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

To: Pete who wrote (658)	2/6/1998 10:15:00 PM
From: TD	Read Replies (1) \| Respond to of 8010

Some thoughts on silver. Read Martin "Shorty" latest, thanks for the post. Who knows he may be right! Personally I do not think so. First I reviewed the CPM Groups 1997 Silver Survey again tonight. All that is written from this point on is in approximate numbers to give the "flavor" everyone is certainly invited to correct me, however if my guesses are reasonable let's not argue if the numbers are grossly incorrect then please inform me. Taking the Medium amount of above ground stocks at year end 1996 the number was 991.1 M ounces. Deficit was estimated to be about 200M ounces in 1997. That would mean 791M ounces at year end 1997. Now according to CPM all governments worldwide own 169.3M ounces, I will subtract this number you may agree or disagree, my thought is silver is a metal of war and most governments will hold? So, 622M ounces available above ground January 1, 1997 Mr. Buffet buy 129M ounces and takes delivery Now we have 493M ounces available to the market. Based on 1997 demand deficit of approximately 200M ounces this implies above ground supply is exhausted in 2 1/2 years. Another way I looked at it was graphically. In the referenced book there is a curve showing Silver bullion inventories as months of demand. This estimated about 7 months worth at the end of 1997. The 200M deficit per year is equal to about 16M per month, to make up for mine production. In other words 16M ounces must come from above ground stocks to make up for the short fall. In this context Mr. Buffet bought an 8 month supply. Conclusions: Think we are in for a very interesting few years in the silver market. Took it upon myself to call coin dealers and found most are very reluctant to buy silver back and are discounting heavily. To me this is a good sign because most people that might be willing to sell will reconsider if they are offered spot minus $1.50. Looking at IBD for today there are about 57,000 contracts for March. This represents 285M ounces with a short for every long, in a "perfect" market. Don't know how many are planning on taking delivery usually it is a very very small percentage, however with Mr. Buffet leading the way there could be a few others that are well heeled that might just demand delivery. Remember the shorts need to deliver the remaining 42.2 M ounces to B-H by March 6th. Still bullish, TD