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Gold/Mining/Energy : Caussa Capital (formerly Antares) T.CAU -- Ignore unavailable to you. Want to Upgrade?

To: bill718 who wrote (2544)	2/4/1998 11:13:00 PM
From: Pietro Manniello	Respond to of 4718

Warren Buffett was buying Antares/tse today . **************************************** "Why Buffett Is Buying Silver" By Andrew Serwer (Fortune Magazine) THIS JUST IN: BUFFETT BUYS SILVER!!! (or, he's no Bunker Hunt!).... That's right! Warren Buffett's Berkshire Hathaway has been buying up oodles of Silver (yes, as in silver dollar). Berkshire made the purchases between July and Jan. 12, and now owns some 130 million ounces! That 130 million ounces is worth some $845 million at the current price of around $6.50!!! Yowser!!!! So what does Buffett see in silver? Apparently, he's been following the metal for some 30 years and he finally became convinced that the supply-demand equation had been tipped in favor of the buyer. That is, it's undervalued!!! Silver got down to $4.60 or so an ounce in July. It hit a high of $50 in 1980. Why is Buffett revealing this? Because Berkshire "has received inquiries about its ownership of the metal..." OK. This may have something to do with a lawsuit filed recently by a silver short against Phibro (commodities arm of Salomon Smith Barney) and 10 other unnamed (!!) defendants. MAJOR HMMMM. As they say in my biz, this story has legs!!!! ---------------------------------------> Buffett silver play unlike Hunts' in 1970s NEW YORK (Reuters) - The disclosure by Berkshire Hathaway Inc. of its huge silver position harkens back to the accumulation of silver by the Hunt brothers in the late 1970s, when they tried to corner the market and almost lost their shirts. But analysts say many differences exist today, ranging from the method of execution of trades to the regulatory environment to the condition of the economy. Berkshire, the company controlled by investor extraordinaire Warren Buffett, said late Tuesday that it acquired 129.7 million ounces of silver between July and January, a holding valued at $915 million in Wednesday's bullion market. In 1980, the Hunt brothers of Texas were accused by the Commodity Futures Trading Commission of hoarding more than 100 million ounces of silver as prices soared to $50 an ounce. When the market moved against them, they were unable to meet their margin calls to brokerage houses, bringing several of those houses to the brink of financial ruin. The Hunts had a larger amount of physical metal within their control, but their share of silver bullion in circulation in the market was much less than Berkshire Hathaway holds. Estimated silver bullion inventories in 1980 totaled 900 million to 1 billion ounces, according to New York consulting firm CPM Group. Inventories today are believed to total between 300 million and 500 million ounces, according to CPM's Edward Kempf. "The key difference to me is the difference in sophistication between the two traders," said William O'Neill, senior futures strategist with Merrill Lynch & Co. Inc. "Bunker Hunt wasn't a savvy commodities trader. It was more of a roughshod accumulation. It didn't have the sophistication that Buffett has a reputation for." Phibro Inc., the commodities trading arm of investment bank Salomon Smith Barney, confirmed Wednesday that it was the broker for Buffett's silver purchases. "Phibro and Buffett have been around long enough to give them an edge in this market," O'Neill added. The method of execution was also different, according to Martin Armstrong, head analyst with Princeton Economics International. "The Hunt brothers just kept buying and buying silver," Armstrong said. "There didn't seem to be any strategy to it." In the case of the Buffett position, however, "everything seems carefully orchestrated," he said. Berkshire said Tuesday that all of the metal was purchased for London delivery through a single brokerage. The Hunt Brothers were believed to have operated through several trading houses. No options have been or are held by Berkshire, the statement said, nor have any purchases been made that established new highs for the metal. "All buying has been after dips" in price, it said. "You can see it even in the way he's managing the position," said Joseph Rosta, research director of CPM Group. "He's a very conservative investor. He came right out and said that he's willing to defer delivery (against his position). Comparing this to Hunt is an apples-and-oranges comparison." The economic backdrop against these two positions also were drastically different. "In the 1970s, you had a period of economic stagnation and higher inflation," said Merrill's O'Neill. "It was a market that was friendlier to silver overall. "Today, you have a market that is in modest growth and very low inflation," O'Neill added. "So the fundamental picture is different. But on the other hand, you could make a case for strong demand from the industrial sector bolstering the market." Berkshire said its purchases were based on the supply balance relative to demand, which by many estimates has been in deficit for the past seven years. Another difference is the regulatory atmosphere in the market. "The situation in 1980 made everyone more aware, super cautious," CPM's Rosta said. "The market regulation is much more strict (now). I don't think the CFTC has ever stopped vigorously watching the silver market since 1980." "The CFTC was in its infancy at that point," O'Neill said. "The market knowledge hadn't evolved to the point where it is today." The Hunts maintained at least part of their positions on the Commodity Exchange and the Chicago Board of Trade. It was stringent position limits set by the exchange that were believed to send the market to more earthbound levels. Buffett's positions were purchased for delivery in London, whose precious metals trading is controlled by the London Bullion Markets Association, which is not a regulated exchange but a group of banks that make markets for precious metals. Buffett is not believed to be holding any positions on the the COMEX division of the New York Mercantile Exchange, the U.S. exchange on which silver is traded. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~