Silver might not be considered as important as gold by many, but it is an extremely practical investment, given its versatility and the dependence of multiple industries on it. Today, silver is openly traded on the market, with spot and futures trade being two of the popular modes. Spot silver is perhaps the most preferred mode when it comes to buying silver, but the term can seem new to the uninitiated. Here are some simple points one should know about spot silver.
What is Spot Price?
The spot price, as the name indicates is the price an individual will have to pay for a particular commodity at a particular moment. It is the current value of an item and decides the amount a buyer eventually pays for any tradable commodity. The spot price, contrary to assumptions actually depends on a number of factors, including the current market trends and expected future prices. Spot price of a commodity changes on a regular basis, owing to changing markets.
Silver is a widely traded commodity, and spot silver refers to silver purchased at spot rates. The spot silver amount typically refers to the cost for 1 troy ounce of .999 fine silver and can be purchased in different forms, with coins, bars and bullion being some of the most popular modes. Realistically, one actually ends up paying different rates compared to spot prices, on account of a profit margin which most dealers keep. The value one pays also depends on the type of silver which he/she intends to buy, with silver coins generally commanding a premium over spot rates. The best way to get the most out of your investment is to buy “junk” or recycled silver, which is often available at prices below spot rates.
Where to buy spot silver
Individuals who are keen to purchase silver at spot rates in India can do so from either banks or jewellers. It is important to remember that silver purchased from banks is often more expensive on account of quality assurances and purity checks. Almost all major banks offer silver at a little above spot rates whereas jewellery stores or pawn shops can offer silver products at spot rates or even below it at times.
- Q. How does one calculate spot silver rates?
A. Spot silver prices are calculated by taking into account the futures contract price for the upcoming months or for those which involve a large volume. A number of international exchanges play a role in determining the final price a buyer pays for spot silver.
- Q. Do spot silver prices change often?
A. Yes, the price of spot silver is changing constantly, with it possible for prices to change every few seconds. Typically prices remain almost constant for a particular day, with variations expected on a regular basis, depending on the market.
- Q. Are there different spot silver rates in different parts of the world?
A. No, spot silver prices remain the same across the world and are typically quoted in US Dollars which can then be converted into the local currency of a particular country.
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