MCX Silver Cross-Market Price Normalization

27. Jan.

MCX–COMEX Silver Relative Value Normalization

This indicator presents an educational relative-value normalization framework for analyzing Indian MCX Silver prices in a global context.

Rather than plotting raw price spreads or performing direct arbitrage calculations, the script focuses on structural price normalization to study how domestic futures pricing deviates from internationally quoted silver prices after accounting for unit and currency differences.

Conceptual Framework

Silver is traded across different markets using different currencies and contract units, which makes direct price comparison misleading.
This script addresses that issue through a three-stage normalization process.

1. Contract Unit Standardization

Indian MCX Silver is quoted in ₹/kg, while global COMEX Silver is quoted in $/oz.
The indicator standardizes domestic pricing into global units using a fixed physical conversion factor.

2. Currency Translation Layer

After unit normalization, prices are translated into a common currency reference.
This step isolates currency effects so that relative price behavior can be studied independently of FX movement.

3. Relative Deviation Measurement

The final output expresses the percentage deviation between:

The normalized domestic silver price

The internationally referenced silver price

This produces a dimensionless relative-value metric, enabling comparison across timeframes and market regimes.

Interpretation Guidelines

Positive values reflect periods where domestic pricing expands relative to global parity

Negative values reflect periods of domestic price compression

Extended deviations may highlight temporary dislocations caused by:

Liquidity differences

Session timing gaps

Currency volatility

Local supply-demand dynamics

The indicator is intended to highlight context, not to generate buy or sell signals.

Analytical Use Cases

Studying relative pricing behavior in MCX Silver futures

Observing structural overextension or compression in domestic pricing

Educational analysis of cross-market normalization techniques

Evaluating how currency movement interacts with local commodity pricing

Important Clarifications

This script is not an arbitrage tool

It does not provide trading signals

It does not predict future prices

Designed for educational and analytical purposes only

Why the Source Is Protected

The protected source reflects a specific normalization methodology and analytical structure intended for educational study of cross-market price behavior.
The goal is to preserve the integrity of this framework while allowing users to interpret its outputs visually.

Recommended Application

Apply the indicator on MCX Silver charts and interpret results alongside price action, volume, and broader market context.

vor 7 Tagen

Versionshinweise

Earlier i was using calculation for ounce as ozPerKg = 35.274
but in case of silver the real ounce troy once whose value is troyOzPerKg = 32.1507466

so i have updated same for the indicator.