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What is the Visible Supply?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 19 November 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
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A visible supply has to do with the amount of accessible goods that are stored in a licensed warehouse. This will include supplies of commodities that are properly inventoried and are available for immediate distribution. The range of supplies can be somewhat broad, although the accessible products will always include items can be transported and delivered to a buyer upon request.

In general, a visible supply will include both afloat and insight commodities that are found within production areas as well as in warehouses. This is an important figure, since the visible supply is meant to represent the total amount of goods or commodities that are ready for purchase. In turn, the total of available products directly relates to the number of deliverables that can be called upon in the execution of a futures contract.

Along with the amount of goods found in licensed warehouses and in production areas, a visible supply may also include commodities that are currently residing at delivery facilities. These commodities are normally already approved for distribution and delivery, and stand ready for immediate surrender to the investor. However, they are still considered to be part of the visible supply until they are actually delivered to the investor.

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Understanding the quantity of the visible supply that is associated with a given investment is very important to the buyer. Depending on the standards that apply to the commodity, a stable visible supply will indicate that the futures contract has an excellent chance of performing very well for the investor. At the same time, if the quantity of commodities associated with the visible supply is not considered deficient in some manner, the investor may want to think twice about investing in the contract.

A qualified broker can help an investor to properly evaluate the visible supply and determine if the investment is a currently a good proposition. At the same time, the broker may advise the investor to watch the performance of the commodities associated with the visible supply for a period of time before choosing to purchase the futures contract.

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