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

To: Bobby Yellin who wrote (17165)	9/2/1998 12:50:00 PM
From: Ray Hughes	Read Replies (1) \| Respond to of 117012

Bobby: I'm a raging bull on silver although timing of big rally could still be a couple of years, or only a couple of months away. Timing, timing, timing. Actual consumption of silver, not to be confused with demand that includes temporary inventory swings, hoarding, etc., does exceed short-run availability of silver from newly mined and scrap recovery production. Hence, excess inventory is being exhausted and a shortage of silver will appear. Then, scrap supply will rise AFTER silver price rises. This will moderate the rise in silver price until lots of idle scrap silver (antique dealers' hoards, etc.) are depleted. Then, silver prices must rise to sufficient level to reduce demand and cause increase in new mine production sufficient to balance consumption vs supply. There is not much new silver mine capacity that can be quickly brought on stream. Most old silver mines that could be reactivated are 1) small producers of 3 - 5 million ounces/yr., b) in environmentally sensitive areas, e.g. Idaho & Montana, c) are in high risk countries, e.g. Russia, d) would have operating costs of US$6 - US$ 8/oz., e) require $25 million to US$150 million to bring back into production. For the above reasons, supply of newly mined silver from primary silver mines will rise only in response to major advance in silver price and will lag the silver price rise by 1 - 5 years. Remember, most small mining company Boards of Directors are ineffectual, unable to analyze and hence are followers, not leaders and will, therefore, defer decision to put major amounts of money at risk until the silver price has REMAINED HIGH FOR 1 - 3 YEARS. Most banks won't lend on small mine rehabilitation so most of the money which I estimate is about US$1.5 billion, will have to come from fresh equity. Investors will lend only after major rise in silver price causes major buying spree in silver equities. There is no substantial inventory of silver held by governments with which to depress the coming bull market in silver. No comment on Rubin. Dollar runup was due to clawing back of monies from foreign investments and foreign money seeking safe haven. Once most of the loose money has been placed in USD the dollar buying will slacken. Some profit taking on runup in USD will then push dollar back down somewhat. I think we are nearing that stage where major corporations and big time speculators will begin to go bargain hunting in Asia, looking to buy cheap assets. That means selling USD to invest with foreign currencies. That could generate into decline for USD. If USD is topping out, then gold price in many foreign currencies will drop. Back to silver/gold. I see silver trending higher big time, gold remaining locked in trading range below US$300. RH