I know that Mcx contracts of silver, Gold, Copper, Natural Gas and Crude whose price simply follow the price of equivalent contracts trading in Nymex and Comex.I also Know that Which month Contract of Nymex and comex is related to Mcx Contract.My Question is, there is always price difference between MCX price and the calculated price using Live Nymex/Comex price and USDINR.Say for example at 1000 Am, May 14 Comex silver at 20 $/Oz & UsdINR is 60.00 after converting the silver price in Indian rupee will be 20x60x32.15=38580, at the same time Mcx Apr 14 silver price is 43080. A difference of Rs 4500 exist. How the difference is arrived? People tell me that it is Cost of carry/Premium, tax, duty etc, But what i want is how the price difference is arrived, is there any formula?
It is not really a formula, but this is how you calculate
For Gold, assume International Rate is $1265 an ounce today.
- Add CIF (Cost,Insurance & Freight) in $ , $ 3 an ounce, so it is now $1268
- For Dollars per KG, multiply by 32.1507, so it is $ 40767.09 per Kg
- Purity trading on MCX is 995, so reduce $200 per KG, so it is $ 40567.09 per Kg
- Multiply now by Currency rate, assume USDINR is 63, so it is now Rs 25,55,740.46 per Kg
- Add customs duty around 10.07% : Rs 253764.5
- Add Cess of 3% of this duty: Rs 7612.94
- So the landed cost per Kg is : Rs 2817117.90 (4+5+6)
- Add Bank cost (@0.10%) : Rs 2817.12
- Final wholesale price per Kg: Rs 2819935.01
- For 10gms: Rs 28199.35
But should this price match the price on MCX? It need not, as finally the difference is attributed to the forces of demand and supply.
If you are calculating for Silver, CIF in Dollars: $ 0.15 per ounce, you don't have to reduce for purity like the way you did for gold, and everything else remains the same.
Hope this helps,