MCX Silver Contract Specification & Benefits
Primary sources of silver include lead and copper ores, as well as naturally occurring minerals. Secondary sources include dis-hoarding of silver from countries who’s export of silver is limited.The natural source of silver is lead ore, silver is also found associated with copper, zinc and gold. The country that produces refined silver is China, the total consumption of silver till date had been around 450 billion oz. In 2014 India witnessed a large number of investors hoarding the precious metal.
A major driver of silver demand is silverware, which led by growth in emerging economies and increasing wealth. Silver jewelry saw broad-based growth in volume terms in 2012 from developed and fast-growing emerging markets. The MCX Silver contract is traded in 100 units and the governing commodity is silver. The contract price is quoted in INR and the price is determined by adding 1% premium to the spot valid at 11:00 AM, then converted into INR. MCX Silver is mainly bought/ sold on speculation due to its volatility, commodity character and low risk/ transaction cost.
As a precious metal, silver has long been used as a store of wealth and as way to protect against inflation. As an industrial metal, silver is used by the chemical, electrical and electronics industries where it is valued for its conductivity. For centuries, silver has also been considered a neutral investment in times of market volatility. As with any investment, it is important to ensure proper diversification within your portfolio.
The Bank Nifty chart has formed a “Rounded bottom” pattern. This pattern indicates that price movement on the charts will be going sideways for some time as suggested by the pattern. The chart has traded lower and closed in red on the last session. We expect to see a gap down today. The market is expected to continue on a reversal trend based on the current price action, once the same break below the crucial support holding near 38400. The downside rally could be testing up to 38100-37800 levels in the upcoming sessions. Alternatively, if the market struggles to break the support level, then the prices would most likely to retest the same and revise the trend to bullish/sideways mode once again. Stiff resistance holds near 38900. A slide to 39200-39500 is also a possibility if the price makes or break above this resistance level.
The market has been in a correction mode since the beginning of this year. The oscillators entered into a sell signal which triggered more selling in the market. During this, the outlook on the market has been bearish as the prices failed to find technical targets offered by some of the oscillators. However, there are some positive signs coming up recently and looking at the higher timeframe charts and levels, we believe that such a move higher cannot be ruled out. The Bank Nifty is just above its crucial support level, which if broken can confirm a trend reversal.