Inflation and Commodity Exchange

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 thus can buy more than 6 lots for the same 100000/- even if i dont need them... and hoping that even 7% increase (weekly rate of inflation in food) in price will shoot up my profitability by 50% on investment.. as i have invested 15000 for a lot of Rs 100000 and 7% increase means i get 22000 on my investment of Rs 15000 and thus i shoot up the prices by holding the stock at such low margins.

Then when the prices rise the persons who actually need the stock will have to buy at higher prices and the stock will finally hit the retail market with much higher prices.. and thus shooting up the inflation.

taking a cue from what the NY Comex did in the case of silver we can increase the margin requirements for the essential comodities and food commodities and thus can deter the unnecessary speculations in the commodities giving rise to the prices.. this will also decrease the unlawful enrichment of hte speculators who are having dmat accounts in different names and are hoarding the commodities at low margin requirement.

lets see if this can help the poor indian who sleeps hungary because cannot buy the food at such high prices.

Comments

RTI HELPLINE WINS AWARD

Launched In 2006, It Has Been Aiding Thousands Fight For Their Rights Ankur Jain | TNN (Times of India Ahmedabad Edition Dated 17.01.2011 Page 2) Ahmedabad: You might not get a kilo of onions for Rs 54, but this Right To Information (RTI) helpline helps thousands every month to fight for their rights — for only that amount. Mahiti Adhikar Gujarat Parishad (MAGP)’s helpline, which was launched in May 2006 and has received more than 60,000 calls till now, is managed by a team of volunteers at a monthly expense of just Rs 54. The helpline has recently won a special award for its contribution to RTI activism from People’s Union for Civil Liberties (PUCL). The helpline has been chosen for this honour by an illustrious jury comprising Naryana Murthy, J M Lyngdoh, and Shekhar Singh. The helpline will be offi cially conferred the award at a ceremony in Delhi on January 20 by Karnataka Lokayukta Justice Santosh Hedge and activist Anna Hazare. The helpline is run by RTI activists Hari...

The Dogs Life - Aftermath of the Mumbai Attack

We all were disturbed by the pictures running for over 60 Hours on the news Channel. The news was the Attack on the Financial Capital of India. The number of Terrorist said to be between 1-12 as per the government statement. The number of People Dead 195 approx in which 22 Foreigners died and around 325 people injured. But most important aspect is i felt that we all Stupid Common Men of India are living DOGS LIFE. Know why? ... It is because the 16 Soilders who died protecting us are given title of the 'Shaheed' which they deserve. The fidayeens who came here to attack Mumbai would be called Shaheed by Jehadis - (i dont feel that they are shaheed) but since terrorism is an undeclared war .. some respect for the opponents too. But what about the STUPID COMMON MAN who died in this encounter.. they are not Shaheeds -- neither they will be remembered for giving up their lives. they will be forgotten by the passage of time and then one more such incident will happen and the list wil...

Save early to earn more

Save early to earn more Prabhakar Sinha | TNN Time is money, goes the saying, which holds true in almost all aspects of life. But, it is more so in case of savings. If you start saving early, by the time you retire, you will have enough money to lead a prosperous retired life. When you start saving early, your saved amount gets a longer time to earn returns. Take for example, if you start saving at the age of 25, or just at the time when you get your first salary, your savings of Rs 5,000 per month, at a conservative return of 10% per annum, will swell to Rs 1.91 crore in 35 years or by the time you retire at the age of 60. But, if you start saving late, say, at the age of 30, your saving of Rs 5,000 per month will become Rs 1.14 crore. If you start at 35, the amount will become only Rs 67 lakh. And, at the age of 35, even if you start saving double the amount i.e. Rs 10,000 per month, by the time of retirement, that will become only Rs 1.34 crore. This is called power...

Punit B. Juneja

Search This Blog