It’s common to compare the prices of different metals in two separate locations on any particular day and expect the same number. However, checking the rate of silver in two cities will always yield a discrepancy. Rest assured that this is not caused by any error or omission but the natural way that silver is priced locally in India, not nationally.
No Nationwide Fixation Of Price
While petrol has a government-fixed price, there is no single nationwide retail price for silver.
Every Indian city has a separate Sarafa Association/Bullion Association, which publishes a daily price on the basis of the last day’s closing price, along with a few local factors.
There is no centralised authority that fixes the price at a national level and provides it to all cities.
– Advertisement – Continue Reading Below –
Local Factors Affect The Silver Rate
There are some local factors that influence the silver rate in Nagpur, the silver rate in Kanpur, or any other cities. The entry of silver into India goes through a handful of import points and refiners. After leaving the factory gates, silver moves to various regional markets through supply chains.
Nagpur has historically acted as an important centre for bullion trade in central India and is located near important transport routes. On the contrary, Kanpur usually receives the silver coming from the Delhi bullion market after travelling some additional distance. Thus, this small extra cost is reflected in the rate card of the city.
Demand Determines The Seasonal Price Variation
Another influencing factor is the demand for the precious metal. Heavy industrial demand, usage of silver in local festivals, and demand for jewellery in weddings affect prices. Although on paper, the price may be the same, the premium varies due to different demand situations at different points of the year.
Daily Rates May Be Updated At Different Times
Timing also affects the price determination of silver. While some Sarafa Associations lock in their daily rates at the beginning of the morning based on the previous evening’s international close, others wait till the local opening of trade along with MCX and then determine their prices.
Just a difference of thirty minutes due to such a delay is enough to cause a visible gap between the silver prices in two cities on days of active movement of prices.
Inclusion Of Other Costs Affects The Final Price
Apart from the metal price itself, there may be some additional costs involved in calculating the final quoted rate of the precious metal. For instance, making charges, wastage percentage, and hallmarking costs differ among different local jewellers’ associations.
Usually, these costs are included in the final rate published on a city page, even though GST on silver remains 3% in all places. Therefore, two cities quoting different final prices might just include different amounts of these additional costs.
MCX Prices Provide Investors With A Uniform Reference Point
When the aim is tracking the price movements of silver for investment purposes and not buying it physically, all these city-based discrepancies cease to matter. MCX silver contract is the traded price of the metal for the whole country, without the local transportation cost, demands during festival periods, or making charges built in.
Conclusion
Silver prices are likely to be different across cities. So, the next time the rates of silver in two cities seem to be different on the same day, it is not an error. It is a result of different local factors that are unique to both places.
Leave a Reply