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

To: Benfica who wrote (1247)	6/16/1998 11:20:00 PM
From: kx	Respond to of 1692

Before I could answer your question, I have to admit, I do not follow the silver market that much. One question we might want to ask ourselve: Between gold and silver, why did Buffet choose to buy silver instead ? He must have had a very good reason for not choosing gold since both of them are precious metal. Buffer is a very conservation, valued, and practical investor. He only buys the companies that produce the products that people use every day. Once you consume it, you buy it again (ie. Coke, McDonalds). Silver is an industrial commodity. Its main purpose is for industrial uses. Are there any major seller of silver other than the producer itself ? This commodity has a direct relationship between the demand (industrial consumption) and the supply (producer). The silver is in the trading range since 1988 with the price trading between $4.6 to $7.3. You can not tell which direction is the major trend. If we are going to have a big boom in a few year from now, the silver market will make a move. Or if the North America runs into recession, the trend will definitely be down. Buffet started buying in July 97 to Jan 1998, in $5 to $6.3 range. Since July 1997, the price of the silver went as high as $7.26, did the price of gold go up along with silver ? No !! In the past there was price correlation between gold and silver.

To: Benfica who wrote (1247)	6/17/1998 10:11:00 AM
From: Guy Paquin	Read Replies (1) \| Respond to of 1692

Benfica: If it can help you, I remember that W. Buffet reasons were that projections on supply vs demand were indicating higher prices in the future as well as some new potential uses for silver on which he didn't elaborate. Since Buffet essentially buys value, he probably found value in silver giving him an hedge in an overvalued stock market. However, I wouldn't personally follow what Buffet does because when he's done it and it's public, it's probably too late anyway. Think of it, when you have as large a position as he claims you need volume to unload. Was Buffet selling when all Buffet fans were buying on the news of his position in silver. I think I would rather trade on my own understanding of fundamentals and price action. Regards Guy