Silver to benefit as festival season gets underway
The country's largest commodity bourse, Multi Commodity Exchange of India (MCX) launched a 1 kilo Silver futures contract at the start of October and has witnessed a bull run.
Posted: Monday , 15 Oct 2012
MUMBAI (Mineweb) -
Silver has been outperforming gold but with greater volatility. In India, the country's largest commodity bourse, Multi Commodity Exchange of India (MCX) which launched a 1 kilo Silver futures contract at the start of October, has witnessed a bull run.
Officials say retail investors have shown high interest in the new offering as it enables them to take delivery of 1 kilo silver bar at lower margins, as compared to the earlier 30 kilo bars. Though the exact number of investors who have opted for the new contract was not immediately available, MCX officials said the timing of the new offering was ripe.
"We have the Navratri festival starting tomorrow, and given the beginning of the holy, pious period, many more investors are expected to get into silver futures and also buy silver coins to mark the occasion," said Manikbhai Godhadia, bullion retailer.
Navratri is a vibrant nine-night festival held in India to honour the Mother Goddess. Beginning tomorrow, nine days are dedicated to Shakti, or the nine forms of Goddess Durga, with people across the country celebrating the festival in unique ways.
A clay pot symbolises the womb which is the source of life on earth. It is a prominent feature during Navratri celebrations across the country. Women in vibrant and grand costumes dance around the pot which is filled with water, a betel nut and a silver coin. A coconut is placed on the top of the pot.
In this particular ensemble, only a silver coin will do. On the occasion, people also exchange gifts and sweets and gifting a silver coin engraved with the Mother's image is considered highly auspicious. Though it is generally priced at a premium in the prelude to the festival, it is considered a wonderful keepsake.
MCX silver prices have already touched an intra-day high of $1,164.32 (Rs 61,731) per kilo.
At present, MCX offers standard silver futures (trading unit 30 kilo), Silver Mini (5 kilo) and Silver Micro ( 1 kilo).
The new contract is aimed at the largest consumers of silver in India, ranging from small jewellers to retail investors, who wish to take physical delivery of 1 kilo silver bar in demat or physical form.
At an earlier briefing, Shreekant Javalgekar, CEO, MCX said, "MCX's contracts have always tried to meet the varied needs of all the stakeholders of a commodity's value chain. The Silver 1000 contract is a unique contract that will go a long way in meeting the needs of physical market participants and retail investors."
India is the largest importer and consumer of silver in the world, and has an average domestic consumption of around 3,000 tonnes per annum.