The city's stockbrokers are following Hong Kong Exchanges and Clearing into the commodities business.
But while HKEx paid a sky-high price for the London Metal Exchange, local brokers have a more modest budget.
Tung Shing Bullion, a subsidiary of Bank of East Asia, will offer gold and silver trading for investors from today and foreign exchange trading from August or September.
Stockbroker friends tell White Collar that Tung Shing is not alone and that other stockbrokers have launched bullion trading for investors recently.
The reason for this diversification is simple. Stock market turnover has dropped recently to about HK$40 billion to HK$50 billion a day, down from almost HK$70 billion last year. Commission income from stock trading is decreasing.
Tung Shing will trade local London gold, as well as silver, around the clock. Brokers said many Hong Kong investors are trading stocks, warrants, gold and foreign exchange, so offering a one-stop shop to them makes sense.
When the gold price hit US$800 per ounce in 1980, Hong Kong had many gold trading firms. International bullion trading companies also set up operations here. Investors, however, lost interest in gold from the mid-1990s, when prices dropped to almost US$230 per ounce.