7 Things to Know About Silver Futures

Silver is frequently overshadowed by its famous peer, Gold, make it forex, ETF’s and on occasion futures. Despite gold becoming popular, silver will manage to put on its own ground. It’s no surprise then silver is frequently supposedly always a “poor man’s gold. ” Depending on who you ask, you may obtain various outcomes. For many traders silver supplies better outcome, while for many, the gold is greater a favorite share while in the gold and silver coins kind.

It is projected that silver mining began 5000 years back with the before all else silver getting showcased in 3000 B.C. at Anatolia, that is in contemporary Turkey. Through time, silver climbed in popularity notably after all 1200 B.C. where silver production has been reported to have transferred into Greece, that was followed by Spain that 10 years later became the most significant silver manufacturer, sourced through a few of its many colonies.

What sets a side silver out of gold would be your varied uses of this alloy which goes beyond only a couple businesses in fabricating as jewelry. Silver is among the very frequently used component being a industrial material in contrast to gold and also hence has more demand on a commercial and industrial level.

Before dabbling in trading futures, it’s vital to be aware of the faculties of the platinum, the things which influence the demand and supply in addition to the futures contract criteria. Listed here are the seven things that you want to find out when investing in silver inventories.

#1 – Demand for silver is constantly bigger than furnish

In reality, statistics clearly show that long haul requirement for Silver continues to be consistently larger than the source, signaling the significance of the modest traded metal.


Long term Silver supply/demand statistics (Source: Silverinstitute.org)

This is also clearly represented on the long term costs for Silver, which as you can see in the next chart has been steadily increasing between the years 2006 – 2012 before silver costs started to decline in the years post-2012.


Long word silver amount graph (2006 – 2015)

For futures traders, as the long-term trends doesn’t impact the short term trading, it still shows that silver futures is an alternative or even compliment gold futures trading. In terms of financial or political uncertainty, silver also exhibits characteristics of a safe haven asset/instrument and thus, tends to appreciate similar to gold costs. There are quite a few subtle differences however between silver futures and gold futures.

#2 – Silver futures contract specifications

Silver futures are standardized exchange regulated and traded contracts. They are primarily traded at the New York Mercantile Exchange (NYMEX), Commodity Exchange (COMEX) and the Tokyo Commodity Exchange (TOCOM). Silver futures are priced in U.S. dollars and cents on a per ounce basis. Silver futures are denoted by the futures ticker name of SI.

Silver futures contracts come with a monthly expiration with trading being conducted on the current calendar month, as well as the next two months. The far out contracts are usually July and December contracts within a 60-month period starting from the current month. Trading on the current futures contract closes on the third-last business day of the month.

One standard silver futures contract controls 5000 troy ounces. There are also many different variations to the standard silver futures contract such as the e-mini silver futures and the miNY contracts, which control 1000 and 2,500 ounces.

Below is a summary of the silver futures contract specifications.

Ticker SI
Units 5000 oz
Contract Months FGHJKMNQUVXZ
Tick Size $0.001/oz
Tick Value $5
Min. Tick 50 points ($5)

A full $1 move in the SI silver futures contract, which is 1000 points, is equivalent to $5000.

Among the various types of silver futures contracts the e-mini silver futures offers better incentives to trade due to both lower margin requirements and lower tick sizes. The CME Futures’ E-mini silver futures contract gets got the ticker symbol QI that controls 2,500 troy oz, that will be half of the value of this typical silver futures contract. With the mini-sized silver futures contract, the full $1 movement around in silver stocks, that will be 1000 points, is equal to $2,500.

Below is a overview of this QI mini-sized silver inventories agency.

Ticker QI
Units 2500 ounces
Contract Months FGHJKMNQUVXZ
Tick Size $ 0.0125 0.0125/ounce
Tick Value $2.5
Min. Tick 50 points ($2.5)

Number 3 – Which silver futures are more perfect for traders?

While Silver stocks might provide reduced margin requirements and also the capacity to restrain lower components, concerning trading volume contrast between your typical silver inventories and also the mini-sized silver futures contract, the bigger contracts are far more actively traded.


Silver Futures Comparison SI – QI Source – CME Group

What this means for day traders is that the larger silver futures contracts make for a better option to trade. The liquidity that comes with the larger silver futures contracts makes it easy for day traders to quickly day trade the futures marketplaces with relative ease. Whereas, the mini-sized silver futures contracts are less liquid and is susceptible to volume trades with the lack of liquidity making it difficult to day trade the mini-sized silver futures contracts.

#4 – What factors influence Silver futures amount prediction?

As with any commodity the fundamental factors that influence costs of silver futures are supply and demand. On the demand side, silver finds more uses than gold, especially in the industrial sector. It is one of the most commonly used materials ranging from automobiles to electronics and photography while also being used as a key component in jewelry.

On the supply side, silver is primarily mined. The mining costs can play a crucial role as it determines the amount of dollars it takes to mine silver from the ground. It is estimated that it takes around $22 – $30 to mine an ounce of silver.

Some of the major producers of silver include countries such as Mexico, Peru, China, Russia, Australia and Chile. Despite being a producer of silver, China also happens to be the largest importer of precious metals in the world.

The table down from shows the 2015 statistics of the top 5 silver producing nations in the world with output measured in million ounces.

Country Output (Million ounces) 2015
Mexico 189.5
Peru 135.9
China 109.1
Russia 50.5
Australia 50.3

#5 – Influence of the U.S. dollar on Silver costs

Silver costs are quoted in U.S. dollar and as a result, the short term silver costs are influenced by the strength or weakness of the greenback. The chart down from shows the U.S. Dollar index on the left and the silver costs on the chart.


U.S. Dollar and Silver costs graph contrast

A rising or perhaps a strengthening U.S. dollar indicator regularly translates into poorer silver costs, while a poorer U.S. dollar regularly leads to silver costs rising. Ergo, the correlation between your U.S. silver and dollar costs are correlated.

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When trading futures, traders will need to also look closely at the essential macro economic improvements that help determine the buck ‘s exchange rate, which has a tendency to impact silver costs as a outcome.

Traders should look closely at the key financial reports like GDP, inflation and unemployment statistics that finally ties in to the Federal Reserve’s conclusions on short-term rates of interest. Usually, a tighter fiscal policy transmits the U.S. dollar high that subsequently surpasses silver costs and viceversa.

Number 6 – The Silver Thursday

Silver Thursday is the title given to the occasion which happened in 1980 because the renowned Hunt Brothers (Nelson Bunker Hunt and William Herbert Hunt) tried to corner the silver marketplace. The activities causes a steep decline in silver costs resulting to panic selling at the commodity futures markets.

The Hunt brothers were thought to have significantly invested in silver futures through string of trades from other brokers. Within a time period, the Hunt Brokers were thought to have held partially forty of the whole world’s source of silver that features a dollar price of countless billions. The purchases finally contributed to silver costs rising from $6/oz as a lot of as 50/oz.


Silver futures marketplace in 1980s

It was also around this time that COMEX adopted new roles which had restrictions on the buy of silver contracts on margin such as doubling the margin requirements and the government imposed restrictions on borrowing money to fund the futures marketplaces. Collectively, this led to a margin call on the hunt brother’s silver futures positions which being unable to meet, led to the brokers liquidating the futures contracts. With no buyers to be found, silver costs collapsed from $20 to $10.

#7 – Day trading tips for trading silver futures contracts

Silver futures contracts is extremely risky due to the tick size and the tick value. For traders who are complacent when trading silver, even winning trades can quickly reverse and morph into big losses. Futures traders should there be very careful when trading the silver contracts.

Here are a few things to keep in mind when trading silver futures.

  • Silver futures contracts are actively traded from 1700 – 1600 CT on a weekday including Sunday with a 60-minute break from 1600 CT.
  • Because silver also behaves as a safe haven share, the amount spikes can occur at any time especially on news that hasn’t already been dismissed by the marketplaces
  • On ordinary days, trading volumes usually selects throughout the 7AM CT.. Of those phases, traders may utilize any brief term trading strategies they have to immediately day trade the silver stocks marketplaces
  • It is worth it to watch from the weekly CFTC’s Commitment of Traders report that could provide you insights to the way the institutional currency is set heading to a brand new trading week. Even though there’s a substantial three-day lag in the accounts, extreme placement from risky cash can usually indicate a short-term shift in trends
  • Silver futures costs have a tendency to be volatile throughout key financial releases by the U.S. and more so throughout FOMC manhood speeches and interest rate decisions, most that are able to retain silver costs volatile

In conclusion, whilst golden is frequently the most favourite rare metalcurrency trading silver inventories can also be a workable prospect. But don’t obtain duped to being complacent in believing that silver is significantly more economical in contrast to gold, it’s simpler to trade. Actually it’s the contrary, with a normal silver futures-contract commanding 5000 oz, the risks of abrupt sharp amount spikes may usually leave your trading equity deep in debt.

For a trader with got the subject, a recognized consistently profitable futures strategy along side good money management skills will undoubtedly be in a position to swiftly create huge benefits trading silver stocks.

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