Archana R Final

A PROJECT REPORT ON
“A STUDY ON PROFIT IN GLOBAL COMMODITY

(SILVER) WITH REFERENCE TO VEER GLOBAL
HUB”
A dissertation report submitted to Bangalore University in partial fulfilment of the
requirements for the award of the Degree of
MASTER OF COMMERCE AT
BANGALORE UNIVERSITY
Submitted By
Archana R
Reg No:17BTCOM003
Under the guidance of

Prof M B Balasubramanyam
Professor
SESHADRIPURAM COLLEGE
Post Graduate Department of Commerce and Management
#27 Nagappa Street, Seshadripuram Bengaluru-
560020
2018-19
CERTIFICATE OF ORIGINALITY
This is to certify that the project titled “A STUDY ON PROFIT IN GLOBAL

COMMODITY (SILVER) WITH REFERENCE TO VEER GLOBAL HUB” is
an original work of Ms. Archana R bearing University Register Number
17BTCOM003 and is being submitted in partial fulfilment for the award of the
Master of Commerce Degree at Bangalore University. The report has not been
submitted earlier either to this University/ Institution for the fulfilment of the
requirement of a course of study.
Signature of Director Signature of Principal
Dr. Bhargavi V.R. Dr. Anuradha Roy

GUIDE CERITIFICATE
This is to certify that Ms.Archana R. bearing university register number 17BTCOM003 has
completed this project titled “A Study on profit in Global Commodity (Silver) With
Reference To Veer Global Hub” under my guidance. This project is based on the original
study conducted by her and the report has not formed a basis of awarding any other Degree/
Diploma/ Certificate by this University or any other University.
Place: Bengaluru SIGNATURE OF GUIDE
DATE:
STUDENT DECLARATION
I hereby declare that “A STUDY ON PROFIT IN GLOBAL COMMODITY

(SILVER) WITH REFERENCE TO VEER GLOBAL HUB” is the result of the
project work carried out by me under the guidance of Prof M B Balasubramanyam
in partial fulfillment for the award of Master of Commerce Degree by Bangalore
University.
I also declare that this project is the outcome of my own efforts and that it has not
been submitted to any other university or Institute for the award of any other degree or
Diploma or Certificate.
Place: Bengaluru Name: Archana R
Date: Register Number: 17BTCOM003

ACKNOWLEDGEMENT
I take this as an opportunity to express my profound gratitude to who have been a

significant part of this project.
I express my deepest sense of gratitude to Dr. Bhargavi V.R., Director, Post

Graduate Department of Commerce and Management, Seshadripuram College for her
valuable guidance, suggestions and constant support.
I heartly thank Ms. Reshma B. faculty for her encouragement and co-operation in all
matters related to my project.
I express my deepest sense of gratitude to Mr. Swaroop R. faculty for his valuable
guidance, suggestions and constant support.
I wish to thank my parents, friends and family who always believed me and had faith
in me whatever I wished to do.
Date: Name: Archana R
Place: Bengaluru Reg. No: 17BTCOM003

TABLE OF CONTENT
CHAPTER PAGE
01 INTRODUCTION NO
1.1 INTRODUCTION 1-2
1.2 COMMODITY MARKET 4
1.3 HISTORY OF COMMODITY MARKET 4
ADVANTAGES OF COMMODITY
1.4 MARKET 5
DISADVANTAGES OF COMMODITY
1.5 MARKET 6
1.6 INTERNATIONAL SCENARIO 7
1.7 NEW ONLINE TRADING 7
1.8 HOW TO INVEST COMMODITIES 8
HOW TO START TRADING
1.9 COMMODITIES ONLINE 9-10
1.10 COMMODITY TRADING SYSTEM 11
TOP COMMDITY EXCHANGES IN
1.11 THE WORLD 12-13
INTRODUCTION TO DERIVATIVE
1.12 MARKET 14
1.13 KINDS OF FINANCIAL DERIVATIVES 15-17
COMMODITY MARKET
1.14 PARTICIPANTS 18-19
1.15 ABOUT SILVER 19
1.16 CHARACTERISTICS 20
1.17 ABOUT SILVER CHEMISTRY 21
1.18 ABOUT INDUSTRY 21
1.19 HISTORY 22-23
1.20 GROWTH OF SILVER GLOALLY 23-24
THE WORLDS LEADING SILVER
1.21 PRODUCTION 25-26
1.22 APPLICATION OF SILVER 26
CHAPTER PAGE
02 RESEARCH DESIGN NO
2.1 REVIEW OF LITERATURE 27-29
2.2 TITLE 29
2.3 INTRODUCTION 29-30
2.4 NEED FOR STUDY 30
2.5 OBJECTIVES 30
2.6 SCOPE OF THE STUDY 30
2.7 METHODOLOGY 31-32
2.8 STATEMENT OF PROBLEM 32
2.9 PLAN OF ANALYSIS 32
2.1 LIMITATIONS OF STUDY 32
2.11 CHAPTER SCHEME 33
CHAPTER PAGE
03 COMPANY PROFILE NO
3.1 INTRODUCTION 34
3.2 VISION AND MISSION 34
3.3 ABOUT VEER GLOBAL HUB 34-35
3.4 WHAT WE DO? 35
3.5 CURRENT OFFER OF INSTRUMENTS 35
3.6 ADVANTAGES 36
3.7 WEB TRADING 37
3.8 WEB TRADER 37
3.9 WHY VEER GLOBAL HUB 38
CHAPTER PAGE
04 ANALYSIS AND INTERPRETATIONS NO
TO STUDY ON GLOBAL
COMMODITIES SILVER AND PROFIT
4.1 RETURNS COMPARE TO SILVER MINI 39-44
TO UNDERSTAND WHETHER THE
DOLLAR VALUE HAS AN IMPACT ON
4.2 SILVER 45-47
TO STUDY THE PREFERNCE OF
INVESTORS N COMMODITY
4.3 MARKET 48-57
CHAPTER SUMMARY OF FINDINGS , PAGE

05 SUGGESTION AND CONCLUSION NO
5.1 FINDINGS 58-60
5.2 CONCLUSION 61
5.3 SUGGESTIONS 62
BIBLOGRAPHY
ANNEXURE
LIST OF TABLE
PAGE
TABLE NO CONTENT NO
SHOWING LIST OF PRECIOUS
1.1 METALS 2
SHOWING LIST OF TOP
COMMODITY EXCHANGES IN
1.2 THE WORLD 12
FIGURE SHOWING COMODITY
1.3 MARKET PARTICIPANTS 18
TABLE SHOWING PROFIT
COMPARISION OF SILVER AND
4.1 SILVER MINI 39
TABLE SHOWING STANDARD
4.2 DEVIATION OF SILVER 41
TABLE SHOWING STANDARD
4.3 DEVIATION OF SILVER MINI 43
TABLE SHOWING CORRELATION
4.4 BETWEEN US$ AND SILVER 45
TABLE SHOWING YEARLY
4.5 AVERAGES OF SILVER 46
TABLE SHOWING RESPONDENTS
FREQUENCY OF TRADING IN
4.6 COMMODITIES 48
TABLE SHOWING WOULD
RESPONDENTS RECOMMEND
OTHERS TO ENTER INTO
TABLE SHOWING COMMODITIES
IN WHICH RESPONDENTS
4.8 PREFER TO INVEST 52
TABLE SHOWING INVESTMENT
4.9 PERIOD IN COMMODITIES 54
TABLE SHOWING INVESTORS
4.1 REASON FOR INVESTING 56
LIST OF GRAPHS
PAGE
GRAPH NO CONTENT NO
GRAPH SHOWING PROFIT
COMPARISION OF SILVER AND
4.1 SILVER MINI 40
GRAPH SHOWING STANDARD
4.2 DEVIATION OF SILVER 42
GRAPH SHOWING STANDARD
4.3 DEVIATION OF SILVER MINI 44
GRAPH SHOWING YEARLY
4.4 AVERAGES OF SILVER 47
GRAPH SHOWING RESPONDENTS
FREQUENCY OF TRADING IN
4.5 COMMODITIES 49
GRAPH SHOWING WOULD
RESPONDENTS RECOMMEND
OTHERS TO ENTER INTO
GRAPH SHOWING COMMODITIES
IN WHICH RESPONDENTS
4.7 PREFER TO INVEST 53
GRAPH SHOWING INVESTMENT
4.8 PERIOD IN COMMODITIES 55
GRAPH SHOWING INVESTORS
4.9 REASON FOR INVESTING 57
A STUDY ON PROFIT IN GLOBL COMMODITY (SILVER) WITH
REFERENCE TO VEER GLOBAL HUB.
CHAPTER 1
1.1 INTRODUCTION
Commodity market is a market that trades in the primary economic sector rather than
manufacture products, such as cocoa, fruit and sugar. Hard commodities are mined such as
gold and oil. Investors access about 50 major commodity markets worldwide with purely
financial transactions increasingly outnumbering physical trades in which goods are
delivered. Futures contracts are the oldest way of investing in commodities. Futures are
secured by physical assets. Commodity markets can include physical trading and
derivatives trading using spot prices, forward, futures and options on futures. Farmers have
used a simple form of derivative trading in the commodity market for centuries for price
risk management.
A financial derivative is a financial instrument whose value is derived from a commodity

termed an underlie. Derivatives are either exchange-traded or over the counter (OTC). An
increasing number of derivatives are traded via clearing house some with central
counterparty clearing, which provides clearing and settlement services on a futures
exchange, as well as off-exchange in the OTC market.
Derivatives such as futures contracts, swaps, ETC, forward contracts have become the
primary trading instruments in commodity markets. Futures are traded on regulated
commodities exchanges. Over the counter contracts are “privately negotiated bilateral
contracts entered into between the contracting parties directly”.
A commodity exchange is an exchange where various commodities and derivatives are

traded. Most commodity markets across the world trade in agricultural products and other
raw materials like wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork
bellies, oil, metals etc and contracts based on them. These contracts can include spot
prices, forwards, futures and options on futures. Other sophisticated products may include
interest rates, environmental instruments, swaps or freight contracts.
Metals
 Precious metals currently traded on the commodity market include gold, platinum,
palladium and silver which are sold by troy ounce. One of the main exchanges for these
precious metals is COMEX.
 Industrial metals are sold by metric ton through the London metal Exchange and New
York Mercantile Exchange. The London metal exchange trades include copper,
aluminium, lead, tin, aluminium alloy, nickel, cobalt and molybdenum.
SESHADRIPURAM COLLEGE Page 1

A commodity is a basic good used in commerce that is interchangeable with other

commodities of the same type; commodities are most often used as inputs in the production
of other goods or services. The quality of a given commodity may differ slightly, but it is
essentially uniform across producers. When they are traded on an exchange, commodities
must also meet specified minimum standards, also known as basis grade.
Commodities are the raw materials humans use to create a liveable world. Humans use
energy to sustain themselves, metals to build weapons and tools, and agricultural products
to feed themselves. These energy, metals and agricultural products are the three classes of
commodities, and they are the essential building blocks of the global economy.
Commodities generally meet the following criteria:
 Tradability : the commodity has to be tradable, meaning there needs to be a viable
investment vehicle to help you trade it. For example, a commodity is included if it has a
futures contract assigned to it on one of the major exchanges, or if a company processes it,
or if there,s an ETF that tracks it, uranium which is an important energy commodity, isn‟t
tracked by a futures contract, but several companies specialize in mining and processing
this mineral. By investing in these companies, you get exposure to uranium
Deliverability : All the commodities have to be physically deliverable. Crude oil is
included because it can be delivered in barrels, and wheat is included because it can be
delivered by the bushel.
Liquidity : every commodity in this learning centre has an activemarket with buyers and
sellers constantly transacting with each other . liquidity is critical because it gives you the
option of getting in and out of an investment without having to face the difficulty of trying
to find a buyer or seller for securities.

TABLE 1.1: SHOWING LIST OF PRECIOUS METALS
COMMODITY MAIN
EXCHANGE
GOLD COMMODITY
EXCHANGE
INC.
PLATINUM COMMODITY
EXCHANGE
INC.
PALLADIUM COMMODITY
EXCHANGE
INC.
SILVER COMMODITY
EXCHANGE
INC.

1.2 COMMODITY MARKET :

1.2(A) meaning of commodity
A commodity is anything for which there is demand, but which is supplied without
qualitative differentiation across a market. In financial terms “ commodities” refers to
industrial raw materials and other agricultural produce. Even energy and other precious
metals products are treated as commodities. A commodity also refers to any other
commodity underlying a “futures” contract at a commodities exchange. There have been
many connotations to what constitutes commodities.
1.3 HISTORY OF COMMODITY MARKET
Commodities markets, over its years of evolution, have hand far reaching economic impact
on different countries and its citizens in varying magnitude. Though its origin is not readily
documented, it is believed that it could have found its roots in Amsterdam in 1695.
Shortages of critical commodities have always been the cause of wars over centuries such
as in World War II, when Japan invaded neighbouring countries to secure oil and rubber.
The 16th and 17th centuries witnessed trading in a wide array of commodities, livestock,
spices, precious stones and gold.

1.4 ADVANTAGES OF COMMODITY MARKET
Price discovery: based on inputs regarding specific market information, the demand and
supply equilibrium, weather forecasts, expert views and comments, inflation rates,
government policies, market dynamics, hopes and fears, buyers and sellers conduct trading
at commodity exchanges. This transforms into continuous price discovery mechanism. The
execution of trade between buyers and sellers leads to assessment of fair value of a
particular commodity that is immediately disseminated on the trading terminal.
Price risk management: hedging is the most common method of price risk management.
It is strategy of offering price risk that is inherent in spot market by taking an equal but
opposite position in the futures market. Futures markets are used as a mode by hedgers to
protect their business from adverse price change. This could dent the profitability of their
business. Hedging benefits who are involved in trading of commodities like farmers,
processors, merchandisers, manufacturers, exporters, importers etc.
Import-export competitiveness: the exporters can hedge their price risk and improve their
competitiveness by making use of commodity market. A majority of traders which are
involved in physical trade internationally intend to buy forwards. The purchases made
from the physical market might expose them to the risk of price risk resulting to losses.
The existence of futures market would allow the exporters to hedge their proposed
purchase by temporarily substituting for actual purchase till the time is ripe to buy in
physical market. In the absence of commodity market it will be meticulous, time
consuming and costly physical transactions.
Predictable pricing: the demand for certain commodities is highly price elastic. The
manufacturers have to ensure that the prices should be stable in order to protect their
market share with the free entry of imports. Commodity futures contracts will enable
predictability in domestic prices. The manufacturers can as a result, smooth out the
influence of changes in their input prices very easily. With no commodity market, the
manufacturer can be caught between severe short-term price movements of oils and
necessity to maintain price stability, which could only be possible through sufficient
financial reserves that could otherwise be utilized for making other profitable investments.
An option for high net worth investors: with the rapid spread of derivatives trading in
commodities, the commodities route too has become an option for high net worth and
savvy investors to consider in their overall asset allocation.

1.5 DISADVANTAGES OF COMMODITY MARKET
You need a mentor : with this lack of guidance , it is only natural to expect that many
traders will be prone to repeating the same mistake which eventually cost them their
capital. Trading in commodities requires a trader to have firm knowledge of the factors that
affect the demand and supply of a particular commodity. Having an experienced broker
with whom you can discuss trading strategies is likely to keep you out of trouble. This
seeking an advice of a mentor is crucial if we want to improve our trading proficiency.
Leverage: commodity futures operate on margin, meaning that to take a position only a
small percentage of the total value needs to be available in cash in trading account. High
leverage means high risk attached to the account. It acts as a double edge sword where
benefit of low margin can result in poor money management.
Over trading: the third disadvantage of online trading relates to the issue of over trading.
Online commodity trading can be risky if you are not disciplined. There is a tendency for a
trader to deviate from his original trading strategy and switch o day trading after he gets
bored of holding a market position for a considerable period of time. When this happens, it
is similar to gambling in a casino

1.6 INTERNATIONAL SCENARIO
The commodities markets are one of the oldest existing markets in the human history.
Derivatives trading started off in commodities with the earliest records being traded traced
back to the 17th century when rice futures were traded in Japan, though there is some
evidence that rice may have been traded as far back as 6000 years ago in china. In the US
during the early 1800s agricultural commodities-notably grains were brought from
Midwest farmlands to Chicago for storage until being shipped out to east coast. As more
farmers and merchants began delivering their wares to Chicago, the first American
exchange was set up in 1848. It was called the Chicago board of trade (CBOT). trading in
commodities futures has a long history though the modern trade in commodity futures
could trace its origins back to the 17th century in Osaka, Japan there is evidence to suggest
that a form of futures trading in commodities existed in china 6000 years earlier.
Organized trading on an exchange started in 1848 with the establishment of the Chicago
board of trade.
1.7 NEW ONLINE TRADING
When it comes to commodities, there are so many important factors to consider. First,
remember that futures and options markets are derivatives of the actual market for the
physical delivery of the commodity in question. Therefore, it is important to learn all you
can about the underlying supply and demand fundamentals for that asset. There is a wealth
of information available for free fro, the commodity exchanges as well as from a variety of
trade organizations and government agencies that supply commodity data free of charge. In
the energy markets, the API and EIA are excellent sources for information. In grain, soft
commodity and animal protein markets, the U.S department of Agriculture issues weekly
and monthly reports that include invaluable data and analysis.
Understanding commodities will require particular attention to supply and demand or

fundamental analysis. At the same time, the futures and options markets in commodities
are laden with risk, while opportunity exists to make huge gains, where there is the
potential for rewards there is also commensurate risks. Trading futures requires a good-
faith deposit or margin. In many cases a trader, speculator or investor can control vast
amounts of a commodity and bet that the pric is going higher or lower with a 5% margin
deposits or less. However, given the gearing of these contracts and the volatility of the
markets ,margin call requiring additional capital are likely. When it comes to options ,
buyers have time value risk, and sellers act as insurance companies, they risk a lot for
small potential profits.

1.8 HOW TO INVEST IN COMMODITIES
There are 3 ways to invest in commodities either directly by buying it physically, or buying
shares in commodity companies or indirectly through a fund or an investment trust.
Investing physically means actually buying and holding the asset; it comes with storage
problems, but there are several bullion firms offering online gold dealing and safe storage
of the asset. Buying physical gold coins also offers and easy way to access the metal. The
world gold council provides details of reputable companies on its website, so always check
there first.
„Real direct exposure in commodities usually involves physical assets, such as gold coins
or bars. This can be expensive, with buying and selling costs to consider in addition to the
cost of storage and insurance. Investors will also need to ensure they buy the asset at a
good price. This can be difficult to achieve, particularly when buying smaller quantities
One option for accessing other natural resources such as oil and gas is to buy shares in
companies such as BP, Royal Dutch Shell or Tallow Oil. The same applies to “Soft”
commodity companies. However, your investment will be subject to movements in the
stock market, as well as to changes in the price of the commodity itself.
An investment fund is an easy way to access the sector. They also provide a degree of
diversification, as they will typically invest directly in a variety of commodities as well as
in production companies.
Passive funds have also risen in popularity over the past few years, with ETPs (exchange
traded products) becoming a viable way to access commodities either indirectly or directly.
Equity based commodity exchange traded funds invest in shares of commodity companies;
whereas exchanges traded commodities (ETCs) are instruments that track the price of the
commodity, or a basket of commodities. They can either be physically backed by holdings
of the commodity itself, or may use swaps with other financial institutions to provide the
exposure.
However, ETFs only track an index such as oil futures, so there is little room for
manoeuvre. ETCs also allow investors to „short‟ or „leverage‟ their investment, allowing
investors to take bets on the price either falling or rising. Investors should be careful here,
as although there are potential gains to be made, there could be huge losses too.

1.9 HOW TO START TRADING COMMODITIES ONLINE
Trading commodities online is relatively simple process, but it is not an activity that you
should pursue without doing lots of homework. The traditional method of calling a
commodity broker to place orders and waiting for a call back to give you a filled order
price is less efficient than online trading. Therefore, if you want to trade commodities
online, there are some important factors to keep in mind.
Choosing a commodity broker

The first job is to pick a commodity broker. All most all commodity brokers offer online
trading but there are some that specialize in online trading. Trade stations offer one such
platform. Trade station offers a versatile trading platform when it comes to charts, quotes
and strategy analysis as well as order entry. Many other online brokers offer an excellent
product, good service and low commission rates. Two other examples are interactive
brokers and Daniels trading.
Commodity account paperwork

Every commodity broker requires documentation to open an account. The forms require
disclosure of financial information and identify the risks involved in trading commodities.
Financial data is critical because commodities are highly leveraged assets, and there is
always a chance that one can lose more money than initially invested. Therefore, a broker
requires information on income, net worth, and credit worthiness.
Not everyone who completes the account forms is suitable to open a commodities account.
A broker may use discretion on whether a potential customer is an acceptable risk and is
suited to trade commodities. Sufficient income, trading experience and creditworthiness
are critical elements of suitability.
Before you start trading commodities online

Once you select an online commodity broker, and you receive approval for trading, the
next step is to fund the account. It is up to the individual as to the amount of funding or
account size when you open account. One‟s comfort level and risk tolerance are important
considerations when funding an account. Before you commence trading with actual
money, it is important to develop a well-researched trading plan.
Many commodity brokers offer simulations to practice with before you put capital to work.
Training and simulations will familiarize you with placing orders, and could save the
prospective trader from making critical order entry errors and help with the development of
a coherent and efficient plan for approaching markets.
Keep in mind that before you begin trading commodities online, choose your trades wisely
and avoid overtrading. If you find yourself placing many trades, and the results are not
profitable, it is likely that you are overtrading one of the greatest downfalls of most
commodity traders.
More advice for the new online commodity trader

When it comes to commodities there are so many important factors to consider. First,
remember that futures and options markets are derivatives of the actual market for the
physical delivery of the commodity in question. Therefore, it is important to learn all you
can about the underlying supply and demand fundamentals for that asset. There is a wealth
of information available for free from the commodity exchanges as well as from a variety
of trade organisations and government agencies that supply commodity data free of charge.
In the energy markets, the API and EIA are excellent sources for information. In grain, soft
commodity and animal protein markets the U.S department of Agriculture issues weekly
and monthly reports that include invaluable data and analysis.

1.10 COMMODITY TRADING SYSTEM

The commodity trading system consists of certain prescribed steps or stages as follows:
Trading
At this stage the following is the system implemented.
 Order receiving
 Execution
 Matching
 Reporting
 Surveillance
 Price limits
 Position limits
Clearing
This stage has following system in place.
 Matching
 Registration
 Clearing
 Clearing limits
 Notation
 Margining
 Price limits
 Position limits
 Clearing house
Settlement
This stage has following system followed as follows.
 Marking to market
 Receipts and payments
 Reporting
 Delivery upon expiration or maturity

1.11 TOP COMMODITY EXCHANGES IN THE WORLD
Top 10 derivatives exchanges worldwide based on number of contracts traded and cleared
TABLE 1.2 : SHOWING LIST OF TOP COMMODITY EXCHANGES

IN THE WORLD
SL Ranking
No exchange No of contracts
1 CME Group(US) 3,16,14,76,638.00

Intercontinental
2 Exchange 2,80,79,70,132.00
3 Eurex (Germany) 2,19,05,48,148.00

National Stock
4 Exchange of India 2,13,56,37,457.00
CBOE
5 Holdings(US) 1,18,76,42,669.00
NASDASQ OMX
6 (US) 1,14,29,55,206.00
Moscow
Exchange
7 (Russia) 1,13,44,77,258.00
BM&F
BOVERSPA
8 (Brazil) 1,60,36,00,651.00
Korea Exchange
9 (South Korea) 82,06,64,651.00
10 MCX India(India) 79,40,01,650.00

Chicago board of trade( CBOT) : Established in 1848, the CBOT ranks as the oldest
futures/ options trading exchange in the world. The exchange offers more than 50 different
futures and option contracts for investors stretching across a number of asset classes. As of
2007, the CBOT operates as a subsidiary of the CME group.
Chicago mercantile exchange (CME): A financial and commodity derivatives trading

platform headquartered in Chicago. Originally founded in 1898 as the Chicago butter and
egg board , the CME has one of the largest options and futures line up of any exchange in
the world. The CME offers contracts of all kinds including agriculture, credit, economic
events, equity index, FX, interest rates and other future/options investments. The CME is
owned and operated under the CME group.
London Metal Exchange (LME): Stationed in the United Kingdom, the LME is a major
exchange that offers exposure to futures and options of a wide variety of base metals and
other commodity products. Some of the metals traded include aluminium,copper, tin
,nickel, Zinc and lead. Though founded in 1877, the exchange can trace its roots all the
way back to 1571, when the Royal Exchange in London was opened, only trading copper
at that time.
National Association of Securities Dealers Automated Quotation (NASDAQ): it is in

the US electronic securities market that quotes price through a computer network (trading
online) . it has the highest listing standards in world. It selects market makers. It has
achieved 20.7% market share for top 10 most actively traded in NYSE 81 % of all
companies that has done IPO in leading US exchange have chosen NASDAQ. It has been
one of the most famous and oldest stock exchanges in the world and the volume of
transaction dealt is also high compare to many other stock exchanges of the world.

1.12 INTRODUCTION TO DERIVATIVE MARKET
Meaning
A derivative is a security or contract designed in such a way that its price is derived from
the price of an underlying asset. For instance, the price of a silver futures contract for
October maturity is derived from the price of silver. Changes in the price of the underlying
asset affect the price of the derivative security in a predictable way.
Evolution of derivatives
In the 17th century, in Japan, the rice was being grown abundantly; later the trade in rice
grew and evolved to the stage where receipts for future delivery were traded with a high
degree of standardization. This led to forward trading in 1730, the market received official
recognition from the “Tokugawa Shogunate” (the ruling clan of shoguns or feudal lords).
The Dojima rice market can thus be regarded as the first futures market, in the sense of an
organized exchange with standardized trading terms. The first futures markets in the
western hemisphere were developed in the United States in Chicago.
These markets had started as spot markets and gradually evolved into futures trading. This
evolution occurred in stages. The first stage was starting of agreements to buy grain in the
future at a pre-determined price with the intension of actual delivery. Gradually these
contracts became transferable and over a period of time, particularly delivery of the
physical produce. Traders found that the agreements were easier to buy and sell if they
were standardized in terms of quality of grain, market lot and place of delivery. This is
how modern futures contracts first came into being. The Chicago Board of Trade(CBOT)
which opened in 1848 is to this day the largest futures market in the world.

1.13 KINDS OF FINANCIAL DERIVATIVES
FORWARDS
FUTURES
OPTIONS
SWAP
FORWARDS:
A forward contract refers to an agreement between two parties, to exchange an agreed
quantity of an asset for cash at a certain date in future at a predetermined price specified in
that agreement.
The promised asset may be currency, commodity, instrument etc. In a forward contract, a
user (holder) who promises to buy the specified asset at an agreed price at a future date is
said to be in the long position. On the other hand, the user who promises to sell at an
agreed price at a future date is said to be in short position.
FUTURES
A futures contract represents a contractual agreement to purchase or sell a specified asset
in the future for a specified price that is determined today. The underlying asset could be
foreign currency, a stock index, a treasury bill or any commodity. The specified price is
known as the future price. Each contract also specifies the delivery month, which may be
nearby or more deferred in time.
The undertaker in a future market can have two positions in the contract:
 Long position is when the buyer of a futures contract agrees to purchase the underlying
asset.
 Short position is when the seller agrees to sell the asset.
Futures contract represents an institutionalized form of forward contracts. They are
traded on an organized exchange, which is a physical place of trading floor where listed
contract is traded face to face. A futures trade will result in a futures contract between 2
sides-someone going long at a negotiated price and someone going short at that same price.
Thus, if were no transaction costs, futures trading would represent a „Zero sum game‟ what
one side wins, which exactly match what the other side loses.

OPTIONS
An option contract where it confers the buyer, the right to either buy or to sell an
underlying asset (stock, bond, currency and commodity) etc. At a predetermined price, on
or before a specified date in the future. The price so predetermined is called the „Strike
price‟ or „Exercise price‟.
Depending on the contract terms, an option may be exercisable on any date during a
specified period or it may be exercisable only on the final or expiration date of the period
covered by the option contract.
Option instruments
Call option
A call option is one, which gives the option holder the right to “buy” an underlying asset at
a pre-determined price.
Put option
A put option is one, which gives the option holder the right to “sell” an underlying asset at
a pre-determined price on or before the specified date in the future.
Double option
A double option is one, which gives the option holde both the right to “buy” or “sell”
underlying asset at a pre-determined price on or before a specified date in the future.
SWAPS
A swap transaction is one where two or more parties exchange (swap) one predetermined
payment for another.

There are three main types of swaps:
Interest rate swap

An interest rate swap is an agreement between 2 parties to exchange interest obligations or
receipts in the same currency on an agreed amount of notional principal for an agreed
period of time.
Currency swap
A commodity swap is an arrangement by which one party (a commodity user/buyer) agrees
to pay a fixed price for a designated quantity of a commodity to the counter party
(commodity producer/seller), who in turn pays the first party a price based on the
prevailing market price(or an accepted index thereof) for the same quantity.
Equity swaps
An equity swap is an exchange of future cash flows between two parties that allows each
party to diversify its income for a specified period of time while still holding its original
assets. The two sets of nominally equal cash flows are exchanged as per the terms of the
swap, which may involve an equity-based cash flow(such as from a stock asset) that is
traded for fixed-income cash flow (such as a benchmark rate),but this is not necessarily the
case. Besides diversification and tax benefits, equity swaps also allow large institutions to
hedge specific assets or positions in their portfolios.

1.14 COMMODITY MARKET PARTICIPANTS
MARKET
PLAYERS
HEDGERS ARBITRAGERS SPECULATORS
Figure 1.3 Showing Commodity Market Participants
HEDGERS: hedging is an investment strategy used for minimizing a risk and hedgers are
the practitioners for this strategy. Generally, hedgers are producers or consumers who want
to transfer the price-risk on to the market. Commodities derivatives market provide them
an effective hedging mechanism against adverse price movements. They protect
themselves from risk associated with the price of commodity by using derivatives.
For example, an airline company faces the risk is price rise of fuel, they will go for a long
position (buy an silver futures contract) to hedge, just to cover the amount of silver they
expect to buy.
ARBITRAGERS: arbitragers are investors who earn from discrepancy in prices between
the two exchanges or between different maturities of the same commodity.A simple
example arbitraging is simultaneously buying a silver at lower price from one exchange
and selling it on another exchange for higher price. So they make profit from price
difference.
SPECULATORS: Speculators are sophisticated leading players in commodities futures

market. They are basically risk takers and are never associated with any commodity. They
generally bet against the price movement in the hope of making gains. They undertake
speculative position with respect to anticipating future price movements with a small
margin and square-off anytime during trading hours. They do either by going short
positions. Buying a futures contract in anticipation of price increase is known as „going
long‟. Selling a futures contract in anticipation of a price decrease is known as „going
short‟
1.15 ABOUT SILVER
Silver is a chemical element with symbol Ag from the Latin argentums, derived from the
proto-indo-European and atomic number 47. A soft white lustrous transition metal, it
exhibits the highest electrical conductivity, thermal conductivity and reflectivity of any
metal. The metal is found in the earth‟s crust in the pure, free elemental form (“native
silver”) as an alloy with gold and other metals, and in minerals such as argentite and
chlorargyrite. Most silver is produced as a by-product of copper, gold, lead and zinc
refining.
Silver has long been valued as a precious metal. Silver metal is used in many bullion coins
sometimes alongside gold, while it is more abundant than gold, it is much less abundant as
a native metal. Its purity is typically measured on a per-mile basis a 94% pure alloy is
described as “0.940 fine “. As one of the seven metals of antiquity, silver has had an
enduring role in most human cultures.
Other than in currency and as an investment medium (coins and bullion), silver is used in
solar panels, water filtration, jewellery ornaments, high value tableware and utensils,
electrical contacts and conductors in specialized mirrors, window coatings, catalysis of
chemical reactions, as a colorant in stained glass and in specialised confectionery. Its
compounds are used in photographic and x-ray film. Dilute solutions of silver nitrate and
other silver compounds are used as disinfectants and micro biocides (oligodynamic effect )
added to bandages and wound dressings, catheters and other medical instruments.
1.16 CHARACTERISTICS
Silver is similar in its physical and chemical properties to its two vertical neighbours in
group 11 of the periodic table, copper and gold. Its 47 electrons are arranged in the
configuration [kr]4d105s1, similarly to copper([Ar]3d104s1) and gold ([xe]4f145d106s1);
group 11 is one of the few groups in the d-block which has a completely consistent set of

electron configurations , this distinctive electron configuration, with a single electron in the
highest occupied subs heel over a filled sub shell, accounts for many of the singular
properties of metallic silver.
Silver is an extremely soft, ductile and malleable transition metal, though it is slightly less
malleable than gold. Silver crystallizes in a face-centered cubic lattice with bulk co-
ordination number 12, where only the single 5s electron is delocalized, similarly to copper
and gold. Unlike metals with incomplete d-shells, metallic bonds in silver are lacking a
covalent character and are relatively weak. This observation explains the low hardness and
high ductility of single crystals of silver.
Silver has a brilliant white metallic luster that can take a high polish and which is so
characteristic that the name of the metal itself has become a colour name. Unlike copper
and gold the energy required to excite an electron from the filled band to s-p production
band in silver is large enough (around 385kj/mol) that its no longer corresponds to
absorption in the visible region of the spectrum, but rather in the ultraviolet hence silver is
not a coloured metal. Protected silver has greater optical reflectivity than aluminium at all
wavelengths longer than 450nm. At wavelengths shorter than 450nm, silvers reflectivity is
inferior to that of aluminium and drops to zero near 310nm.
Very high electrical and thermal conductivity is common to the elements in group 11,
because their single is electron is free and does not interact with the filled d sub shell, as
such interaction (which occur in the preceding transition metals) lower electron mobility.
The electrical conductivity of silver is the greatest of all metals, greater even than copper,
but it is not widely used for this property because of the higher cost. An exception is in
radio-frequency engineering, particularly at VHF and higher frequencies where silver
plating improves electrical conductivity because those currents tend to flow on the surface
of conductors rather than through the interior. During World War II in the US, 13540 tons
of silver were used in electromagnets for enriching uranium, mainly because of the
wartime shortage of copper. Pure silver has the highest thermal conductivity of any metal,
although the conductivity of carbon (in the diamond allotrope) and super fluid helium-4 are
even higher. Silver also has the lowest contact resistance of any metal.
Silver readily forms alloys with copper and gold, as well as zinc. Zinc-silver alloys with
low zinc concentration may be considered as face-centered cubic solid solution of zinc in
silver, as the stricture of the silver is largely unchanged while the electron concentration
rises as more zinc is added. Increasing the electron concentration further leads to body-
centered cubic (electron concentration 1.5), complex cubic (1.615), and hexagonal close
packed phases (1.75)
1.17 ABOUT SILVER CHEMISTRY

Silver is a rather unreactive metal, this is because its filled 4d shell is not very effective in
shielding the electrostatic forces of attraction from the nucleus to the outermost 5s
electron, and hence silver is near the bottom of the electrochemical series (E0 (Ag+/Ag)=
+0.799 v). In group 11, silver has the lowest first ionization energies than copper and gold

(showing the stability of the 4d orbital‟s), so that the chemistry of silver is predominantly
that of the +1 oxidant state, reflecting the increasingly limited range of oxidants states
along the transition series as the d-orbital‟s fill and stabilize. Unlike copper, for which the
larger hydration energy of Cu2+ as compared to Cu+ is the reason why the former is the
more stable in aqueous solution and solids despite lacking the stable filled d-sub shell of
the latter, with silver this effect is samped by its larger second ionisation energy. Hence,
Ag+ is the stable species in aqueous solution and solids, with Ag2+ being much less stable
as it oxidizes water.
1.18 ABOUT INDUSTRY
In the past silver was used as currency, but more recently it has been used to make coins.
For instance sterling, silver is an alloy having 92.5% silver, while the rest is some other
metals. Silver is also used to make jewellery, silverware and other decorative items to
enhance their aesthetic appeal. Silver has applications in making high capacity batteries,
where it is used with zinc or cadmium. Since it has the best properties to reflect light, it is
used to make mirrors, though it can tarnish over time. Silver has other numerous
applications which include silver paints where it is used to make printed circuits, electrical
contacts, dental alloys, solder and brazing alloys among others. In the history of
photography, silver bromide and silver iodide were used because they sensitive to light
with the coming of the digital photography, silver still plays an important role, where silver
salts are used to produce high-quality images and protect it from illegal copying. The photo
chromic lenses work on similar principles, darkening under bright light and becoming
more transparent in low light.

1.19 HISTORY
The global silver trade between the Americans and Europe from the 16th to 19th centuries
was a spill over of the Columbian exchange which had a profound effect on the world
economy. In fact, many scholars consider the silver trade to mark the beginning of a
genuinely global economy, with one historian nothing that silver went round the world and
made the world go round. Although global, much of that silver ended up in the hands of
Chinese, as they accepted it as a form of currency, in addition to the global economic
changes the silver trade engendered, it also put into motion a wide array of political
transformations in the early modern era. New World Mines concluded several prominent
historians “supported the Spanish empire, acting as a linchpin of the Spanish economy.
Spaniards at the time of the Age of exploration discovered vast amount of silver, much of
which was from the Potosi silver mines, to fuel their trading economy, Potosi deposits
were rich and Spanish American silver mines were the world‟s cheapest source of it. The
Spanish acquired the silver, minting it into currency to then use it as a means of purchase
that currency was so widespread that even the United States accepted it as valid until the
Coinage Act Of 1857. As Spanish need for silver increased, new innovations for more
efficient extraction of silver were developed such as the amalgamation method of using
mercury to extract silver from ore.
In the two centuries that followed the discovery of Potosi, the Spanish silver mines in the
Americans produced 40,000 tons of silver. Altogether, more than 150,000 tons of silver
were shipped from potosi by the end of the 18th century. From 1500 to 1800, Mexico and
Peru produced about 80 % of the worlds silver with 30% of it eventually ending up in
china (largely because of British merchants who used it to purchase exotic Chinese
commodities) in the late 16th and early 17th century Japan was also exporting heavily into
china and the foreign trade at large.
FIRST PAPER MONEY
The world‟s first paper money (Flying money) was invented by the Chinese and they
needed some commodity to back it. Traditional coins were useful, but the amount of coins
needed for large purchases could be bulky and dangerous to transport. The problems were
solved when the Chinese created small pieces of paper with pictures of the coin printed on
them. By the nature of their geography, china had no real amount of precious metals of
their own to back the paper money they invented because the Spaniards didn‟t find gold
but did find copious amount of silver, the Spaniards and the rest of Europe used this silver
to purchase the commodities of choice from china, solving both of their problems.

SILVER IN AMERICAS
A result of the Spanish Colonization of the Americas was the discovery, production and
trade of precious metals. The Spanish along with other European nations had a great desire
for Chinese goods such as silk and porcelain. The Europeans did not have any goods or
commodities which China desired so they traded silver to make up for their trade deficit.
The two most important mining colonies of the Spanish empire were Peru and Mexico who
were estimated to have provided one hundred thousand tons of silver from mid 16th century
to the end of the colonial period. The richest and most productive mine in the Americas
was that of Potosi in what is modern day bolivis. The richest camp in Mexico was in the
city of Zacatecas; however the production of this mine was far less than that of Potosi.
1.20 GROWTH OF SILVER GLOBALLY
The ultimate destination for the mass amount of silver produced in the Americas and Japan
was china. Silver from the Americas flowed mostly across the Atlantic and made its way to
the Far East. A popular route was around the Cape of Good Hope into the east, and
sometimes it came over land. Major outposts for the silver trade were located in Southeast
Asian countries, such as the Philippines. The city of manila served as a primary outpost of
the exchange of goods between the Americas, Japan and china. However, there is a large
amount of silver that crossed across the pacific ocean directly from the Americas as well.
There are not many records of the amount of silver which crossed the pacific due to it
being discouraged by the Spanish monarchy, so estimates highly vary.
Silver also found its way across other parts of the world as well. India and Europe both
received a fair amount of silver. This silver was often locally traded for other commodities
such as gold or crops. In India, silver flowed from the south to the north, gold flowed the
opposite way. Often silver and gold were manufactured into jewellery or hoarded as
treasure.
CHINA AND DEMAND FOR SILVER
China was the ultimate destination in which silver would flow towards. In exchange the
Chinese traded their popular goods such as silk and porcelain. China had a high demand
for silver due to its shift from paper money to coins in the early period of the Ming
Dynasty. The Ming paper currency eventually failed due to self-imposed inflation along
with an inability to stop the production of counterfeit bills. The Ming attempted to produce
copper coins as a new form of currency, but production was inconsistent. Hence silver
became of high value because of it was about two to one, which meant that European and
Japanese merchants made a large amount of profit. In the 1640‟s the bimetallic ratios in
china converged with the rest of the world, before experiencing another population boom.
The new population boom was a product of the introduction of new world corps into china,
mainly sweet potatoes, which could be more easily grown by this time, the silver mines in
japan were largely depleted and the new world became china‟s primary source for silver.
Initially, Japan served as china‟s primary source of silver in the 16th century. In exchange
for silver, china would provide Japan with silk and gold. Japan and china didn‟t directly
trade with each other due to political tensions. This meant that European entities and
countries such as the Dutch and Portuguese served as a middle man between the two
countries.
CHINA‟S SILVER DOMINANCE
In the famed THE WEALTH OF NATIONS, Adam Smith noted the sheer force and the
great reach of the global silver trade. He was impressed by its market value but more
intrigued with the way this single item of commerce brought together new and old worlds
i.e. the Americas and china. Although china acted as the cog running the wheel of global
trade, japans huge contribution of silver exports to china were critical to the world
economy and china‟s liquidity and success with the commodity. Historians posit
Europeans would have been left out of world trade; china may have fallen prey to conquest
by settlers of the Americas if not for Japanese silver mining. Silver was paramount to East
Asia‟s introduction into the global trade market. Under the Ming and Qing empires, china
hoarded silver to boost its economy and increase its trading power.
Many historians argue that silver was responsible for the birth of global economics and
trade. According to this view, global trade commenced in 1571 when Manila was founded
and became the first trading post linking America and Asia due to the expansive and
profitable silver trade. In fact, its value in china was astronomical compared to rest of the
world. In fact its value was that of Spain in the 16th and 17th centuries between 1600 and
1800 china received 100 tons of silver on average per year. A large populace near the
lower Yangtze averaged a hundreds of taels of silver per household in the late 16th century.
Silver even played a large role when defending Toyotomi Hideyoshi‟s attemptive takeover
of Ming ruled Joseon Korea. The Ming ministry of war sent approximately 140,000 ling of
silver to its soldiers and required provinces to provide silver as tax for the war efforts as
well. In the 16th century, the daimyos of southwest Japan hoped for unhinged global trade
but was stopped due to Ming china trade policies. Still, Japan became a player in the global
abundance of silver and exchange goods. Japan increased in the Yuan dynasty. His attempt
involved imposing harsh limits on silver mining to stop its flow into the market and
subsequently replaced it with baochao or paper money. However, the currency never
popularized and silver proved its mainstay as a global currency.

1.21 THE WORLDS LEADING SILVER PRODUCTION
Silver has a chemical formula (Ag), and it appears with white metallic luster. Its value
stems from its ability to resist the corrosive effects of oxygen and moisture, and its ability
to reflect light and appear white. Silver in nature comes in a combined form, usually with
lead or copper. Any ore containing silver the element is always a minor constituent of the
ore typically silver might be 0.085%. All ores containing silver are mined either by open
bit or the underground method then they are crushed and grounded to begin the extraction
process. The method employed depend on the primary metal in the ore, whether it is lead,
zinc or copper.
Mexico
It has remained the world‟s largest producer. In 2013, the country produced 5,400 tons of
silver. Fresnillo Company from Mexico is the world‟s leading producers of silver, though
it also mines gold in other parts of the country. Goldcorp is another silver producing
company owns Panasquito mine which is primarily a gold mine and silver come as a by
product.
China
It is the second largest producer of silver and in 2002, it was the fourth biggest producer of
silver in the world and its production has been increasing over the years. In 2013, its total
production was 4,000 tons. The Chinese have developed other mining operations in the
country and that is the reason for its steady increase over time 95% of the silver produced
in china is a result of other mining projects, and therefore it is a by product.
Peru
It is the world‟s third largest producer of silver and in 2013 it produced 3,500 tons. The
country has the biggest deposits of silver in the world. The deposits are enormous and the
country could quickly move up the rankings in the future. Much of copper come from
Antamina mine though it is primarily copper mine.
Russia and Australia

Both produced 1,700 tons of silver in 2013, and therefore both occupied the 4th position.
Australia has a long mining history. BHP Billiton is the largest corporation doing mining
in Australia having started its operations in the 1920s. BHP Billiton is a multinational
company doing mining in other countries. Queensland produces more silver in Australia
more than any other territory. Russia‟s silver reserve is unknown but has always remained
in the top ten largest production of silver.

Other leading producers
Bolivia (1,200 tons), Chile (1,200 tons), Poland (1,150 tons), US (1,090 tons) and Canada
(720 tons) are the other major producers of silver in the world.
1.22 APPLICATION OF SILVER

In the past silver was used as currency, but more recently it has been used to make coins.
For instance sterling, silver is an alloy having 92.5% silver, while the rest is some other
metals. Silver is also used to make jewellery, silverware and other decorative items to
enhance their aesthetic appeal. Silver has applications in making high capacity batteries,
where it is used with zinc or cadmium. Since it has the best properties to reflect light, it is
used to male mirrors, though it can tarnish over time. Silver has other numerous
applications which include silver paints where it is used to make printed circuits, electrical
contacts, dental alloys, solder and brazing alloys among others. In the history of
photography, silver bromide and silver iodide were used because they sensitive to light.
With the coming of the digital photography, silver still plays an important role, where
silver salts are used to produce high quality images and protect it from illegal copying. The
photo chromic lenses work on similar principles, darkening under bright light and
becoming more transparent in low light.

CHAPTER 2
RESEARCH DESIGN
2.1 REVIEW OF LITERATURE:
 (cooper., AL., ET 2017) Has explained people are much known about the financialization
of commodities and less is known about the profitability investment in commodities.
Existing studies of commodity trading advisors (CTAs) do not adequately address this
question because only 19% of CTAs invest solely in commodities. The author has
compared a novel four-factor model prices commodity risk premia better than the Fama-
French three-factor model prices equity risk premia, and thus is an appropriate benchmark
to evaluate commodity investment vehicles.
 (Walsh., AL., ET 2015) The study tells that commodities as an asset class have been in
growing demand over the last 40 years. The paper begins by reviewing the existing
theories and fundamental drivers of returns from commodity investments to better
understand the risk and commodity investors are compensated for bearing. From this
perspective the author evaluate existing methods of commodity investing with a focus on
why the risk premia these strategies capture are likely to persist in the future.
 (Szilagi., AL., ET 2015) The study tells that investors hold commodities are to receive
diversification benefits. However, while an extensive set of existing studies demonstrate
diversification benefits when investors hold international stocks or bonds, they are
generally silent on the implications of holding commodities. Generally, commodity and
stock markets are integrated, although there are time-varying benefits to investors that are
subject to sample period selection and investment horizon.
 (Gluck., 2014) In this paper, the author show that large inflows into commodity
investments, a recent phenomenon known as financialization, has changed the behaviour
and dependence structure between commodities and the general stock market. The
common perception is that the increase in commodity movements is the result of distressed
investors selling both assets during the 2007-2009 financial crises. They show that
financial distress alone cannot explain the size and persistence of commodity movements.
They predict spill over between commodities and the stock market to remain high in the
future.

 (Putnam., AL., ET 2014) This paper examines the return performance and diversification
benefits of both buy and hold and tactical portfolios of commodity futures. They have
fused together both of these highly desired investment benefits of the unique asset class to
provide a thorough analysis of the commodities market given the changes it has undergone
over the last decade due to the rapid increase in investor participation however, in the post
2000 era, the risk adjusted returns of many of the commodity portfolio examined are
insignificant.
 (Groot., 2013) This article demonstrates that momentum, term structure and idiosyncratic
volatility signals in commodity futures markets are not overlapping which inspires a novel
triple-screen strategy. The study shows that simultaneously buying contracts with high past
performance, high roll-yields and low-yields and high idiosyncratic volatility yields a
Sharpe ratio over the 1985 to 2011 period which is five times that of the S & P-GSCI.
 (Rajput AL., ET 2013) This is paper examines the price discovery and volatility spill-over
relationship for Indian commodity markets. They authors have covered twelve actively
traded commodities including agriculture, metal and energy and four commodity indices.
Price discovery is confirmed for eight commodities and three indices with a greater role for
futures markets in the price discovery process. Price discovery results are encouraging
given the nascent character of commodity markets in India. However the market does not
seem to be competitive. Volatility spill-over is confirmed for only three commodities and
none of the indices.
 (Plantier., 2012) This paper presents empirical evidence that the rise and fall of commodity
prices on a monthly basis can be strongly linked to the value of the U.S. dollar and the
world business cycle in particular, to the strength or weakness in emerging market
economies such as china, brazil, India and Russia. Despite concerns raised by some policy
markets that increased commodity index investment has driven commodity price
movements, numerous academic studies have concluded that index-investing has not
moved prices or exacerbated volatility in commodity markets in recent years.
 (Falkowski., 2011) The paper addresses the issue of so called commodities financialisation
process. It looks at the main factors standing behind commodities price movements and to
what extent financial market participants contributed to commodities price volatility in
recent years. Based on the data examined it distinguishes the involvement of both
commercial and non-commercial traders in short and long term periods of time. As well as
explaining the impact of growing investor‟s interest in commodity markets it defines other
market forces – like currency appreciations and emerging markets as being part of
increased volatility in raw and soft commodity market.

 (Bhardwaj., 2010) Commodities are one of the least understood asset classes. Some
investors wonder how owning a chunk of steel or a bushel of corn could provide them with
any real return, particularly in times of deflation. Still others contend that the high
historical returns for commodities are primarily the result of two commodity bubbles and
that excluding those abnormal periods, commodities have had only poor results. Then too
some commodities as highly volatile and as too risky for most investors. This paper
describes the fundamental properties of commodities to help institutional investors
evaluate the case for investing in them.
 Joseph P.ByrneaGiorgioFazioabNorbertFiessac (2012) The study of behavior of

commodities is critical for developing and developed countries alike. This paper
contributes to the empirical evidence on the co-movement and determinants of commodity
prices. Using no stationary panel methods, we document a statistically significant degree of
co-movement due to a common factor
2.2 TITLE: “A STUDY ON PROFIT IN GLOBAL COMMODITY (SILVER) WITH

REFERENCE TO VEER GLOBAL HUB “
2.3 INTRODUCTION
Silver served as money for thousands of until the gold standard was introduced in the XIX
(19th ) century. Although not money, silver is used as an investment. Like gold, silver is a
monetary asset, which may be used as a hedge or safe-haven against tail risks. However,
silver is much more widely used in the industry; therefore it behaves more like co mmodity
an is more business cycle-sensitive than gold.
The silver market is a global market, with London and New York being the biggest market
places for silver in the world. The silver market is much smaller than the gold market. It is
estimated that the London silver bullion market turns over 18times less monetary value
than gold. Silver is also widely traded in the over-the –counter market. However, the
futures market dominates the silver trade.
Silver has a dual nature: it is a monetary asset and an industrial commodity. Therefore, the
monetary aspect of silver explains why many reasons for investing in silver are the same as
in the case of gold. Silver can be used as a portfolio diversifier, since it has very low
correlation with other assets (except gold and copper). Actually silver has very high
positive correlation with gold (often more than 90%). This is why white metal is also a
hedge or safe haven, which can be seen as an insurance against tail risks, financial black
swans, high and accelerating inflation or systemic crises. This is also why the price of
silver is influenced like gold by the U.S Dollar index, real interest rates and the fear level.

However, silver has also an industrial aspect, which explains why the white metal is often
positively correlated with the level of business activity and industrial production. The price
of silver is also influenced by the situation in the base metals markets, since silver is mined
as a by-product of them. Last but not least, silver prices are in gold‟s shadow. Silver may
be even considered a more leveraged or speculative version of gold. Silver prices are
almost two times more volatile than gold prices, therefore silver is a much riskier
investment with higher beta (investing in silver increases potential profits, but also
potential losses compared to gold). Therefore, the impact of changes in risk-aversion
among investors is less unambiguous than in the gold market.
2.4 NEED FOR THE STUDY

The purpose of the study is to predict about the silver price in the market, to analyze the
risk and returns for the investment, balancing the risk against the investment.
2.5 OBJECTIVES
To study on global commodities silver and profit returns compare to silver mini.
To analyze the silver moment in global market and co-relation currency
To study the preference of investors in commodities market
2.6 SCOPE OF THE STUDY

The study is analytical study where the study reports the price movement in global market, study
on global commodities (silver) and profit returns compare to gold it also results in knowing
about major exchanges trading in global commodity market.

2.7 METHODOLOGY
DATA COLLLECTION
CORRELATION ANALYSIS
Correlation analysis deals with the association or co-variation between two or more
variables and helps to determine the degree of relationship between two or more variables.
But correlation does not indicate a cause and effect relationship between two variables. It
explains only co-variation.
DEFINITION OF CORRELATION
According to Croxton and Cowden, “The relationship of quantitative nature, the
appropriate statistical tool for discovering and measuring the relationship and expressing it
in brief formula is known as correlation”.
TYPES OF CORRELATION
Positive and negative
Simple and multiple
Partial and total
Linear and non linear
POSITIVE AND NEGATIVE CORRELATION:
Positive and negative correlation depend upon the direction of change of variables. If two
variables tend to move together in the same direction i.e, an increase in the value of one
variable is accompanied by an increase in the value of the other variable; or a decrease in
the value one variable is accompanied by a decrease in the value of the other variable, then
the correlation is called positive or direct correlation. If to variables tend to move together
in opposite directions so that an increase or decrease in the values of one variable is
accompanied by a decrease or increase in the value of the other variable, then the
correlation is called negative or inverse correlation.

SIMPLE AND MULTIPLE:

When the study is made with only two variables, the relationship is described as simple
correlation. But in a multiple correlation the study is made with two or more variables
simultaneously.
PARTIAL AND TOTAL:

The study of two variables excluding some other variables is called partial correlation. In
total correlation, all the facts are taken into account.
LINEAR AND NON LINEAR:

If the ratio of change between two variables is uniform, then there will be linear correlation
between them. In a curvilinear or non-linear correlation, the amount of change in one
variable does not bear a constant ratio of the amount of change in the other variables.
SECONDARY DATA
 Data collected from various books and sites.
 Data collected from internet.
2.8 STATEMENT OF PROBLEM

In the current scenario people tend to invest more in capital market investment when
compared to commodity market. Globalization of the financial market has led to a
manifold increase in investment. New markets have been opened, new instruments have
been developed and new services have been launched. Besides, a number of opportunities
and challenges have also been thrown open.
2.9PLAN OF ANALYSIS
The data collected are tabulated accordingly to the objective of the study. The analysis of
the data is represented in the form of tables and graph.

2.10 LIMITATIONS OF STUDY

The data is collected from veer global hub and within Bangalore.
Time perception to complete the project is another constrain of the study.
2.11CHAPTER SCHEME
The study has been divided into five chapters and the details of which are as follows
Chapter 01 : Introduction
This chapter includes the theoretical background of the study.
Chapter 1: introduction, about silver, characteristics, about silver chemistry, about industry
, history, growth of silver globally, the worlds silver leading production, applications of
silver.
Chapter 2: it tells about the title of the study, statement of the problem, objective of the
study, limitations, methodology, sources of data, plan of analysis and reference period.
Chapter 3: company profile
It gives complete details of the company like inception, type, nature, business operations,
products and services offered, competitors and future prospects of the business.
Chapter 4: Data analysis and interpretation
It deals with analysing the primary data collected and interpreted and into meaningful
sense upon which charts are done to understand it better.
Chapter 5: Findings, Conclusion and suggestions
It deals with the findings and suggestions arrived upon based on the analysis and
interpretation done about the data. It also deals with giving recommendations and
conclusion on the study.

CHAPTER 3
3.1 INTRODUCTION
Provides access to global investment opportunities and also give awareness and training
program to the customers.
3.2 VISION AND MISSION

Our goal is to provide our customers with advanced technological solutions, through our
trading platform and support of highly professional local teams, to help our clients achieve
success in their investments.
Our mission is to offer our customers an optimal environment for derivatives trading on
structures and strategies perfect on each market condition.
Technological innovation and professional services offered by local teams in local
language of each country, has made us an undisputed leader and allows us to continue to
grow and spread in Asia and Latin America. Today we are operating in countries in Asia,
Asia Pacific.
3.3 ABOUT VEER GLOBAL HUB

 VEER GLOBAL is a leading broker in the market for CFD‟s, stocks, options, currencies
and commodities VEER specializes in financial products trading on OTC markets.
Core business is to provide wide range of investment products and brokerage services on
the both OTC and regulated markets.
 Company‟s head offices in Seychelles and India.
VEER GLOBAL HUB is registered under Seychelles country vide No 159850.
We located in Bangalore and Mumbai and aims to service clients nationwide and its
neighbouring countries.
Our team of specialist can help clients start, learn and continue trading.
Customer support is offered not only in English but also in many local languages like:
Hindi, Guajarati, Marathi, Tamil and Nepali.
The office address is : www.veerglobalhub.com, phone -080 43755855

OPTIMIZED TRADING
Every single aspect of the services we provide has been finely tuned down to the very last
detail, in order to ensure maximum competitiveness with no compromises. We aim to
provide the best trading conditions available so as to increase at the highest level the
opportunity of producing profits from trader‟s investment.
SIMPLIFIED APPROACH
Having carefully evaluated every process involved in online trading, we have actively
taken steps to simplify every action and eliminate entirely impediment that may be a
source of confusion for you by taking a straight forward approach on all operations, we
effectively streamline all areas of your interaction starting with the initial account
registration to withdrawal of profits.
3.4 WHAT DO WE DO?
VEER GLOBAL HUB is into online trading as information about the investment providing
the widest range of investment products.
 The goal of the company‟s activities is to create the most effective and friendly system in
derivatives transactions based on currency exchange, commodities Quotations, Equities
and levels of stock Indices.
VEER GLOBAL HUB is a training centre for beginners and experts.
3.5 CURRENT OFFER OF INSTRUMENTS

Currently Veer offers the following CFD‟s for the following underlying assets:
Currencies
Commodities
Stock exchange indices
Direct market access to stock market from all continents
Digital, binary and betting options.

3.6 ADVANTAGES
Pure ECN/ STP broker
Guaranteed execution order
No hidden charges
Two high-end trading platforms
Competitive spreads
Reliability and safety of funds
Broad range of instruments
Mobile trading and web trading
Online live seminars
Access to international equities markets in all continents
24 hours chat room

3.7 WEB TRADING

Web trading enables you to trade online using your web browser. You do not need to
install any programs on your computer. You can watch the real-time prices, analyse charts
and trade all major currencies, commodities Indices and Equities.
Web-based platform
Customized market watch list
Enhanced consolidated portfolio summary
Click and trade : Execute market orders with one click or double click
Trade directly from charts.
Trade with Ultra-Fast Average trade execution is less than 85 milliseconds
3.8 WEB TRADER
Web trading platform is widely recognized, advanced solution. At VEER global you can
benefit from the following advantages
Free chart, news real time data transactional prices.
All other services are free
Web trading builder is unique software allowing developing automated strategies without
any programming skills or computer knowledge.

3.9 WHY VEER GLOBAL HUB
We are full regulated broker.

Requires low capital investment
2-way profit potential, when the market goes, UP or DOWN
Simple and straightforward investing procedures
Personalized with a dedicated expert monitoring
Support through a program of free online training
Flexible withdrawal within 24 to 48 hrs.
Daily analysis (macro and technical) rewarded
Orders stop loss and take profit guaranteed and personalized follow-up risk
Platforms at the forefront of technology: Web Trading and mobile trading
Mobile and tablets trading (iphone and Android)
Reliability and Accuracy
 Our technical analysts assist the client‟s 24 hours, providing market information analysis
as per the clients need. We also provide additional information through email, sms,
telephone and newsletter.

CHAPTER 4
DATA ANALYSIS AND INTERPRETATION
From the secondary data collected various statistical tool are used to analyse the data
required interpretation are derived.
4.1 TO STUDY ON GLOBAL COMMODITIES SILVER AND PROFIT

RETURNS COMPARE TO SILVER MINI.
4.1 TABLE SHOWING PROFIT COMPARISION OF SILVER AND SILVER

MINI
Silver
Year Silver mini
2014 265249 78696.91
2015 251991 62063.08
2016 265663 65346.32
2017 183614 45674.39
2018 187611 44140.59
ANALYSIS:
From the above table we can observe that the silver has more profits when compared to
silver mini .it is traded more in the global market. The silver mini is used in industry where
the usage of silver is 50% which is stable so it increases the demand for silver.

Profits on silver compared with silver mini

300000
250000
200000
150000 Silver
Silver mini
100000
50000
0
2014 2015 2016 2017 2018
4.1 GRAPH SHOWING PROFIT COMPARISION OF SILVER AND SILVER

MINI
INTERPRETATION:
From the above chart it is clear that the silver demand has been increasing from the year
2014-2016 the trading for silver has been increasing. In the year 2017 due to rise in the US
dollar and there is a decline in mine supply.

4.2 TABLE SHOWING STANDARD DEVIATION OF SILVER
Total Standard
Year value deviation
2014 3182983 32761.69
2015 3023896 34042.93
2016 3187960 64972.82
2017 2203372 31323.04
2018 2251334 26025.30
ANALYSIS:
It can be observed from the above table that, different standard deviation values have been
arrived for different years. It can be noted that, the risk factor is high in the year 2016. The
lowest risk in the year 2018. Therefore, from the above table we can tell that there is a
fluctuation in standard deviation values for various years which indicates the risk factor.

Standard deviation of silver

70000.00
60000.00
50000.00
40000.00
30000.00 Standard deviation
20000.00
10000.00
0.00
2014 2015 2016 2017 2018
4.2 GRAPH SHOWING STANDARD DEVIATION OF SILVER
INTERPRETATION:
The standard deviation represents the total risk of a particular commodity. It can be noted
from the above graph there is a high risk involved in investing silver for the year 2016
because the standard deviation is more. Therefore more risk is involved in the year 2016
because of various reasons involved. It can be also observed that the risk factor is less in
the year 2018. Therefore, the investors who invested in the year 2018 , would have earned
more income.

4.3TABLE SHOWING STANDARD DEVIATION OF SILVER MINI
Total Standard
Year value deviation
2014 944363 12526.56
2015 744757 12312.84
2016 784156 13405.69
2017 548093 8402.81
2018 529687 4442.39
ANALYSIS:
It can be observed from the above table that, different standard deviation values have been
arrived from different years. It can be noted that, the risk factor is high in the year 2016
and the lowest risk in the year 2018. Therefore, from the above table we can tell that there
is fluctuation in standard deviation values for various years which indicated the risk factor.

Standard deviation of silver mini

16000.00
14000.00
12000.00
10000.00
8000.00
Standard deviation
6000.00
4000.00
2000.00
0.00
2014 2015 2016 2017 2018
4.3 GRAPH SHOWING STANDARD DEVIATION OF SILVER MINI
INTERPRETATION:
The standard deviation represents the total risk of a particular commodity. It can be noted
from the above graph that there is a high risk involved in investing silver for the year 2016
because the standard deviation is more .Therefore more risk is involved because of
economical and political factors. It can be also observed that the risk been reducing after
2017, and in the year 2018 its been reduced to lowest risk, therefore the investors who
invested in the year 2018, would have earned more income.

4.2 OBJECTIVE 2 -TO UNDERESTAND WHETHER THE DOLLAR

VALUE HAS AN IMPACT ON SILVER
4.4 TABLE SHOWING CORRELATION BETWEEN US$ AND

SILVER
Year Correlation
2014 0.10
2015 -0.84
2016 -0.62
2017 0.52
2018 -0.01
ANALYSIS:
From the above table, we can observe that all the correlation values are positive. Therefore,
positive correlation values indicate higher risk and the sign on one variable depending
upon the other variable. We can conclude from the above table that both dollar value and
silver are dependent factors

4.5 TABLE SHOWING YEARLY AVERAGES OF SILVER
Yearly
Year average Year
2014 265248.5933
2015 251991.3657 260967.8
2016 265663.3242 233756.4
2017 183614.3696 212296.3
2018 187611.2036
ANALYSIS:
It can be observed from the above table that there is fluctuation in the silver traded in
global market. 3 year moving average is considered to predict the market for the next year
that is 2018

300000
250000
200000
150000 Yearly average

3 Year
100000
50000
0
2014 2015 2016 2017 2018
4.4 GRAPH SHOWING SILVER PRICE MOVEMENTS
INTERPETATION:
Silver price has been volatile in nature due to numerous factors. So there is a need to
predict the market for the investors before investing into commodities market. It can be
observed from the above graph that the prices are high in the year 2014 when compared to
other years. By keeping all the 5 years as base. It can be predicted from the above graph
that there will be increase in the prices of silver for the year 2018.

4.3 OBJECTIVE 3-TO STUDY THE PREFERENCE OF INVESTORS

IN COMMODITIES MARKET
4.6 TABLE SHOWING RESPONDENT’S FREQUENCY OF TRADING

IN COMMODITIES
SL
No Frequency Percentage
1 DAILY 14%
2 WEEKLY 58%
3 OCCASIONALLY 28%
ANALYSIS:
From the above table it is clear that more than 50% of the people trade in commodities
weekly and 14% of the people trade daily as they deal with commodities and much
interested to trade in commodities.28% of the people trade occasionally because of their
busy schedule.

70% frequency of respondents trading

60%
50%
40%
30%
20%
10%
0%
daily weekly occasionally
4.5 GRAPH SHOWING RESPONDENTS FREQUENCY OF TRADING IN

COMMODITIES
INTERPRETATION:
From the above chart it is clear that more than 50% of the people trade in commodities
weekly and 14% trade daily as they deal with commodities and much interested to trade in
commodities. 28% of the people trade occasionally because of their busy schedule. People
frequently do transactions in commodity market as it is wider market for their investments.

4.7 TABLE SHOWING WOULD RESPONDENTS RECOMMEND OTHERS TO

ENTER INTO COMMODITY MARKET
SL
No Recommendation Percentage
1 DEFINITELY 28%
2 MAY BE 66%
3 NEVER 6%
ANALYSIS:
From the above table it is clear that the people who invest in commodities earn profit and
recommend others also to invest in commodities. Only 6% of the investors do not
recommend investing in commodities as they were unaware of the market conditions and
had loss

respondents recommend others to enter commodity market

70%
60%
50%
40%
30%
20%
10%
0%
definetly probably never
4.6 GRAPH SHOWING WOULD RESPONDENTS RECOMMEND OTHERS TO

ENTER INTO COMMODITY MARKET
INTERPRETATION:
The chart clearly states that the people who invest in commodities earn profit and
recommend other also to invest in commodities. Only 6% of the investors do not
recommend investing in commodities as they were unaware of the market conditions and
had loss. Most of them suggest investment in commodities as it is a better investment
avenue of the investors.

4.8 TABLE SHOWING COMMODITIES IN WHICH RESPONDENTS PREFER

TO INVEST
Sl.No commodities Percentage

1 Silver 30%
2 Silver mini 20%
3 Silver petals 10%
4 Gold mini 28%
5 Gold petals 12%
ANALYSIS:
From the above table it is clear that 30% of the people like to invest in silver as the demand
and usage of silver is more. They second which the customers prefer to invest is gold mini
that is 28%. 20% in the silver mini. 10% in the silver petals and the least is in the gold
petals that is 12%.

commodities respodents prefer to invest

35%
30%
25%
20%
15%
10%
5%
0%
silver silver mini silver petals gold mini gold petals
4.7 GRAPH SHOWING COMMODITIES IN WHICH RESPONDENTS PREFER

TO INVEST
-+
INTERPRETATION:
From the above chart it is clear that 30% of the people like to invest in silver commodities
as the demand and requirement is more. The second preferred commodity is gold mini that
is 28% and the next preferred commodity is silver mini that is of 20%. 10% of the people
preferred to invest in silver petals. The rest 12% of the people prefer to invest in gold
petals. From the survey we got to know that investment in silver is yield more profits to the
customers so people tend to invest more on silver commodity.

4.9 TABLE SHOWING INVESTMENT PERIOD IN COMMODITIES
TRADING
SL.NO PERIOD PERCENTAGE
LONG
1 TERM 22%
MID
2 TERM 35%
SHORT
3 TERM 43%
ANALYSIS:
From the above table it is clear that 43% of people like to trade in the commodities for
short term period to reduce the risk and 35% of people trade in midterm period and finally
third kind of people who invest more on long term period with huge investments for more
returns.

TIME PERIOD OF TRADING IN COMMODITIES

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
LONG TERM MID TERM SHORT TERM
4.8 GRAPH SHOWING INVESTMENT PERIOD IN COMMODITIES
INTERPRETATION:
The chart clearly states that the people tend to trade in commodities for short term to
reduce the risk that is 48% of people. The midterm trading period is of 35% people prefer
to trade to hedge the risk. The third kind of people who trade in long term has more risk
and more returns the trading people in long term are 22%.

4.10 TABLE SHOWING INVESTORS REASON FOR INVESTING
SL.NO REASON PERCENTAGE
DIVERSIFIED
1 PORTFOLIO 48%
HIGH
2 LIQUIDITY 22%
HIGH
3 RETURN 30%
ANALYSIS:
From the above table it is clear that people interest towards investing is more in diversified
portfolio to diversify the risk that is 48% .In the high liquidity there are 22% of people who
invest. Thirdly people mainly invest for the high return reason that is 30%.

REASONS FOR INVESTORS TO INVEST

60%
50%
40%
30%
PERCENTAGE
20%
10%
0%
DIVERSIFIED HIGH HIGH RETURN
PORTFOLIO LIQUIDITY
4.9 GRAPH SHOWING INVESTORS REASON FOR INVESTING
INTERPRETATION:
The chart clearly states that the people who invest in commodities are mostly investing in
diversified portfolio that is 48%, and secondly in high return that is 30% of people to
invest in commodities is to have high returns and thirdly 22% of people invest in
commodities for high liquidity.

CHAPTER 5
SUMMARY OF FINDINGS SUGGESTION AND
CONCLUSION
5.1 FINDINGS
OBJECTIVE 1: TO STUDY ON GLOBAL COMMODITIES SILVER

AND PROFIT RETURNS COMPARE TO SILVER MINI.
The demand of silver from industry can be a big effect on price variations, but the
photography industry in the recent years has been no longer using silver as it was
consuming generation ago. Stainless steel has largely replaced silver in items such as
flatware, while many mirrors now contain aluminium instead of silver.
Even though silver has been placed but for the industry silver is used continuously where
industry usage of silver is % which is stable. Industries such as water purification, circuit
boards and solar companies many such companies have been still continuing to use silver.
The reason for silver usage is its unique physical and chemical properties.
The silver has more value when compare to silver mini , investing on silver can lead to
high returns at the same time it has risk too. The silver is inversely proportionate to US
dollar so its price fluctuations will impact on silver value.
At presently there is less supply of silver, because of unavailability of silver in the earth
crust, the demand has been increasing so there is lot of price volatility in the
silver price.

OBJECTIVE 2: TO UNDERESTAND WHETHER THE DOLLAR

VALUE HAS AN IMPACT ON SILVER
From the above table, we can observe that all the correlation values are negative.
Therefore, negative correlation values indicate lower risk and the sign on one variable
depending upon the other variable. We can conclude from the above table that both dollar
value and silver are dependent factors
Silver price has been volatile in nature due to numerous factors. So there is a need to
predict the market for the investors before investing into commodities market. It can be
observed from the above graph that the prices are high in the year 2014 when compared to
other years. By keeping all the 5 years as base. It can be predicted from the above graph
that there will be increase in the prices of silver for the year 2018.
The silver and US dollar has both depending variable presently silver has been volatile
due to the increase in the US dollar, and demand is high and supply is less.

OBJECTIVE 3: TO STUDY THE PREFERENCE OF INVESTORS IN

COMMODITIES MARKET
The investors preference of investors towards commodity market are different and the
study shows that there are different factors and attractions for the investors to invest in
global markets, like high returns, average returns, low returns.
The frequency level of traders is more in weekly due the time availability and free time.

5.2 CONCLUSION:
Silver is extracted and used to mint coins, jewellery purpose also used as an investment
avenue. Silver has traditionally been a safe haven for investors, and equities are usually the
investors favourite. But with the unstable global economic conditions. People are moving
towards safe investment options and minimizing risks. Silver has seen risen in the global
market, and is on its best run. The silver price is getting affected for economic booms and
busts in global market due to various expectations that US federal Reserve(FED) will not
make any changes to bank rates this year. The expectations of these rate cuts are leading to
lowering of value of major currencies because of this economic conditions, the basics
supply and demand are in favour of silver. Heavy purchase of physical silver and
importing of silver, these types of events may lead to actual reduction in the value of silver
price, which can lead to higher volatility in prices.
In the current scenario there is a stabilized trend in silver prices due to increase in the
demand for silver after demonetization. In short term, the demand for silver may rise
because of safe investment avenue.

5.3 SUGGESTIONS:
 It is examined that there is a positive correlation between silver prices volatility and
the dollar movements.
 Further research can be conducted considering inflation rate for US$ as the major
factor correlating silver price volatility.
 Heavy purchase of physical silver and importing of silver, these types of events
may lead to actual reduction in the value of silver price, which can lead to higher
volatility in prices.

Bibliography
https://www.google.com/search?q=REVIEW+OF+LITERATURE+ON+SILVER&rlz=1C1CHZL_enIN840
IN840&oq=REVIEW+OF+LITERATURE+ON+SILVER&aqs=chrome..69i57j0.20342j0j7&sourceid=chro
me&ie=UTF-8
https://www.google.com/search?q=veer+global+hub&rlz=1C1CHZL_enIN840IN840&source=lnms
&tbm=isch&sa=X&ved=0ahUKEwiy8YDOtY7iAhVEWysKHdqaBm4Q_AUIESgE&biw=1366&bih=657
#imgrc=WngBSjx_JEpCBM:
https://en.wikipedia.org/wiki/List_of_commodities_exchanges
https://www.google.com/search?q=commodities+traded+in+ncdex&rlz=1C1CHZL_enIN840IN840
&oq=commodties+t&aqs=chrome.5.69i57j0l5.15863j1j4&sourceid=chrome&ie=UTF-8
https://www.google.com/search?q=PROBLEMS+FACED+IN+COMMODITY+MARKET&rlz=1C1CHZL
_enIN840IN840&oq=PROBLEMS+FACED+IN+COMMODITY+MARKET&aqs=chrome..69i57j0.13773j
0j7&sourceid=chrome&ie=UTF-8
https://en.wikipedia.org/wiki/Brazilian_Mercantile_and_Futures_Exchange
https://www.mcxindia.com/#

ANNEXURE 1
CALCULATION OF CORRELATION OF SILVER AND US $

(2014-2018)
ANNEXURE 2
CALCULATION OF STANDARD DEVIATION OF SILVER AND
SILVER MINI (2014-2018)
ANNEXURE 3
SILVER AND SILVER MINI PRICE TRADED IN GLOBAL
MARKET
(2014-2018)
ANNEXURE 4
MOVING AVERAGE OF SILVER PRICE
(2014-2018)
Yearly
Year average Year
2014 265248.5933
2015 251991.3657 260967.8
2016 265663.3242 233756.4
2017 183614.3696 212296.3
2018 187611.2036
ANNEXURE 5
1. Name
2. Gender : Male Female
3. Age:
a. Up to 30
b. 31-40
c. 40 and above
4. What attracts you to invest in commodities

a. Diversified portfolio
b. High liquidity
c. High return
5. What is the frequency of your trading
a. Daily
b. Weekly
c. Occasionally
6. Would you recommend others to enter into commodity market
a. Definitely
b. May be
c. Never
7. In which of the following commodities do you prefer to invest
a. Silver
b. Silver Mini
c. Silver Petals
d. Gold Mini
e. Gold Petals
8. How long are you trading in commodity market
a. Below 1 year
b. 1-3 years
c. Above 3 years

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A PROJECT REPORT ON

“A STUDY ON PROFIT IN GLOBAL COMMODITY

Under the guidance of

This is to certify that the project titled “A STUDY ON PROFIT IN GLOBAL

Signature of Director Signature of Principal

Dr. Bhargavi V.R. Dr. Anuradha Roy

Place: Bengaluru SIGNATURE OF GUIDE

I hereby declare that “A STUDY ON PROFIT IN GLOBAL COMMODITY

Place: Bengaluru Name: Archana R

Date: Register Number: 17BTCOM003

I take this as an opportunity to express my profound gratitude to who have been a

I express my deepest sense of gratitude to Dr. Bhargavi V.R., Director, Post

Date: Name: Archana R

Place: Bengaluru Reg. No: 17BTCOM003

CHAPTER SUMMARY OF FINDINGS , PAGE

A financial derivative is a financial instrument whose value is derived from a commodity

A commodity exchange is an exchange where various commodities and derivatives are

SESHADRIPURAM COLLEGE Page 1

A commodity is a basic good used in commerce that is interchangeable with other

SESHADRIPURAM COLLEGE Page 2

TABLE 1.1: SHOWING LIST OF PRECIOUS METALS

SESHADRIPURAM COLLEGE Page 3

1.2 COMMODITY MARKET :

1.3 HISTORY OF COMMODITY MARKET

SESHADRIPURAM COLLEGE Page 4

1.4 ADVANTAGES OF COMMODITY MARKET

SESHADRIPURAM COLLEGE Page 5

1.5 DISADVANTAGES OF COMMODITY MARKET

SESHADRIPURAM COLLEGE Page 6

1.6 INTERNATIONAL SCENARIO

1.7 NEW ONLINE TRADING

Understanding commodities will require particular attention to supply and demand or

SESHADRIPURAM COLLEGE Page 7

1.8 HOW TO INVEST IN COMMODITIES

SESHADRIPURAM COLLEGE Page 8

1.9 HOW TO START TRADING COMMODITIES ONLINE

Choosing a commodity broker

Commodity account paperwork

Before you start trading commodities online

More advice for the new online commodity trader

SESHADRIPURAM COLLEGE Page 10

1.10 COMMODITY TRADING SYSTEM

SESHADRIPURAM COLLEGE Page 11

1.11 TOP COMMODITY EXCHANGES IN THE WORLD

TABLE 1.2 : SHOWING LIST OF TOP COMMODITY EXCHANGES

1 CME Group(US) 3,16,14,76,638.00

3 Eurex (Germany) 2,19,05,48,148.00

10 MCX India(India) 79,40,01,650.00

SESHADRIPURAM COLLEGE Page 12

Chicago mercantile exchange (CME): A financial and commodity derivatives trading

National Association of Securities Dealers Automated Quotation (NASDAQ): it is in

SESHADRIPURAM COLLEGE Page 13

1.12 INTRODUCTION TO DERIVATIVE MARKET

SESHADRIPURAM COLLEGE Page 14

1.13 KINDS OF FINANCIAL DERIVATIVES

SESHADRIPURAM COLLEGE Page 15

SESHADRIPURAM COLLEGE Page 16

There are three main types of swaps:

Interest rate swap

SESHADRIPURAM COLLEGE Page 17

1.14 COMMODITY MARKET PARTICIPANTS

HEDGERS ARBITRAGERS SPECULATORS

Figure 1.3 Showing Commodity Market Participants