Wall Street Metals – Gold and Silver Investing
Silver Spot Price FAQ
How is the spot silver price calculated?
Silver is a commodity that trades virtually 24 hours per day across many exchanges such as New York, Chicago, London, Zurich and Hong Kong. The most important exchange, however, when it comes to determining the spot silver price is COMEX. The spot price of silver is calculated using the near term futures contract price. By near term, that may mean the front-month contract or the nearest contract with the most volume.
How often do spot silver prices change?
The price of silver is constantly changing. The spot price of silver changes every few seconds during market hours. Between domestic and foreign exchanges, spot silver prices update Sunday through Friday, from 6 PM EST to 5:15 PM EST each day. Spot prices remain static during that 45 minutes down period from 5:15 PM EST to 6 PM EST each weekday, as well as from 5:15 PM EST on Friday until 6 PM EST on Sunday. Although silver and other markets may have periods in which they are very quiet, they also have periods in which prices change very rapidly.
What currency are spot silver prices quoted in?
The silver spot price is usually quoted in U.S. dollars (USD). However, markets all over the world can take the spot silver price in USD and simply convert it to local currency.
What exactly is the spot silver price referring to?
The spot silver price is quoting the price for 1 troy ounce of .999 fine silver.
Are spot silver prices the same all over the world?
Yes, the price of silver is the same all over the world. Exchanges and markets all over the world can take the current spot silver price in USD and convert the price in USD to local currency.
Why can’t I buy silver at the spot silver price?
Silver is sold by dealers with a premium to the current spot price. When one is looking to sell metals to a dealer, the dealer may offer spot or slightly below the spot price for one’s metals. The dealer premium as it is often called represents the price at which a dealer will buy silver and the price at which a dealer will sell silver. The difference between the spread represents the dealer’s gross profit. This is how dealers make profits and stay in business.
What is the difference between the bid and ask prices?
The bid price is the maximum offer available for a particular commodity at the present time. The ask price is the minimum asking price available for a particular commodity at the present time. More simply, if you want to buy, you will pay the ask price. If you want to sell, you will receive the bid price.
The difference between the two is referred to as the “bid-ask spread”, and often is a reliable indicator of an investment’s liquidity. The smaller the bid-ask spread is, the more liquid a commodity and the less “transaction fees” an investor will incur when getting into and out of investment positions.
Silver Futures and Paper Silver FAQ
What are silver futures contracts?
Silver futures contracts are an agreement for a buyer to purchase a fixed amount of silver from a seller, at a fixed price, at a specific time in the future. A simple example would be a buyer agreeing to purchase 5,000 troy ounces of silver, at $20/troy ounce, two months from the present. If during those two months, the price of silver decreases $2, the seller would profit $10,000, as they could source the silver on the open market for $90,000 and then sell it via the futures contract for $100,000. If during those two months, the price of silver increases $2, the buyer would profit $10,000, as they have now purchased $110,000 worth of silver for only $100,000 cash.
Futures contracts also allow bullion dealers, including Wall Street Metals, to hedge their physical silver positions by electronically buying or selling metal out in the future to offset their physical inventory positions. As spot prices move up and down, the offsetting gains and losses between physical and futures positions ensure that movements in spot do not affect our company.
Metals futures contracts trade on a variety of worldwide exchanges, including the COMEX and NYMEX.
What is the COMEX?
The COMEX is the primary exchange for trading gold and silver futures contracts. Standard gold contracts are for 100 troy ounces of gold, while standard silver contracts are for 5,000 troy ounces of silver.
What is the NYMEX?
The NYMEX is the primary exchange for trading platinum and palladium futures contracts. Standard platinum contracts are for 50 troy ounces of platinum, while standard palladium contracts are for 100 troy ounces of palladium.
Could I buy silver by just buying a futures contract?
One could buy a silver futures contract and take delivery. This is not what normally happens, however. Taking delivery on a silver futures contract involves additional fees and costs and one is limited in the product type. In addition, the amount of silver is fixed as one regular silver futures contract equates to 5000 ounces of silver.
What about leveraged or paper silver products? Are the prices the same?
The spot silver price is the price at which silver may change hands and be exchanged right now in the physical form. The spot silver price should not be confused with say the price of a silver-based ETF, where an ETF’s price may be based on multiple factors.