Fair Value
Basis is the difference between an observed local market price and a chosen model or fair value, such as MCX gold minus its import-parity value. It shows how far local prices sit above or below the reference you are measuring against.
In a bullion fair-value context, basis is the observed local price minus a chosen model value. Global basis compares the local price against a converted global reference before landed costs, while import basis compares it against fair value after a cost profile (duty, premiums, financing) is applied.
Basis matters because it converts two separate prices into a single read of how stretched the local market is. A positive basis means local metal is trading above the model; a negative basis means below. Traders watch the history of the basis to judge whether the current gap is unusual or routine.
A gross basis can look large before costs, while the net basis after assumptions may shrink or even flip sign. Basis describes deviation, not a guaranteed convergence or captured profit, so it is read with the active cost profile and the freshness of each price leg in view.
Put it to work
Educational reference only. Definitions describe how traders use these concepts and are not investment advice or a recommendation to trade.
