Silver Price Today: Calculation - Why Futures rate is higher than spot by Rs 10,000?

Silver Price Today: The gap in price of silver on the exchange and physical markets has widened by as much as Rs 10,000. So, what does this mean for investors? Why are investors being offered a lower price in physical markets after buying at a higher rate via the online mode. What should the investors do now? Zee Business’ Mrituenjay Kumar Jha answers some important questions.  

Commenting on this disparity in the price in the online and offline mode, Surendra Mehta, Secretary at the India Bullion and Jewellers Association Ltd (IBJA) said that silver is a very speculative commodity and the market for it is usually very volatile. There has been a rapid rise in silver price from Rs 60,000 to Rs 73,000 in a matter of a few weeks. If you look back to 2011, the prices had gone up to Rs 77,000!  

Watch Zee Business Tweet Video Below:

वायदा में चांदी का भाव 70 हजार के करीब, लेकिन हाजिर में चांदी 60 हजार के करीब, क्यों है इतना फर्क? जानने के लिए देखिए #CommodityLIVE https://t.co/WRNYsbb5wb

— Zee Business (@ZeeBusiness) August 19, 2020

So, what is the calculation that accounts for this massive gap in silver price? Simply stated, this price difference in silver is due to the demand-supply situation. In other words, currently, there is not much demand in the physical markets, he said.  This is why this metal is being offered at a lower price in the physical markets. 

The demand for silver does not build swiftly at consumer level. It is also difficult to store it, he added. Even big bullion dealers want to exit from this. 

The difference in prices is dictated by the market dynamics. At the time of volatility, even in the spot market, the buying and selling prices are significantly different, Mehta said. It is a big difference and the traders hedge their losses, he further said. 

Silver Investment tips and prediction: 

Former Chairman of All India Gem and Jewellery Domestic Council (GJC), Nitin Khandelwal advises investors to buy silver only from a trusted jeweller in case purchase is made from physical market. Investors should also make sure to test its purity, he adds. 

Mehta advises investors to buy a 1 kg bar of silver in the spot market if they have a budget. For investors with small budget, the Secretary advised investing in gold coins. He also said that the silver should be bought in purest form.

See Zee Business Live TV Streaming Below:

In his silver price prediction, Ravindra Rai of Kotak Securities, another panellist, recommends a buy at Rs 67,000. MCX Futures has a strong support at 66,200. Until this level is breached, there is no weakness, he added.