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Gold/Mining/Energy : Silver prices -- Ignore unavailable to you. Want to Upgrade?

To: Claude Cormier who wrote (295)	12/23/1997 5:38:00 PM
From: lorne	Respond to of 8010

Full story Silver prices surge to eight year high, supplies dry up 05:19 p.m Dec 23, 1997 Eastern By Clive McKeef NEW YORK, Dec 23 (Reuters) - Silver prices surged to a new eight-year high Tuesday after a further large drawdown in silver inventories in COMEX warehouses prompted more buying by commodities funds, traders said. ''Silver is going higher. You just have to go with the flow here, as one or two hedge funds and banks are taking advantage of the disappearance of deliverable silver,'' said Hudson River Futures COMEX floor trader Carlos Perez-Santalla. After the market closed Tuesday, COMEX reported its silver inventories had fallen 1.6 million ounces to 111 million ounces to 113 million ounces Monday. COMEX March silver ended up 21.8 cents at $6.243 an ounce, after seeing a new contract high at $6.250 an ounce. In the bullion market, spot silver ended quoted $6.24/26, the highest levels since January 1989, after fixing in London earlier Tuesday at $6.03 an ounce. At the London fix the silver forward price curve remained in backwardation, with the 12 month forward price fixed at $5.9690 an ounce, lower than the spot price. ''Backwardation'' is an unusual market price structure in which prices for immediate delivery of a commodity are higher than prices for delivery of the commodity in the future. ''Indications of tightening deliverable supplies based on the large decline in COMEX silver inventories and a shift in some delivery dates to a backwardation, combined with reports of an orchestrated supply squeeze, supported the sharp rally,'' Salomon Smith Barney analyst David Rinehimer said. Market analysts such as Gold Fields Mineral Services, CRU International, and CPM Group have all concluded that silver demand has exceeded mine supplies for most of the 1990s, drawing down silver inventories worldwide. World inventories still remain very large, however, following eleven years of supply/demand surpluses between 1997 and 1990, MerrillLynch analyst Ted Arnold argued. ''The big worry has to be what happens to Indian consumption next year,'' Arnold said. Indian silver imports in the first nine months of 1997 totaled 3,405 metric tons, up from 3,250 tons in 1996, according to consultants CRU International. But the Indian rupee has depreciated by about 10 percent since October, raising Indian rupee silver prices more quickly than U.S. dollar silver prices. ''At some point, prices in the West could reach such high levels that the Indians will start to export silver again to the West,'' Arnold said. ''And next year also sees a full year of production from the new BHP Cannington mine in Australia of 750 tons.'' Silver prices rose faster than gold prices Tuesday, pushing the spot gold/silver ratio down to 47.08-to-1, a new 10 year low.