hkmexWhen the Rothchild’s HKMEx was launched in 2011, much of the metals community assumed that the COMEX & LBMA, were they not to outright default, would fade into irrelevance with the advent of the new Asian metals exchange.
Two years to the day after the exchange’s launch however, in perhaps the most glaring evidence of physical gold & silver shortage to date, the HKMEx has announced it will voluntarily cease trading, and all open positions will be closed out and financially (cash) settled on Monday 5/20!

2013 Silver Eagles As Low As $3.79 Over Spot at SDBullion!


As Commodities Now reports, the HKMEx has voluntarily made the decision to cease trading and close out all open positions:

The Hong Kong Mercantile Exchange (HKMEx) announces today it has decided to voluntarily surrender the authorisation to provide automated trading services (“ATS”) granted by the Securities and Futures Commission (“the SFC”). With immediate effect, no new orders may be placed and all open positions will be financially settled at the settlement price determined by HKMEx and its designated clearinghouse.


The HKMEx’s Chairman claims that their priority is to protect members’ interests by closing their positions:

“The favourable conditions under which HKMEx was founded have not changed. Global commodity demand continues to shift towards Asia as the region undergoes sustained growth, presenting great opportunities that we will continue to exploit,” said Barry Cheung, Chairman of HKMEx. “Our priorities now are to protect members’ interests by ensuring effective closing of open positions while strengthening our shareholding base and developing new products that play to our distinctive strengths.”

In closing out the open positions, the Exchange has developed a plan in consultation with the SFC to ensure the process is orderly and that investors are well informed of the matter. The Exchange will disseminate settlement prices to its members the morning of next Monday, 20 May 2013.


In an interview with the South China Morning Post, Cheung claimed that defaulting on metals contracts has no impact on investors:

HKMEx chairman Barry Cheung Chun-yuen told the Sunday Morning Postthat the decision to surrender the trading licence and not reopen for business tomorrow would have no impact on investors and that client contracts would be honoured.

“There is no question of not getting your money back or anything like that. People absolutely do not have to worry about that and I don’t think they are.

“The only thing they will want to know is what settlement price will be used,” Cheung said.

HKMEx was working with LCH.Clearnet – the world’s largest clearing house for financial transaction settlements – to arrange settlement pricing on the exchange’s roughly 200 outstanding contracts, Cheung said.

The tiny number of outstanding contracts reflects the difficulty HKMEx has had in attracting trades to the platform that officially opened almost two years ago to the day on May 18, 2011.

We suspect that come Monday morning, more than one Chinese investor who believed he owned a gold position (and learns that in fact he held paper) will immediately attempt to source and take delivery of physical metal.  As the Shanghai Gold Exchange appears to have stopped delivering gold as well, we suspect that the LBMA may be in for a bit of a physical run.

The first domino appears to have fallen in the ponzi fractional gold system.


  1. Hmm…. got to look into how much industrial silver is sorced from HKMEX, for use in high tech inustries in the region.  While HKMEX’s growth has been modest since launch, it still could gum-up supply chains and send high tech industrial buyers scrambling.

    • Only open interest data I can find in silver was here:
      I can’t speak to whether this is valid or not, but it passes my ‘sniff test’ when compared to total volumes trading in the contract.
      Given the contract is for 1,000 oz (not 5,000 like CME), the underlying physical representing the paper is even smaller than may appear.  If open interest over all contract months is really on the order of ~300 contracts, the question becomes how many of those actually stand for delivery… on a small volume exchange it’s likely a higher percentage… so if 100 stand, it is 100,000 oz.  
      I get bashed for appearing to be to supportive of paper markets, so read the following as comparison data only as that is my only intent.  So far this month on COMEX silver deliveries have been 3,218 contracts, or ~16mln oz.  
      Seems like a non-starter to me.  Due to the lack of transparency on the HKMEx underlying physical stocks, it is hard to tell if there is really a shortage of metal for the exchange to execute on.  Given how this article cherry picked the sensational bits out of the press release and ignored the parts about no volume = no revenue and we can’t pay our bills… I’m leaning this is just a failed contract due to lack of interest by market participants.

    • Right FW! This is HUUUUUUGGGGGGE news, regardless of what ALL the trolls on this and other sites are saying. I mean the answer to their complex BS is to apply Occam’s (Ockham) razor, which is basically that the most likely explanation IS the explanation … ie. that there is not enough physical to support their paper scam!! Truths are always simple … do you hear that, trolls?
      I also find it very interesting that the S&P500 closed at 1666 on Friday, similar to the low of 2008 of 666. You know, the ‘devil’s’ number, in programming speak. Like the good doctor (Doc) says ‘it will be an interesting week’.
      Pedal harder trolls 🙂

    • “I mean the answer to their complex BS is to apply Occam’s (Ockham) razor, which is basically that the most likely explanation IS the explanation …”
      I thought that was “the simplest explanation is the most likely one”.  Multiple variations?

    • Where’s “Ranger”? He loves to state that metals exchanges won’t and cannot fold…. Hope he doesn’t miss this article, I’d hate to miss an opportunity to lock him in the stocks, and throw vegetables…

    • @Henasau here is one of the shills I guess you are referring to, never to be heard from again since this site seems to be taken over by idiot know it alls. You have the gall to come on here putting down people who have been on here a long time, who are true stackers,  You can have it and good riddance. I can see why Charlie is gone, not because he is busy. No need for more of your crap postings to comment on this, I won’t be here to read it. Been good Doc, while it lasted but the usefulness of this site has been compromised. Maybe snotrider can start posting more so you will be in good company. Good by to all.

    • @Crissy not gone or forgotten. I just choose and pick now what I read and post. I also try and stay positive concerning the Metal prices. Ranger being called a shill, LMAO that’s a good one.  There are to many paper folk on this site now that it’s getting depressing. Notice how they come out of the woodwork when the price falls. Charlie Keep Stacking the PHYSICAL.

    • I will accept the homework that mikeyj80 has done for us as fact.  However, I take issue with his statements as he seems to misunderstand the importance of this default   
      If the HYMEX is obligated to pay all the outstanding 100,000 ounces of Gold outstanding in the open contract, that is only about 3.5 tons of Gold, why cant they deliver physical Gold rather than paper?  The fact is that none of these exchanges can meet physical demand including the Comex or the LBMA.  So, this is certainly an indication of the paper con game we have been watching.

    • MFL, I would love to have access to see how much gold underlies these contracts, if anyone can track that down please share!  As mentioned, I have a hunch that it is significantly higher as a percentage than the bigger exchanges due to this ones lack of volume, and probably lack of liquidity.
      I did not read this as ‘there is not the gold to perform,’ I read it as ‘this exchange is bleeding every day and it’s time to caulderize the wound.’  The cash settlement cleans everything up quickly.
      Now I would really like to know why this exchange never took off int he first place, was the delivery system un-economic in some way, is there another exchange that does it better, etc?  Or is it something altogether different that may impact other exchanges in time?

    • Ok, anyone got any thoughts on BullionVault? They are also backed by Rothschild. Seems the Red Shield might be behind these bullion houses so they can fill them with bullion, then close up shop and settle in cash? Who thinks The Red Shield has intents notions of gaining a larger slice of the World’s gold? Excuse typos, but this section does not let you correct typos. 

    • @Crissy I have never mentioned your name or replied to any of your posts but as old saying says “The skin always burns on the thief” (I hope I got right) or loose translation from another language “Hit the table and the tableware will ring”.
      Calling me an idiot is a bit personal as you know all I did in other threads I was only standing up against Sinclair’s and other guru’s bashing. They do deserve more respect from us. 

    • Henasau says:
      May 18, 2013 at 10:29 PM

      Ranger and his shill friends. Where are they?
      I guess you are an idiot, this is what you wrote and I consider Ranger a friend, actually no, a BROTHER as we are True Stackers, not Paper Pushers. Stepping on toes and name calling is not a good thing to do on here.

    • Marchas45 and Crissy-I enjoy your posts.  This site isn’t any good without people responding and having opinions.  Don’t let others stop you from voicing yours.  You  guys bring a lot to the table.  Lately, I was just called “arrongant” by some dipshit on this site.  Actually, it made me laugh.  All I did was provides some links and some information.  If you are “arrogant” because of that then so be it.  I have learned to have alligator skin on these boards.  I have been called all kinds of names.  You can’t please everyone.  I doubt people wouldn’t be having these these name calling episodes if silver was 50 bucks.  Everyone’s nerves are shot with the prices being in the tank. It’s your choice to respond on these boards.  I just think the good people get the short end when people stop communicating.  We need more of your posts not less but I understand why you have cut back.  Keep stacking, brother!

    • @ Marcha45
      Mate, to call someone an idiot is really very heavy handed and you should think twice before doing this but at least it reveals what kind person you might be. It is very hard to know who is hiding behind each and every name but if one take time and read back comments this will give pretty good idea who the person might be, I understand never guarantee though. Unfortunately in this case it doesn’t look very favorable. This is not what pure stacker consistently would say hence my recent post and my opinion.
      Now in general, constant Guru bashing ‘sport’ is not what you would expect from pure stackers. At the very least it settles which side I am on.  

    • @Henasau To call someone who’s a friend of Ranger a Shill then YOU should think twice about saying things. As for being heavy handed and what type of person I am, I will leave that up to my friends and fellow Stackers and not you to decide and as for your opinion, I don’t really give a shit. By the way you keep talking about Guru Bashing that was never mentioned by me only the SHILL FRIENDS. Keep Stacking

    • @Marcha45
      Please take time and read my post properly. I DID NOT CALL YOU SHILL neither I didn’t accuse you about Guru Bashing. In fact I don’t have problem with you. The only reason I responded to your post becasuse the frase you used against me. Now I am calling for Peace. Keep stacking

    • Marchas45 and Crissy-I enjoy your posts.  This site isn’t any good without people responding and having opinions.  Don’t let others stop you from voicing yours.  You  guys bring a lot to the table.”
      Could not agree more, Duck.  Well said.

  2. Great News!… Only one snag..LBMA are not an exchange, its an association. How is there going to be a run? banks? fabricators? refiners?
    This would mean a run on a whole bunch of companies, all with ranging interests in the Bullion Market. The General Public don’t deal direct with some of these companies, they have to go through a brokerage, unless they are trade.
    Might see some rises in prices, I do hope so, I need some good news.

  3. “The voluntary surrender decision was made to enable the Exchange to re-align its strategy with the new industry environment since its trading revenues have not been sufficient to support operating expenses and, as a result, its inability to meet the required regulatory financial conditions.”
    Very hard to find any physical delivery information from their website (such as how many contracts delivered, physical stocks in warehouses that are underlying the paper, etc).  This problem is ironic as the site is very straightforward.  Volume numbers are available and are pathetically small, a couple hundred contracts a day in silver, 4x in gold.
    Sounds to me that they just want out of the game, longs get cash settled and have to buy futures somewhere else, shorts get cash settled and need to find another market to sell.  Owners of physical gold obtained still own it in the licensed depositories.

    • Also very hard to find any open interest information!  The only chart I found was froma  3rd party site and over 2 years old, but total OI only a couple thousand contracts.  One contract of HGMEx gold is equal to about 1/3 of a CME contract.  Would love to know what percentage of the OI is settled physically.  I’d imagine given the lower volumes and OI it is a bigger %, but I’m guessing it’s not more than 5,000-10,000 oz of gold per expiration.  Not a complete shot in the dark, but not a lot of science behind that, would be curious if someone does have the OI and physical delivery info, it would help answer the question Flying Wombat posed

    • @mikeyj80:  You’re right about their apparent inability to pay the bills.  This article is insightful.  Given how small their open intrest appears to be, and that it’s spread out on what is noted as only about 200 contracts, this probably isn’t going to be market moving story.
      I think the regulars have a better understanding of where you’re coming from, Mikey.   Thanks for the valuable feedback.

    • What a relief, at least someone agrees to Mikey.
      To all weak hands, always treat all Internet articles and comments with SUSPICIONS including mine! unless you know what you are dealing with…
      If anyone notice, Thursday price movement for Silver took down previous 15 days prices and Gold took down previous 17 days prices. So will the probability of trend to go down further or sky rocket up. You guess!
      Trading is for logical minded people but not for people with the word `HOPE’ in their thick skull.
      Have a safe trading.

    • @jav … to respond to your ‘points’ …
      1. to buy real money in physical form with counterfeit toilet paper is NOT trading!! 
      2. paper prices are irrelevant.
      3. What, so you and Mikey are in agreement? … well that makes sense.
      To change perception of reality, you need to appear credible and independent. You, and your friend Mikey, fail on both counts.
      Shit is about to hit the fan people, hold on.
      To the trolls, I would say ‘keep pedalling’ 🙂

    • I was wondering that myself. Trolls are double team these days, sorry I mean more and more of them. As I said in the other thread the time must running out for the etablishment. We are getting close to the D Day.
      I noticed there are two types of shills on this blog one type hardheaded: “Silver will go down..”, “You can never win with…”, “Can’t win against the Fed” etc. The other type is doing it softly. Putting doubts in your head slowly but guys and girls, look at the fundamentals. Look what is going on in the world. There is only one outcome for this. Shit will hit the fan very soon and you need to protect youself and your family against it.

    • @Chief
      And on the originality count, I think we all fail in that regard, we’re here to discuss Pms as a preservation of wealth.  Some see that as a necessity tomorrow and want to get all-in.  Others see it as an eventual possibility to start preparing for.
      From what i’ve gathered here over a few months (lurking first), people here are like the republican (or Democratic party), a couple different ideas among us, but generally of the same philosophy.

    • Mary, given the volume on that exchange, low liquidity, etc.  I’d be that the gold to paper ratio is much higher than at comex.  If liquidity is low, more likely you have more sellers and buyers living with their positions and riding them to physical execution as it is less likely they’ll find a way to get out.
      I’m not 100% sure of that but would be willing to bet an ASE if anyone could get the data (far cry from a bridge… unless it’s one of those popsicle ones the kids make in high school physics class).
      Again, don’t mistake this for saying ‘hurry up and go buy paper on this contract before they don’t trade it anymore,’ just sharing my opinion based on my experience in trading physical commodities using physically settled futures contracts.  I lurked here for a while and am glad to be able to contribute in some areas, in others I look for others opinions to help define my own.  Thank you for taking the time to type yours above.

  4. This reminds me of two old flames getting together to revisit good times.  Just like bankers and weekends:  Their  favorite time to hose the clients. 
    It also reminds me of Ann Barnhardt and her decision to exit her business, return client funds after the MFGlobal thefts.  She’s flat broke but still has her soul.
       Not that HKMEX is honorable, doing the right thing or that clients will see return of their assets, paper or physical.  Peregrine went down with a loss of 50-90% of client funds.  
    Call me suspicous but the timing of this event, the assets involved and Rothchild’s involvement makes me think this won’t end well or stop with the return of client funds, or with this group.  We will see.
    “The fovorable conditions under which HKMEX was founded have not changed”  Really? Don’t Bulls*** and bulls*****
     Then why close?   First ABN AMRO (BAN MOAR) and this.  Next customer!

    • AGXIIK, you’ve seen my posts on ABN Amro… 
      If you read the entire press release (easily tracked down on the exchanges site), and look at some of the volume data it’s not hard to see a more likely story.
      Nobody is using their product.  The exchange only makes money when a buyer and seller execute via their system, if that’s not happening they won’t last.  This is what appears to have happened to me.
      There is no data I can find to either verify or refute shortages of the physical.  Given the paltry size of the exchange my bias would be that if the data were available it would show plenty of gold/silver available.  Similar to my comments about a low volume product seeing higher physical delivery, it is also likely that the physical underlying the paper is higher as well.

    • Shamus, it would all be speculation on my part, but you see from my other post the volume of silver that is being physically settled on COMEX, those users will need to find another way to hedge their supply, that could mean locking in large forward contracts with mines if they could agree on a price, or using another exchange just as a reference and lock in the physical somewhere else.
      They will go where the liquidity, ease of execution, and correlation of the hedge is best.

    • I agree AGXIIK. With this quote… “The Exchange will disseminate settlement prices to its members the morning of next Monday, 20 May 2013” – shivers went up my spine. Why would they need to “tell” investors what they are getting? Wouldn’t the investors know exactly where they stand?? That is unless the exchange is going to screw them?
      It appears that TPTB are doing everything they can to cause fear in the market place so they can get the price of gold moving. Remember: their goal is to kill all currencies and come out with a new one. They cannot do this until many more people put a value on gold. They need us moving into gold and not away from it.

    • Sam, they need to define the final settlement price so they can close their doors.  This is admittedly not a great situation, but has few repercussions in my mind as volume is as small as the pimple on the rear of a mosquito.
      Let’s not over react until we see the settlement price.  I don’t know the ins and outs of the exchange.  Typically they don’t hold positions, so one would expect/hope them to be a neutral third party and pick a price that will let the holders of positions arbitrage to a new market.  I think what everyone here relates to is a long hoping to stand for delivery… well if they are forced to sell at fair market price, they can rebuy their long on a better exchange with hopefully no slippage (depends on the ultimate settle price), and then stand for delivery on that exchange.  
      As long as their is not a domino effect where by exchanges continue to fail, eventually the long gets the gold.
      There are a couple scenarios I can think of that have yet to play out in the closing of the exchange that could be “bad,” however most carry a very small likelihood in my mind.

  5. Ouch that sucks… contracts settled in cash whether you’re up or down.
    Though on flip side – as end of the post mentions:
    “HKMEx was working with LCH.Clearnet – the world’s largest clearing house for financial transaction settlements – to arrange settlement pricing on the exchange’s roughly 200 outstanding contracts, Cheung said.
    The tiny number of outstanding contracts reflects the difficulty HKMEx has had in attracting trades to the platform that officially opened almost two years ago to the day on May 18, 2011.”
    The reasoning is more likely that they are losing money due to lack of business.

    • And one contract represents only a Kilo of gold…  Definitely not what you want to wake up to in the morning, but doesn’t strike me as a physical shortage as there are plenty of places you could source that kind of gold.  Hell, not that we would want to… but to put it in perspective, all of us here probably could pool together to cover those contracts and then some just from our personal stacks!

    • How is this proof when other exchanges trade with huge volumes beyond what this exchange did?  Read some of my other posts on this article as I think you really have me mis-read, I would like to understand what the core failure was of this exchange.  
      A lack of faith is very broad, what specifically would cause that lack of faith in such a way that it had a much greater impact here than in any other exchange?  Ultimately no volume means a lack of faith… but that lack of faith could exist for lots of reasons.
      Here’s a for instance:  An ethanol byproduct (DDGS) contract proposed recently (in the last 4 years) never got legs, but it was not anything about the government or the exchange that prevented it from working, it was the fact that if you executed you couldn’t control what railroad you owned your physical.  Since railroads in the US do not play nice and tend to only service O/D pairs on their own lines, this was a huge issue for any long wishing to use the contract… you may be able to get product that works to you nicely, you may get product at an origin that kills you in execution costs.  Nothing nefarious, just a poorly designed contract.

  6. Roger that Mikey  I’m being more of a wiseass in my post.  You did explain the ABN AMRO story and it seems plausible since the gold business was sold off.  The way it was handled was unseemly.   Some are still promoting the story that ABN AMRO hosed its clients. That story first put out was  contrary to your post.  Yours was well reasoned and fact based.
    But the truth barely has its shoes on before a lie has circled the globe   ABN will probably live with the story for awhile.
    I am suspicious of anything that involved midnight raids, bankers and financial agencies coupled with unannounced adjustments to client accounts. The thing that occurs to me that while some actions are innocent and others just the sign of the times. There are so many messes and problems cropping up, we can’t know which one will be the tipping point that collapses markets.
    Cyprus might be that one since it’s still evolving but I think we need to see more of the events before enough people recognize the systems can’t be trusted.
    We’ll see how the  HKMEX clients fare in 24-48 hours

    • PS I read the article from the South China Post.  It seems like the CEO did a lot of explaining including denying any political connection from actions in 2012.  Again, I’m suspicious.  Like Junkers said, When things get serious, start lying.   3-4 months to reopen and needing $100,000,000  That’s some serious money.   Maybe they went in undercapitalized and got caught with their cash flow pants down.  We’ll see soon enough.  It does seem like small potatoes compared with the bigs.  I’ll tuck my tin foil hat away for now and go back to study chemtrails

    • @AGXIIK 100 mil serious money. Nah, daddy has a printing press 🙂
      – Daddyyyy, can I have $100,000,000 pleeease?
      – What for boy?
      – To counterfeit precious metals and add some more of the pleebs phyz to our basement vault.
      – Of course! Here you go son. Your account is credited. Don’t forget to grab the palladium”

    • Yes, if I had a long or short position I would sure be interested in what settlement price was going to be used, specifically is it representative of other markets… for example if settlement price was $1000 / oz it’s as outrageous as if $1700 were used.

  7. Everyone keeps looking at their contracts… Haven’t we all figured out by now that they LIE
    about everything and cook their books? My guess is this whole exchange was set up to
    launder gold from the west to east. Keep it off the books like everything else. These people
    aren’t that stupid to just LET all this gold go east… They are putting it there for a reason
    if you ask me

  8. Also I highly doubt it’s a coincidence that this occurs at a time when metals prices have been crashing. Much cheaper to settle positions in dollars when the prices are at multi-year lows.

  9. Reading through the article and reflections commented … all I kept hearing in the back of my mind is that consistent refrain from around the world by LCS operators, ‘No one is selling. They’re only buying”. As we saw in countless photos and videos posted in that connection, what it is ‘they’re only buying’ is metal in hand … NOT claim tickets settled in someone ELSE’S claim tickets. So, the story is, for me, as much about the unfolding demise of the entire fractional reserve concept, as about incapability of settling these derivative ‘contracts’ according to customer wishes. This IS a ‘milestone’ in the larger narrative. Perhaps it indicates why this ‘transformation’ is being so tediously drawn out as well. The implication, from my perspective, is that underlying forces are rejecting any notion of even a ‘gold-backed’ currency! Humankind may actually be resolutely fed up with banknote ‘money’ and all the presumptious apparatus surrounding it.

    • Oh, and another thing (since I don’t have the edit function to add the afterthought … yeah, I’m miffed about that change, Doc. Just like the loss of the ‘Coins’ radio button), if I recall correctly, that HKMEx was precluded with the Chinese government’s outlawing hundreds of small local and regional REAL, FREE, ORGANIC exchanges to pave the way for its ‘institution’. As Bastiat uniquely observed … losses ‘not seen’.

    • Gotta join in on the picket to restore the edit function… I’m sure my post above was great for a much needed laugh, ( I fell over laughing myself after ‘re reading them) but it is embarrassing, and typos present my posts in an unprofessional manner. I post from cell phone in the middle of the ocean, so yes, I got typos!

    • Pat, I agree that MOST individuals are selling (someone is selling 3 rolls of eagles on my local craigslist @ $27 /coin right now).
      However, watch what people do, not what they say…  premiums for ASE’s have gone from $7-10 down to $3.50-$5 in the last few weeks, despite the fact that the spot price reference is steady to lower.  I draw a conclusion from that.

    • erg… most individuals are “not” selling.
      Can we stage a one day boycott until the edit function comes back?  Similar to May 1 buy silver?  maybe that would get Docs attention!

    • Nat, what do you expect, hes a mess…you seen what happened to Bumi?…His dad, now that’s a different matter, he owns BullionVault. You want to go into how successful the French side are?

  10. I think that determining the reasons why nobody wanted to play in the contract is probably a worthwhile exercise.  If those reasons become applicable across the major exchanges then we could have some bigger problems.  

    • I’m thinking even bigger, lack of faith in the exchange to perform, a delivery system that does not work, fear of meddling by the government… etc etc etc.  Those are the things that one might be able to sniff out well in advance.  I feel, however, that as long as the delivery (physical settlement) functionality works, people will be willing to trade as you can always arbitrage the paper/physical if you disagree with the pricing of either.
      We all have some feelings like those mentioned above (some more than others, mine relate more towards the government and taxes), but the general trade seems to be OK with how the exchanges are working, evidenced by plenty of physical gold and silver being executed off of these other major exchanges.

  11. shamus   I’, thinking Gomez and Morticia had a hand in this. Maybe the entire Adams Family.  Remember them?  Uncle Fester, cousin It. 
    Itook a trip in the wayback machine and recalled the long conversations we had here when this business was set.   There was substantial speculation, some of it well reasoned.  Suspicions were raised about the present of the Rothchilds. Some connections tied to the LME.   China bought the LME for about $1.9 billion over a year ago  If there is a connection between those two firms, then there is more to the situation that a booboo shutdown, release of license and a need of $100 from Daddy warbucks, like widget noted.  
    These types of organizations are well connected, just like banking institutions. Someone is pulling on threads to see what falls out.  Let’s keep eyes on this to see what happens. 

    • @drjames
      That’s a hoot! It looks like it was just printed in the first week of this month! It heavily underscores the adage that when bankers are crowing about their excellent health in the face of blatantly contrary fundamentals, they’re lying through their teeth!

  12. It seems to me that the exchange, set up in 2011, was a shell company designed to accept gold/silver products from Rothchild Et. Al. then delivered to Chinese government to assuage their thinking that all the US Bonds the hold are worthless. There was a deal made to pay the Chinese gold/silver in exchange they did not sell or stop buying US Treasuries. Gold/silver from US scrap was sent to them via SA, gold/silver was sent from Fed Reserve Banks in NYC/Boston stolen under the guise of a hurricane/bombing respectively. China is now happy they have adequate gold/silver and withdrew threats to dump Treasuries. Thus the price smash to get gold/silver melt, weak hands to sell may be over.  If this hunch is correct, and the transfer’s are complete (or winding down), we will see more upward price action…resuming normal based on yet to be released aweful economy numbers after a natural disaster or two this fall. Soros gave me the clues. He rolls the dice 3-4 months in advance!  This is my story and I am sticking to it. Really is no less unreasonable than the guru’s. 

    • They could not get the gold in Syria/Iran, so they raided US reserves and forced weak hands through price manipulations. Their plan of transfer’s to China were delayed by Dieselboom’s admission about bail-ins which created instant stacking and delays in their ME conquests. These adjustments still fit their overall plans to crush everyone with massive debt down the road.

  13. Thomas   I like your thinking.  When speculators wind down some sort of scam they like to close the loopholes and exit quietly so as to not alert the less aware. Th weasely wording of the CEO of HKMEX is telling. I’ve heard those exact same words from dozens of bankers trying to tell the sheeple that their bank was safe.  2-3 weeks later—Kaboom, the bank was closed.
     Ponzi schemes (and banks) always seem to fail because the folks that run these are not particularly good at math and prey on this who are even worse. My apologies to the good bankers, few as they may be.  The really sharp folks who operate on a global scale have tried and true means to cover their tracks.  They use political high cover at upper levels of government.   Madoff was a success story for 40 years and dazzled the Fed and SEC for decades.
    Nothing would surprise me to see this HKMEX as a portal for PMs since Hong Kong is one of the largest golden doors to China.  How many tons flow through HK?  Maybe 1,000 tons of gold this year.    Soros is probably one of the most connected of these sorts in the world and is making billion dollar bets on PM and miner prices increases aftere shorting currencies like the Yen and Aussie dollar, making a cool billion or two in each trade.  I’m thinking he needed some place to put his extra cash and PM markets are probably a good place to go.  Following the big  money is spectator sport and we have a ring side seat.
    There’s an old saying attributed to a successful Merrill Lynch traders decades ago. He said words to the effect that the strong money comes in at the lowest part of the market then leaves the market to  the weak money  which comes in at the top.  The equity markets saw the strong money exit the equities at a rate of 50 to 1.  The weak money is being suckered in at the DOW and S&P tops. That will end in tears.  This bubble will end with horror and tears that would make the tech wreck look like a foggy day.  And that was a $6 trillion loss to the weak hands.  I was there when it tanked and it cost me dearly.  When the present equities tank 50% the weak hands will have been dealt the final of the trifecta of wealth thefts that started in 2000.  Greenspan presided over than, the housing crash and much of the Lehman crash.  Those wealth extractions are measured in the tens of trillions.  That money went somewhere and much went east I think
    Maybe the strong money got into gold and silver 4 years ago, rotating out of other asset classes like equities before the huge downward Lehman crash in 2008.  They waited by the side of the road and then went into the market when gold and silver were in triple and single digits respectively.  they rode it up to $49 and $1,900, exited and then helped knock the market down 50%   Now the Soros clones are back. 
    Soros must be well connected in China.  Taking huge profits from the Yen seppuku probably delighted his Chinese partner/masters, allowing him the opportunity to move back into gold.  It’s probably a good idea to take a page from 3 billion people buying gold hand over fist and they are all in the eastern zone.  Just sayin’ —there are many spoons in this soup bowl

  14. Wow, you guys seem to have a misconception here.  There are NO industrial metals purchased on the HKMEx, it is for speculators just as the COMEX and LBMA.  Most large industrial users purchase directly from miners at a much lower cost than the prices we see.  Foxconn had a recent statement that showed they paid just over $300,000 per ton of silver.  Grade was not mentioned but I think it is safe to say it was 999 or 9999 but that is under $10/oz and most likely from a Chinese mine.  Don’t get too hyped up on this move.

    • Jiggy, I am not familiar with the exchange, but since there is a physical delivery mechanism, it is not unreasonable to think large users could use the exchange to source supply.  One look at the volume and open interest will make it clear that while possible, it is not happening.

    • jiggy That is a strange notation of a silver sale. 
       why would a silver miner, even Chinese, sell for $10 an ounce.  the cost of mining in China could not be that low.  They pay the same price for oil. Yellow metal machinery costs just as much.  Even slave labor costs something.  If the general cost of silver mining is $25 an ounce as noted by SRS, how does China mine at so low a price.  And why would they give Foxconn a break on price.  So that firm could produce more Apple products a little cheaper?   Did Foxconn hedge their silver price because if they did it would have to have been 5 years ago when silver crashed to $8 an ounce. 
      I’m not question this, but I am curious about the why’s of this.
        I miss the logic of selling silver at $10 so a slave labor corporation in China can get a break on silver prices.  Silver content in an Apple product ranges from 25 cents to maybe $1.  The economics of cheap silver to Foxconn doesn’t make sense to me. No one has complained about the price of silver as a content to these products when silver is in short supply.  I can’t see why a silver miner would sell at less than half the going market price so we round eye barbarians can buy our tools at a lower price.  This quote got me to thinking since if the Chinese miners are selling for $10 an ounce, it changes my thinking about silver shortages, at least in China.
      They and India are buying about 50% of the entire world production of silver this year and probably at about the present spot price.  Maybe they want to subsidize their electronics industry.

    • Does anyone actually buy into this guys bullshit? He never provides any evidence of his claims (which are outrageous to say the least). And there is no logic or reasoning in what he says. It is the opposite of that and makes zero sense.
      I question everything people say, and especially the silver bashers. China imports loads of silver and exports none. Get real. 

    • I didn’t bother to reply as it seemed to crazy to bother to respond to… Physical delivery exchanges work both ways, both as a buy or a sell.  Sell futures if it is the highest price you can find, then make sure your silver gets to the approved depositories and deliver the silver in fulfillment of your short obligation.
      If you really had .999 metal would you sell it for $10/oz when you could have it melted into bars/rounds and deliver them against a short position on the exchange?  Sure there are costs to do this… but I bet there would be plenty of approved refineries willing to do this for a small fee, even after shipping there is a lot of meat left on that bone!

    • I have never seen SDs post an electronic company’s COGS but I certainly dont claim to have insider knowledge.  Foxconn’s COGS is freely available as is Apple’s so if you ever want to step out of the lala land of dealer & blogger articles, reality is just a click away.

    • @jiggysmb:  The LBMA, in particular, is most certainly used directly for actual physical off-take.  That doesn’t change the fact that it’s got 100x leverage in the very least, with the vast majority of the activity nothing more than speculation.  But it does have a more physical rooting.  Direct off-take and honest/true hedge trades associated with direct off-take happen (e.g., as but one example, an industrial buyer going to a refiner for X amount of silver, which in turn sets-up an order book for the refiner waiting on dore bars from mining companies and, as a result, the refiner takes out a “true” hedge directly linked to the physical supply chain order).  Stuff like that happens every week.

    • Normal

      @jiggysmb:  Just fyi, Apple does not publish costs at the granularity level necessary to determine what they pay for things like silver.  I know this for a fact because I have read *all* of their filings during a given reporting year on more than one occasion.  I haven’t checked but I would assume the situation is the same at Foxconn.  That level of granularity isn’t required by law and it’s unusual to see it discussed when, as a percentage of overall costs, any given single input is small.
      Eric Dubin (securities analyst for 20+ years, and, well, yeah, occasional blogger in “lala land” 🙂

    • I only mention apple since most everyone owns or knows someone that owns stock and can easily request the statement with the details needed.  Seeing your experience I’m sure you know Foxconn manufacturers most of apples products.  Being a Foxconn stockholder I do see the detailed cogs and is where I got the estimate mentioned.  Don’t let it get you down, it is not uncommon for manufacturers to get supplies under market cost, but I am sure you know that.

    • @jiggysmb: The discussion was about the cost of silver being sourced, not finished end products like an iPad, or a division/product level break-outs of COGS.  The data on silver isn’t public, nor disclosed, and many analysts have requested that detail from Apple (including yours truly) and Apple simply doesn’t disclose that information. 

  15. HKMEx chairman Barry Cheung Chun-yuen told the Sunday Morning Postthat the decision to surrender the trading licence and not reopen for business tomorrow would have no impact on investors and that client contracts would be honoured…
    They did not ASK the invesrtors if they wanted paper, yet NO IMPACT…Bullchit ,now these people have to scramble for phyzzz…K.I.S.S
    ‘keep it simple stupid ‘ there is NO Gold at HKMEx  and investors will get screwed .luciferians shattering confidence in their CURRUPT  Banking system ..People will be pizzed . having phyzz in China is very desirable NOW! can’t wait until tomorrow settlement

  16. We need another World Silver buying day because it’s afforable for most ..Silver Bulls United ,start running info commericals ,inform the public ..break the backs of the Silver  ‘naked’ shorters…You know the price will RISE once that’s done? much more cost effective than mining ,..even if you mine successful ,you still have the luciferians rigging the market ,..INFO WARS  IMO

  17. Gosh, So many Newbies here. Must be throw overs from the SLV message board. I am totally a physical player not a paper player.
    Most likely have a bigger stack than most. Won’t say how many but between over 2000, but less than 10,000 ASE’s so take your Homogenized Horseshit back to The SlLV message board where you belong.  

  18. well, there goes all that hype that opening this exchange was part of the China plan to suck all the gold and silver out of the west…. and silver will skyrocket to da moon ..etc bs. 

  19. If the current trend in the paper price is down and looking to go lower. Why settle now. Why not wait for the bottom to be hit. If anyone has a nod on this it would be a Rothchild.
    Unless we are seeing the bottom right now? And the sort squeeze is about to strike. Thoughts anyone?

    • You wouldn’t “value” if it bit you in the ass. I really wonder why you are here bashing silver investors in the first place? Are you a well paid troll or do you just take pleasure in watching the financial markets disintegrate all around us? It makes no sense at all why you keep posting this nonsense.
      At any rate, from what I can gather, your opinion probably carries no weight around here with a bunch of blockheaded hard core stackers. You might want to move on the Yahoo boards. 

    • Not the same value in regard to the Dollar. I don’t give a shit. I’m not selling at this level.
      I may never sell for fiat, but barter for something of value.
      Good luck with stocks or wherever you think is a good place to put your fiat.

    • Silver, I agree you would not mine silver only, I’ve read that a lot of mines are producing silver as a byproduct to what they’re really wanting to pull out of the ground and that the cost of production for these mines is closer to $15-17 per oz.  Before you call BS please allow me a little time to try to refind those articles.
      Also, silver spent a long time around $30-40.  It is possible mines locked in very long term contracts at these, now high, prices.  If so they may continue to produce longer than you would expect just by looking at the spot price today.  I’m not *sure* that they did that, just merely one possibility that ought to be at least considered… and after considering you may do whatever you want with it!  But hopefully that is why we all read these posts here, to gather more information to form better opinions.

  20. EROI = Energy Returned On Energy Invested – The Peak of World Silver Production may be just around the corner due to a falling EROI (energy returned on energy invested). This will also be true for most industrial metals.  I may go as far as to say, if the Global Economy does not make a full recovery shortly (which I doubt), 2008 could be the all time peak for world silver production.  At least, the world production of silver will be in a plateau as unconventional oil supplies start to peak and decline.

    We have two problems concerning the mining industry.  First we have the numerous Black Swans ready to take down the Global Financial System in the immediate future, and secondly, the falling EROI ratio that will provide less net energy for mining into the not so distant future.  One deals with the evaporation of credit to fund new and existing mining projects in a Global Financial Meltdown, and the other limits the production of future mines to those companies who have the best quality high grade ores. 
    I was inspired to write this article by reading “Mexican Silver” by Bob Moriarty.   Mr. Moriarty stated that Mexico has so much silver, the country has barely been scratched.  Even though it is true that Mexico has plenty of silver, it takes a great deal of energy to explore, develop, mine and produce this silver for market.  Very few, if any analysts understand the falling EROI ratio and its impact on the future of the mining industry.  To understand the EROI ratio, I would direct the reader to check my previous article: THE MOST IMPORTANT ASPECT MOST ECONOMISTS AND ANALYSTS FAIL TO RECOGNIZE.  You can find the article HERE.
    Basically, the EROI is the net energy remaining after exploration, development and extraction has been factored in.  When we just consider the energy coming out of the ground, this is called the EROI from wellhead.  We also must factor in the refining, distribution and energy cost to maintain the infrastructure system to get a more complete EROI ratio.  This will be discussed in a later article.  But, if we just go by the basic EROI from the wellhead, Cutler Cleveland of Boston University reported that the EROI of oil and gas extraction in the United States has declined from 100:1 in 1930, to 30:1 in 1970, down to 11:1 in 2000. [1]

  21. There’s very little left on the planet. The U.S. Geological Society said just a couple years ago that silver would be the first element in the periodic table that would become extinct. It’s incredibly bullish. The USGS said that would happen by 2020. So if we’re in the situation where we can run out of silver, the price clearly has to go up, because you can’t obviously run out of silver. What will happen is, the price will have to go to a price level where it’s economic to recycle it.. (emphasis mine)
    We have seen history in the making here. Normally whatever the government states, we know as of late is false. But here, we have some honesty from the USGS. Unfortunately, as energy becomes more expensive due to less net energy available due to a falling EROI ratio, even recycling will become expensive and prohibited. There will be plenty of challenges in the future for the modern technological society we live in as we transition to a world with less of everything right at the time when China and India are westernizing.
    Conclusion and Final Comments
    The world is peaking in global oil production. The downside slope of the graph is much worse when you factor a falling EROI (energy returned on invested) into the mix. If the certain data listed above is correct we may see the USA hit a 1:1 EROI ratio by 2020’s and the world by the 2030’s. The real damage to a modern society starts when the EROI figures reach 3-5:1. When 1:1 is reached….the movie has been over for quite a while and the theater is officially closed for business.
    Liquid energy fuels are such an important part of our way of life, to transition to another type of technology or energy would cost countless trillions of dollars in an upgrade. People talk about changing the auto fleet to electric. This sounds nice on paper, but the economics, cost and logistics would make this theory, DEAD IN THE WATER. We have to start making wise decisions with the resources we have left. Until we find ZERO POINT ENERGY or some poor Alien Slob crashes his ship here on earth, we are going to have to tighten the belts, bite the bullet and get to work.
    The mining industry will follow the peaking of global oil and natural gas production. There was a peak in conventional oil discoveries in 1965 and a peak in conventional production in 2005. There was also a peak in world class mine discoveries in 1981. A great deal of capital has been invested in the past several years in both the oil and mining industry, but very little to show for it. The world is surviving on the back of large depleting oil fields and declining world class mines.
    The peaking of world silver production will be the Canary in the Coal mine. Soon after, we will see the peaking of world industrial production. Even though the USGS states that there are over 550 million tons of copper reserves in the world supplying 35 years production at current rates, a rapidly falling net energy supply will very quickly erode the annual production rate. Sure there might be plenty of silver in the Mexican mountains, but it will be mined in the future at a very smaller annual rate. Many people confuse the Peaking of Oil with running out. This is not the case. It is the FLOW RATE that peaks. To add insult to injury, adding the falling EROI ratio to the equation, you’ll have a lot less oil flowing a heck of a lot slower as time goes by.
    I stated in the beginning of the article that I believe the world silver production peak may have occurred in 2008. The disintegration of the global economy has put a damper on base metal production along with by-product silver. I don’t see the global economy recovering anytime soon with money printing and derivative game playing as the primary source of real capital. If we don’t have a peak in world silver production in 2008, it will plateau and decline soon there after.

  22. That 64 to 1 gold to silver ratio makes me happier that having 20 pounds of viagra and keys to the Playboy Mansion.  Look Hef, you old fart, woodie’s coming to town. And that ain’t no Allen

    • two ZH articles just up
      SA gold miners want a 60% raise.  Good luck with that
      Big margin call on Yen trade caused a massive liquidation including silver dump.  what—me worry?

    • Good heads up on the liquidation… Something to think about, the boat seems to be leaning very heavily bearish now, and when you start to hear stories like margin calls causing a liquidation it may mean that the big position holders have either had enough or have blown through the amount of money the company is willing to risk on a trade… when this happens in a big way it’s not uncommon to see highs and lows printed…
      I haven’t done enough research of my own yet, but maybe we are about cheap enough…

  23. that item mentioned on another post about Foxconn being able to buy silver at $10 an ounce might be something along the line of a base metal miner offing his silver on the cheap, like Silver Wheaton buys for $4 an ounce.  Apple has $170 billion in cash  Maybe they fronted some funds to a miner and got the silver byproducts.

  24. Paper longs are under the blow torch.  I’m starting to agree with those who predict a forced manure in paper which lets them cash settle all the longs, and make a nice profit doing so.  This also might be helped along when real traders, fed up with the phony market, dump everything to get out.  The old paper to zero meme.  Whatever is going on here, smacks of total desperation on almost all sides.  The fat lady is tuning up.
    Take it down and blow it out- IOW, if we can’t win we overturn the chess board.  The death of the Rule of Law is a sad thing to see.  Thanks again to Bart and Gary.  You guys are terrific.  Cash those bribe checks before they bounce, boys.

  25. Paper longs are not the only ones under a blowtorch.  If someone is long a reasonable amount of paper, similar to stacking a reasonable amount of physical, they’ll have no reason to need to sell.  If you’ve made a big bet and are in need of $ to pay bills, you are under the torch as mentioned.
    I find the comment by AGIIK about a blowout in yen causing liquidation in silver very interesting.  we may have a little more pain to go, but if that is really happening we may be close to the end of the down run, at least for now.  

  26. Okay, I’ll settle all his bickering and name calling.  If you don’t have 400 posts on this website, SHUT THE FUCK UP AND GO BACK TO WHERE YOU CAME FROM!  IF YOU CONTINUE TO BOTHER WE REGULARS, I’LL TURN YOU OVER TO OBAMA AND LET HIM AND THE IRS TAKE CARE OF YOU!

    • The IRS already took care of me so no need to bother.  I forgot to report a small 1099-INT a few years ago, IRS asked me WTF I was thinking, I apologized, sent them a check for $4 and in my note told them I hoped this would settle the matter and considered the problem rectified.
      A month later I received a check back for $4.01, extra penny for interest earned on my money while they held it as they said there was now no extra tax liability… Sure am glad we wasted everyone’s time for that.  After that I debated sending them $10,000 to see if they’d pay back the same 3% annualized return!

  27. I believe this HKMEx default won’t have any consequences whatsoever. Until the whole system crashes down in flames, everything will be contolled by some big entities who conrol everything. That’s it. If you watch CNBC, all the traders/commentators work like they’ve worked for the last 30 years, nobody cares that the system is completely rotten. The rules are still the same and as long as they don’t change, the system will stay rigged. Right now the system runs on nothing but a hot air. I believe it cannot stay that way forever… unlesss… more and more hot air will be needed. At some point the physical WILL decouple ferociously.

  28. What, another “coincidence”?  Hmmm…. We have a flash crash Sunday evening, which would make anyone “cash settled” based on Friday’s closing prices on precious metals contracts happy if they were long. 
    Something for the research community to dig into because the timing is fishy…  I’ll dig if I have time.

  29. jiggy  there was an infographic posted a few months ago that included an outline of how much silver AND gold goes into the most common electronics we use today.  The amounts were tiny, ranging from a few tenths of a gram to about 20 grams for a large computer like a lap top.  This means the silver contents would range from 25 cents to maybe $20 when silver was $30 an ounce.  I didn’t focus on gold since it was more available.  But the gold contents were even smaller and ranged from hundredths of a gram with costs of $2-10.  Multiply that one billion electronic items and you are talking lots of silver and gold but no one item was so precious metal heavy that a tripling of silver price would make much difference in a $1000 Apple computer.

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