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

To: Paul Moerman who wrote (836)	3/3/1998 7:11:00 PM
From: CuriousGeorge	Respond to of 8010

Technicals Cited in Gold, Silver Price Declines futuresmag.com New York-March 3-FWN--The precious metals complex ended mostly lower here Tuesday, with only palladium managing an upward move. April gold futures lost $2 to close at $298.50, and May silver dropped 18.5 cents to $6.3830. Tim Evans, senior commodity analyst at Pegasus Econometrics, suggested technicals were a key factor behind Tuesday's moves in silver and gold. Other contacts also noted some profit-taking occurred in silver, after its sharp runup in recent days. Evans noted that May silver stalled around $6.60 -- the Monday high which became resistance -- after retracing notquite half of the decline from the February high. Then, after breaking Monday's $6.45 low Tuesday, "you had a confirmed short-term reversal to the downside," he continued. "Now, the question is how much of the bounce from last week's low are we able to hang on to," he said. "If the market can continue to consolidate -- say we spend a couple of sessions in the $6.20 to $6.50 range -- and break out again to the upside, it will raise the possibility the commercials will need to cover their shorts and that the funds were right to stay to the long side of the market and not chicken out on that scary rollercoaster ride down to $6.02." But, if the market should break down technically, "panicky" fund liquidation could occur. The analyst pointed out that Friday's Commitments of Traders report showed that funds have remained a net long in silver. "It appears the long-term players have stuck with their positions," said the analyst. "Looking ahead, this means continued high volatility. It means if they continue to hold onto it and squeeze the life out of it, they might get the commercials to cover shorts. Alternatively, though, if the market were to consolidate and then break to new lows, then the game is over. The funds are going to be sellers . . . And we could be headed significantly lower." Two possible downside levels to watch would be the $5.41 May silver low during January, along with a Fibonacci projection down to $5.20 from the Feb. 26 low of $6.02. The analyst said he does not foresee any underlying fundamental factors that would stop such as slide, if the market were to have a technical break to the downside. As a sidenote, Evans pointed out that whatever famed investor Warren Buffett does with his 129.7 million ounces of silver could have a significant effect on the supply for the year. The analyst noted one news wire recently quoted a bank source as forecasting that free stocks of silver would total around 120 million ounces at the end of the year, representing about six weeks of supply. The implication was this was bullish, said Evans. However, pointed out Evans, when factoring in the silver that Buffett's Berkshire Hathaway accumulated between July and January, there would be a supply of around 12 1/2 weeks. "So, whether the market is going to be in surplus or in deficit is going to be kind of a function of whether the Buffett holdings are available to the market or not," he said. "That's something the market is trying to grapple with here."