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Wednesday, October 12, 2011

Commodity market - Silver and MCX

A few decades ago, every street in the city would have a goldsmith – where are those tribe now ?   The film Dasavatharam will open with Kamal speaking to a larger audience on Chaos theory and the butterfly effect of sensitive dependence where a small change in one place can result in large differences elsewhere !!  The volatility in the market is often attributed to occurrences elsewhere !!!

In markets – they sell vegetables.  There are markets for dry fruits, spices, fruits and more… but can you buy : Gold, Silver, Aluminum, Platinum, Oils, Oil seeds, Almonds,  Spices,  rubber etc., all at a single place ?  -  the rate of Almonds per kg was Rs.400/- (and Rs.382/-) **

Apart from Gold, there is another ductile, malleable, brilliant white metallic lustre capable of taking high degree of polish.  It has the highest electric conductivity of all metals, even higher than copper – it is the metallic chemical element with chemical symbol “Ag” – ‘Silver’.

The metal occurs naturally in its pure, free form (native silver), as an alloy with gold and other metals, and in minerals such as argentite and chlorargyrite. Most silver is produced as a byproduct of copper, gold, lead, and zinc refining.  Silver has been a  valuable precious metal used in making ornaments, jewellry, utensils, coins and the like…. For devout Hindus, silver is considered auspicious and preferred one for religious purposes.  It has its utility also in electrical contacts and conductors, in mirrors and in catalysis of chemical reactions; in photographic film, and dilute silver nitrate solutions and other silver compounds are used as disinfectants and microbiocides.

On October 11, 2011, Silver prices gained in Mumbai, Jaipur and Ahmedabad markets but it was down in Chennai market. Pure silver (99.9 purity) was quoting up at Rs 54540 in Mumbai,; in Chennai I was Rs.53000/- per kg.  At 15:58 hrs MCX SILVERMIC November contract was trading at Rs 52999.00 down Rs 65.00, or 0.12%. It touched an intraday high of Rs 53640.00 and an intraday low of Rs 52760.00. So far 95969 contracts have been traded. At 15:58 hrs MCX SILVERMIC February contract was trading at Rs 54360.00 down Rs 86.00, or 0.16%. It touched an intraday high of Rs 54999.00 and an intraday low of Rs 54133.00. So far 7007 contracts have been traded.  (should be confusing for some not trading in the market !)

Internationally, trading  sentiments bolstered after gold climbed the most in a week in New York as falling dollar prompted investors to buy the precious metal as an alternative asset. Gold in New York, which normally sets the price trend on the domestic front, rallied by $37.20 to $1,675.90 an ounce and silver by 2.46 per cent to $32.04 an ounce.  Back home, retailers  buying for the ongoing festive season also supported the uptrend.  On the domestic front, gold of 99.9 and 99.5 per cent purity added another Rs. 195 each to Rs. 27,115 and Rs. 26,975 per 10 grams, respectively. The metal had gained Rs. 260 on Monday.   Similarly, silver ready remained in demand and advanced by Rs. 400 to Rs. 53,900 per kg .

Yesterday (11th Oct 11)   Gold eased 1 percent  giving up some of the previous day’s gains, as stocks and the euro were pressured by waning optimism over a new plan to tackle euro zone debt, and ahead of a vote in Slovakia to ratify changes to the bloc’s rescue fund.  The euro fell 0.3 percent versus the dollar on Tuesday, extending losses after Slovak Prime Minister Iveta Radicova said she will tie a ratification vote on the expansion of the euro zone’s EFSF rescue fund slated for later in the day to a confidence vote on her government.
Slovakia is the last member the 17-member bloc yet to vote on changes agreed by its leaders in July to the 440-billion-euro European Financial Stability Facility. Markets were also wary over a pledge by French and German leaders to unveil a multi-faceted plan by early November to address the debt crisis.

The market where one can buy all those items is MCX – Multi Commodity Exchange of India Ltd,  headquartered in Mumbai – electronic commodity futures exchange.  This has permanent recognition from the Government of India to facilitate online trading, and clearing and settlement operations for commodity futures across the country.  MCX began its operations in Nov 2003 and holds a very high market share of Indian commodity futures market, and has more than 2100 registered members operating through over 1, 80,000 trading terminals, across India. MCX offers more than 40 commodities across various segments such as bullion, ferrous and non-ferrous metals, energy, weather and a number of agri-commodities on its platform.

Now people prefer to buy gold and ornaments at GRT, Vummidiars, Nathellas, Saravana and other big shops.  Earlier there were local Goldsmiths who mastered the art of turning gold into ornaments of choice pattern.  Silversmith were the ones who specialized in silver; as the techniques were largely same but end product greatly varied, there were some who did both..  generations would be loyal to their preferred Goldsmith from whom they used to buy their ornaments… gone are those days and such  traditional shops have almost vanished

-         the rate of Almonds per kg was Rs.400/- (and Rs.382/-) **  -  the rates of MCX commodity market.  Rs.400/- is the latest price while Rs.382/- is the future price as at 30.11.2011 !

With regards -  S. Sampathkumar.

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