AleecePrince719
Spot cost is the cost you would have to spend now to buy the commodity. Therefore, spot prices are essentially the 'right now'. Spot price is affected by the marketplace trends and doesn't 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 top demand of silver. The silver spot price could be high because the traders expect a rise in the future. The predictions or even the sentiments with the traders in such cases is a strong indicator of what to anticipate in the silver market.
Silver spot - The long run cost is as important as the present price inside the commodity market. Speculation plays a huge role in this market. This importance exists since it gives suppliers and purchasers a hedge against future changes on silver prices. The costs on silver are decided beforehand, before the silver is bought. This is called a commodity contract. A silver commodity contract is surely an agreement to get a specific amount of silver at a decided price in a particular time. The silver price decided inside the contract remains binding no matter it rising or falling meanwhile.
The key advantage for suppliers is they are guaranteed a customer for his or her commodity at a certain price even though the with the commodity may rise or fall in the future. The supplier is certain of a sale in cases like this. The buyer alternatively is hoping how the commodity price will rise. The customer will be able to purchase an inexpensive price and later sell it off on the current high price. He can then have the ability to pocket the real difference from the contractual price as well as the real.
Your situation is more complex than this. In fact the investor never really buys the contract but usually sells it with a 3rd party. The 3rd party wants the agreement before it matures. There is also the 'put' option, which can be actually a kind of selling short. This means selling an agreement before you decide to actually own it on the assumption that the price will fall. In this way you'll be able to buy anything at a lower price and pocket the main difference between your price you sold it at before owning as well as the actual price you're in a position to buy it for.
