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Showing posts from May, 2011

Inflation and Commodity Exchange - a thought...

Commodity trading on exchanges is time and again being held responsible for the increase in the inflation in the essential commodities. Recently Silver touched price of Rs 75000 per kg and then came back crashing to Rs 50000 per kg. It was later found that the lots of speculative trading on the New York Comex was responsible for such a shootup in the silver prices. NY Comex then increased the margin requirement of trading in silver to 84% from 25% and then the prices came down drastically.. this establishes the nexus between the price rise and the speculative trading on the commodity exchanges.. In India on the commodity exchanges all the commodities are being traded and even speculated.. some having marign money requirement of as low as 12 to 15% and thus the prices shoot up because of the speculation.. For example if i can buy a lot of some food grain at 15% margin and one lot on delivery costs 100000 Rs.. i can buy the same for Rs 15000 in a vayada bazaar or the futures market and t