Silver closed at an all time high of $49.80 an ounce (1 troy ounce equals 31.1 gm; around Rs 75,000 per kg in India) on last Monday in London. This beat the previous high of $49.45 per ounce that was seen way back in 1980.
After this, prices fell as investors sold silver after it reached an all time high. Silver currently quotes at around $42 per ounce. While there are a number of fundamental reasons behind the rally, the immediate reasons behind the price of silver going up are pretty different.
Some of the biggest investment banks of the world have been short on silver for a while now. Being short essentially refers to an investment strategy where an investor sells something he does not own, in the hope that the price will fall so that he can buy it a lower price and thus make a profit.
Let us understand this through an example. Let us say the price of silver is currently quoting at $45 an ounce. An investor thinks the price of silver is going to fall to $30 an ounce. So he borrows silver from another investor who has the commodity, pays him a small fee for it, and sells the silver at $45 an ounce.
| Our basic needs are: Air, Water and Food. |
| Recent Articles By Arya : - |
No comments:
Post a Comment