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COMEX (previously known as Commodity Exchange Inc.) is a marketplace for trading in futures and options of commodities that include:
Platinum
Gold
Silver
Copper
Steel
Aluminium
Palladium
COMEX is a trading division that comes under the Chicago Mercantile Exchange (CME) Group. The second most traded commodity on COMEX after gold is silver, with an average daily trading volume (ADV) of over 1 Lakh contracts.
So, if you are planning to trade in silver futures, COMEX serves as the clearing house. COMEX allows you to trade in silver futures of regulated sizes that sometimes can even be mini or micro versions.
Before you decide on purchasing silver futures, it is advisable to check the prevailing silver price in COMEX. Silver prices fluctuate daily as a number of economic and geopolitical factors influence it in the background.
The following are some of the factors that influence silver prices in COMEX:
Demand and Supply: Demand and supply is the most important factor that determines the price of any commodity. If more investors are willing to sell silver than those ready to buy it, the COMEX silver prices will fall and vice versa.
Economic and Geopolitical Trends: The silver prices in COMEX are also linked to global economic and political trends. Generally, silver prices increase when there is economic or political instability.
Inflation: Investors consider hard assets like gold and silver as investment instruments for hedging against silver. So, when inflation rises, the demand for silver rises with subsequent hikes in its prices.
Central Bank Policies: Central Bank’s monetary policy also has a significant impact on the prevailing silver prices. Moreover, when a Central Bank buys or sells silver in large volume, it also influences the prices of this commodity.
Interest Rates: If interest rates are higher, people generally tend to invest in another investment tool rather than these metals. Hence, the demand for the metal remains low, along with the prices.
Since COMEX is the largest silver futures and options, the fluctuations in this commodity exchange trigger price fluctuations in other regional markets. Hence, it is important for investors to be aware of the trend in silver prices on COMEX.
Note that certain local and geopolitical factors influence the rate of trading price in the commodity exchange market. Adequate knowledge about how these factors impact silver prices can help you better optimise your returns on silver futures.
The average value of the COMEX silver futures contract is around $85,000, i.e., the average lot size of silver is 5,000 ounces.
However, you can also trade in silver futures in COMEX in smaller lot sizes, viz., E-mini and E-micro, for 2,500 troy ounces and 1,000 troy ounces, respectively.
Yes, you can buy silver futures on COMEX.
In late 1979, the silver futures prices witnessed a rapid hike due to the falling value of the US Dollar and market manipulation by two private investors. In fact, the price almost doubled as the silver price in COMEX reached US$50 by the end of the year.
In 1980, the US government, concerned with the manipulation of the country’s silver reserves, enacted Silver Rule 7. This rule mandated tight provisioning for margin requirements for trade in silver futures.
This burst the inflationary bubble of silver futures trading, and the prices dropped dramatically. On March 27, 1980, often referred to as the “Silver Thursday”, the silver price in COMEX fell from the high of US$ 48.70 to US$11.
NYMEX (New York Mercantile Exchange (NYMEX) introduced the COMEX 589 Silver Rule in 2014 to apply certain limits on the fluctuations of silver futures. The primary aim of bringing this rule was to promote cash-futures price convergence and price discovery.
At the beginning of the trading day, the COMEX determines the upper and lower fluctuation limit based on the previous day’s price. If the silver price in COMEX touches either of these limits, it results in a triggering event.
This results in a two-minute pause in trade in the market for monitoring purposes, which may be followed by a halt in trade for the entire day. The trading will resume the next trading day from the price where it was closed the day before.
COMEX is the world’s largest commodity futures and options market. The silver price on COMEX has a significant impact on the trading price of silver in other regional markets as well.
You can track silver prices in COMEX on the Silver Overview page of the CME Group website.
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