Silver Futures Contract Specifications

Silver Futures Contract

In bad economic times silver has proven again and again to increase in prices much more significantly compared to gold or any other precious metals. More and more investors are seeking silver investing advice to provide them with excellent protection against potential hyperinflation and possible currency default. Silver futures are an important financial mechanism for large scale silver dealers, bullion manufacturers and silver mining corporations.

In layman’s terms, silver futures contract allows sellers to find silver buyers ahead of time, sometimes before silver production takes place, and agree on a price and date in the future. Silver futures contract helps buyers secure a silver purchase for a future date for a favorable price. This way both parties win by participating in the silver futures agreement. In addition, silver futures contracts act as a price hedge against sellers being forced to sell too low and buyer from having to pay too high in case silver prices fluctuate between the dates of signing and maturity of a silver futures contract. Only 1% of total silver futures contracts result in actual commodity delivery, most futures are resold before their maturity date allowing traders to make a profit on the difference between purchase and sale of silver contracts prices.

Maintaining standard silver futures contract specifications makes them globally accepted and liquid financial mechanisms. Silver futures contract includes the following specifications below:

Trading unit is standard at 5,000 troy oz of silver
Trading hours are usually set between 8:25 PM through 1:25PM EST
Trading months are clearly defined depending on the time of the contract commitment
Maximum price fluctuations are also specified in a standard silver contract
Last trading day and various applicable options are attached to each item in the specifications

Silver futures charts play an important role in silver trading and help establish the daily spot price of silver.

Gold futures contracts work in a similar way, except they trade gold commodity and specifications are a little bit different due to gold’s superior value.