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Gold/Mining/Energy : Silver prices

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To: Mark Bartlett who wrote (344)	12/27/1997 1:49:00 AM
From: Jim Ilchyshn	Read Replies (1) of 8010

Mark, If I may try to answer your question to Emory... If I understood you correctly, this would suggest the commercials perceive an overbought situation and expect the price to fall - otherwise they would be still be net long, even (especially) if their commitments were not a hedge to offset company exposure. You are correct, normally a short position by the commercials would indicate and overbought (overvalued) situation and they expect a price fall. In your previous post you suggested some outside intervention (manipulation) as with what is suspected is being done with gold. I agree that this is entirely possible. One other thing you must remember is that the commercials are only human traders also and they can be wrong too. I have a friend that trades electical futures for a large power company. It is not common for her group to lose hundreds of thousands of dollars in a couple of days. Typically you would trade by the charts and by what is perceived as the norm. Well the last 17 or so years, we have had a deficit in the mined supply/demand equation so it would not be uncommon for the commercials to expect life to carry on as before when probably 99% of the traders have never seen a precious metals bull market. All of a sudden when the realization sinks in that supplies are actually dwindling, they come accross an unfamiliar situation and think that it will be over in a couple of weeks. I think they will really be surprised to find out that you just can't turn on a silver mine like a light switch, especially when it's primary source is a byproduct of gold production which has been cut back. We do live in interesting times! Hopefully some of this makes sense... - Jim.

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