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Spot cost is the price you should shell out at this moment to get the commodity. Therefore, spot price is in essence the 'right now'. Spot prices are suffering from the market trends and does not operate in isolation. The future spot price strongly affects a non perishable commodity including silver. A boost in spot price doesn't necessarily indicate a high demand of silver. The silver spot price may be high because the traders are expecting a boost in the long run. The predictions or the sentiments with the traders in such instances is a strong indicator of what to anticipate inside the silver market.
Silver spot - The near future price is as important as the current price within the commodity market. Speculation plays a huge role in this market. This importance exists as it gives suppliers and purchasers a hedge against future changes on silver prices. The values on silver are decided beforehand, before the silver is bought. This is whats called a commodity contract. A silver commodity contract is surely an agreement to get a quantity of silver at a decided price with a particular time. The silver price decided inside the contract remains binding irrespective of it rising or falling in the meantime.
The main advantage for suppliers is because they are guaranteed a client for his or her commodity with a certain price although from the commodity may rise or fall in the future. The supplier is certain of a sale in this situation. The buyer on the other hand is hoping how the commodity price will rise. The purchaser should be able to purchase at an affordable price and later sell it off on the current high price. He can then be able to pocket the real difference in the contractual price as well as the real.
Your situation is sort of more advanced than this. In reality the investor never really buys the agreement but usually sells it with a alternative party. The next party wants anything before it matures. There is also the 'put' option, that is really a type of selling short. This means selling an agreement prior to deciding to actually own it around the assumption how the price will fall. This way it is possible to get the agreement for less money and pocket the main difference between your price you sold it at before owning and the actual price you're able to buy it for.
