hong Kong was a British colony, which made the business easier than in the mainland for Asian and Western investors alike for 156 years. During this period, Hong Kong Stock Exchange (SEHK) was formally founded and monopolized the market. In 1997, Hong Kong returned to China, but as a SAR during an Asian financial crisis. Thus, Hong Kong was part of China but hasn’t cut its ties with the western world. Hong Kong is China’s gold port, gold come from Hong Kong and export back to Hong Kong. Hong get this gold from Australia, U.S. and the rest of Asia.

After being aware of these circumstances, it is understandable to open an electronic commodity exchange market in Hong Kong. For one reason, to establish a proxy gold market accepted in China, the U.S. and Europe in the Asia-Pacific time zone. Another reason is to facilitate gold trades overseas. In June 2008, the exchange was announced and in March 2009, Albert Helming, a former vice-chairman of NYMEX was appointed President of HKMEx. By February 2012, HKMEx gold futures reached a total turnover above $50 billion.

On May 2013, the exchange ceased, and Hong Kong police made arrests, and they are currently investigating corruption with connection to HKMEx. The collapse started as something smelt fishy from the start. HKMEx surrendered automated trading service and said it can’t afford to support operating expenses. Names were associated with the negative connotation of Rothchild’s and Chinese corruption. It was a tale more suitable for a crime novel than a news story. Till this very moment, there is nothing solid and there is no proof of corruption, only conspiracy theories. But, there is no rational explanation for this unexplained fast collapse unless the rumors were true. The Western world lost its gold futures trade window in the Asian market.

I hope this collapse was due to the financial crisis or the recession over vice or political scandal. The world had enough of scandals and people are starting to lose faith in their governments and officials. The world needs to take the next step to unite if there is any hope for prosperity or crossing this river of selfishness. A troubled world is bad for business.