Hong Kong Mercantile Exchange to Cease Trading on Monday 20th May and Settle all outstanding contracts IN CASH.

The suppression of the price of gold seems to have claimed it's first major casualty. As of Monday 20th May, the HKMEx (Hong Kong Mercantile Exchange, basically an offshoot of the COMEX in Chicago) will cease trading and settle all open transactions IN CASH
What does this mean? Well, for one thing, if you were had invested in HKMEx Gold contracts and were expecting to get Gold on delivery, then forget it. Apparently, the only detail remaining to be worked out is 'what settlement price will be used' in other words, if you bought HKMEx Gold at say, $1700 and were planning on waiting for it to rise before getting out, forget it. Instead of gold, you will be getting paper fiat money.
I suspect that they will give their contract holders more money than the current spot price in order to stop the incredible howls of protest that would result if they decided to cash out all positions at the currently (artificially) depressed spot price.
However, make no mistake, people are going to lose money in this. If I had to make a guess, I would suspect that those people with connections will get back the money that they put in (ie, because they could not deliver the gold, they will pay you back the money you originally gave them.)
Of course, they don't have the money to do this for everyone, so unless you have a major legal team, a government or a central bank behind you, then they will probably give you something like current spot price, plus 10% in USD.
This is just the first domino to fall. Given the Chinese Government's massive bullion purchases, I am not surprised that HKMEx cannot find any gold. However, what is much more important is that whatever gold they can find will cost significantly more than the spot price (at least 25% more, imho.) This means that since HKMEx have no doubt sold more paper gold into the market than they have physical gold in their possession and they know that people will soon be queuing up to withdraw their physical gold, they have decided to take the first move shut down first.
The closing of the HKMEx will also have another important effect: it will remove all the paper gold and silver that has been sold by the exchange from the market. Since it is exactly this paper gold and silver that has been keeping the spot price down, expect rises in the price of Silver and Gold on Monday.
The big question, of course, is about the COMEX, which has already been caught short on failing to deliver on Gold forward contracts. If the same thing happens to the COMEX as is now happening to the HKMEx, then even more paper gold will evaporate from the market, again pushing up the price of Silver and Gold.

I know I have said this before, but I think it bears repeating.

If you don't have possession of your Precious Metals, then you do not really own them, and they can be taken from you if the company that is storing them for you goes under.



You can read the original article [ here ]

http://silverdoctors.com/hkmex-to-cease-trading-will-close-out-cash-settle-open-contracts-monday/