Thai Guru's Gold und Silber ... (Informationen und Vermutungen)

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May 28 - Gold $393.70 down $1.30 - Silver $6.09 down 9 cents

Mahendra Magic/Super Silver/Golden Star Deal A Solid One

Zitat

Only those who risk going too far can possibly find out how far one can go...T.S. Elliot

GO GATA!!!!

Gold was very firm overnight, but sold off during Comex hours due to strength in the dollar. The euro fell to 122.11, down .57, while the dollar rose .28 to 88.99. However, the setback was a minor one considering how much gold has advanced the past couple of weeks.

The open interest dropped another 3725 contracts to 240,375. This tells us the specs who went short, many below $380, were bagged by The Gold Cartel again. Cabal forces who bought down there have been covering those shorts the past few days. This is why the open interest continues to contract. As recently mentioned, the open interest is now as low as it has been for some time. If gold takes out its 200-day moving average, around $3 higher than today’s close, the specs should jump on the long side once more. There is plenty of latent buying power out there from these specs to take gold to new high ground.

Silver remained weakish all session long, falling close to 20 cents at one point. The silver open interest continues to drop, this time for another 121 contracts to 85,489.

Some input on silver to bring your way. One of our London sources is very encouraged by silver’s 10% recovery off its lows. It reflects what is going on in the physical market. Ten days ago our source saw silver as tight as this veteran precious metals dealer has ever seen it. It is even tighter today he says.

This London dealer is looking for silver to trade up to $7.69 this summer, but not to explode again until sometime in August or September. His trading model has silver rallying to $9 or $10 if $7.69 is breached.

For some reason he is also focusing on the legendary Warren Buffett to become more active in silver again. Part of his rationale is that Buffet has exited the stock market to a significant degree, is loaded up with foreign currencies and is rearranging his financial affairs. This dealer tells the same story I do about Buffett’s run in with the Washington powers over silver when he was chairman of Salomon Brothers. Their sub, Phibro, was going to squeeze silver in 1994 and was in the process of doing so when the US said go ahead, but you will have more regulators on your case than Salomon has seen in all its existence. At the time Salomon was suffering as a result of a bond market scandal. Buffet was told, you probably will win the silver battle, but you will lose the Salomon War. Buffet called off Phibro. The point of this is the London bullion dealer feels Buffett is now inclined to not fear what Washington has to say and is ready to become more active in silver again after his big purchase in 1997.

Here is some wonderful news for you silver bulls out there. The Comex stocks are FINALLY beginning to decrease. Yesterday they dropped 597,583 ounces. Today they fell another 594,287 ounces. They now stand at 119,066,383 ounces, almost 3 million ounces less than where they have been for some time. If this trend continues and the Comex silver stocks continue to dwindle away, it will put the fear of God into the spec shorts. The Comex silver stocks are the last major source of supply left in the world.

Hi Ho Time might be not too far off!

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The John Brimelow Report

A Bull run? A Big Mac for thought

Friday, May 28, 2004

Indian ex-duty premiums: AM $2.82, PM $3.54, with world gold at $396 and $393.55. Below legal import point. The Indian commercial classes are feeling pretty miserable about the new Government: the stock market fell 4.41%. This is not, of course, entirely bad for gold consumption.

During the course of today, TOCOM gold traded up to the highest since early February, entirely because of the influence of offshore gold. The public was again disposed to sell: open interest fell the equivalent of 1,455 Comex lots on 37% higher volume equal to 22,794 Comex lots. The active contract in the end closed down 2 yen, and world gold went out 15c below NY at $395.25 (Volume in NY yesterday was 135,811, or 99,779 net of switches, in other words very heavy. Open interest fell 3,725 lots to 240,375.)

Once again today, gold rose during the early Asian day, hovering around $396 for several hours. There is no discernable enthusiasm for this in any of the "transparent" Asian markets: even the active Shanghai Gold Exchange contact showed a slight discount. The further slump in open interest in NY yesterday indicates that the short established towards the low in early May must have been very large. If indeed they are being replaced by Western long specs, the scope for further buying within modern parameters of open interest is impressive.

An interesting event this week is the publication of the Economist "Big Mac" PPP survey. For some reason the magazine names the Philippines as having the most undervalued currency. China is actually the same, 57% undervalued. The process by which the US comes to tolerate a major trade partner adopting this policy, and the financial stress implications, are a Big Mac for thought.

JB

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CARTEL CAPITULATION WATCH

The DOW fell 17 to 10,188 in quiet pre-holiday trading. The DOG gained 2 to 1988.

GATA’s Mike Bolser:

Hi Bill:
The repo pool rose to day to $45.2 Billion after the Fed added $3.75 Billion in temporary repurchase agreements. The rd pool moving average line continues on a gentle up slope gradually increasing the support for the DOW.

For new readers, the Fed issues repos which then can be used to obtain cash through a collateral operation. The primary dealers than use that cash to enter the various futures markets (DOW and Bond) and implement what the Fed calls its "monetary policy".

These primary dealers, Merrill Lynch, UBS, Morgan Stanley, JP Morgan etc are the Fed's agents and they are compensated handsomely for doing what the Fed tells them to do. Permanent open market operations for example, involve the issuance (lending) of government securities that remain permanently in the market. They require a periodic payment of "interest" to the Fed. That payment is called a "coupon". When the Fed announces a "coupon pass" as they did this week, the primary dealers get to skip their otherwise required payment. It's a nice deal for them so they do exactly what the Fed wants, otherwise the coupon pass gravy train will stop coming to their door.

By supporting the DOW futures markets the Fed's agents can steer the much larger DOW upward or let it fall. Dan Norcini has opined and I agree with him, that the Fed may have allowed the DOW to dip recently to aide their bond market support. They accomplished this by driving some DOW players into the "safe" bonds as the DOW fell. It was a head fake DOW dip, never out of the Fed's control. But the bonds are now back on track well within their operating "channels".

The upper limit of the 30-year bond yield "channel" appears to be around 5.5%

http://ichart.yahoo.com/b?s=^TYX&d=c&k=c1&a=v&p=m50,m200,s&t=5d&l=off&z=m&q=c

While the lower limit sits about 4.8%

The reason I point this out is that we can gain insights to the Fed's rigging mechanisms by observing what they do when the yield gets near the Fed's pre set "channel" walls. We generally see Wall Street commentary, government reports and fedspeak events designed to help drive down the yield as the upper "wall" is approached. Of course nothing but silence is heard when the lower bond yield wall is near. Watch for this pattern as we move forward.
Mike

Houston’s Dan Norcini:

Bill:
Commitments of Traders reveals some significant changes took place this past week in regards to positioning by various players.

Let’s start with the funds – as you will recall, funds had been slowly increasing their shorts and dumping longs since the recent price top near $430 at the beginning of April. All told, since the Commitments report dated April 6 was released, thru today’s release, there has been a reduction from a net long position of 144,253 to the low reached last week of 27,513 net longs or a staggering transfer of some 116,740 long positions. That action took the price of gold nearly $60/ounce from its recent peak as it well should have with that amount of selling taking place.

By the way, let me pause and interject something here. From time to time I see analysis of Commitments data that translates the number of contracts held into number of ounces held. For example, if funds reduced their long positions by 1000 contracts, the commentary runs that they reduced their holdings by 100,000 ounces. As a trader I can tell you that such statements are meaningless. Traders look at the number of positions held when they are attempting to gain insight into markets. It is simple and sweet and requires no further math to obtain the desired picture detailing market action. Analysts love to muddy the waters with further math. Reminds me of the time when grain contracts were still denoted in numbers of bushels. A single contract of corn controls 5000 bushels. Whenever one wanted to buy some corn they had to give the order as, "Buy 5000 December corn at the market." Everyone got sick of the complications and continued need for calculators and finally the members voted to change the contract specifications to read as single contracts. Now, anyone who wants to buy 5000 bushels of corn has to simply say that they want to buy ONE December Corn at the market. Easy and sweet. Call me a prude but I do get perturbed at these guys who continue to pass off commentary on the gold market in millions of ounces instead of contracts. Position reporting limits are defined by the exchanges in contracts held, not millions of ounces, pounds of cattle, or bushels of soybeans. So if any of you whiz bang analysts are reading this, do yourself and your paid subscribers a favor and drop the pedantic scribbling and just give the number of contracts please. We will still be impressed with your analysis. There, enough of that. Now back to the fun.

I mentioned in my last week’s commentary that I felt we would have perhaps one more week of reductions in the fund long category and the commercial short category and that we would cement a bottom after that based on the ratio of fund longs to fund shorts. It appears that call was accurate. With today’s release showing the fund long/fund short ratio at 1.41, the lowest going back all the way to October 2002 when front month gold was trading near $310/ounce, it does seem to indicate that the fund long liquidation in gold ended this week. Unfortunately we will have to wait until next Friday’s release to gain some insight into what transpired this week since Wednesday’s spike upward and Thursday’s surge northward is not included in the Commitments Data. My guess is that we witnessed some fairly dramatic short covering on the part of the commodity funds and the small specs as well who unfortunately for them, added nearly 5,000 short contracts in the last week, all of them below $390 and many of which were no doubt down closer to the $380 region. Those positions were seriously underwater due to yesterday’s price action. That explains the violence of the price spike over the latter part of this week. Fear is a remarkable market mover and as a long term gold bull, it is nice to see FEAR in the eyes of the other guy after the beating gold has taken over the last 6 weeks.

In regards to the commercial action – they did indeed cover more of their shorts and the long commercial category added more new longs as well. Once again, as was the case last week and the week previous to that, the commercial category was responsible for all of the NET buying that took place thru Tuesday, May 25.

My gut tells me that we have now seen the low point in the number of commercial shorts for this episode in the gold market saga. I fully expect the commercial short category, known "affectionately" as the cartel, a.k.a., the goon squad; a.k.a., COT, to have commenced their price capping activity once again beginning yesterday, as they attempt to fight the upward move in gold and play out their usual delay and harassment strategy. What will now happen based on continued strength in gold is that further fund short covering will take place and the fund long category will begin to re-establish their longs with the cartel fighting gold all the way up. Funds are basically followers of moving averages when all is said and done and as those levels come into play and are breached to the upside, we will see them increase their longs and move further to eliminate their shorts widening the ratio back out to levels that are more within the norm.

All in all a terrific week for gold. It does seem that we have moved from the recent "Sell the Rally" mentality to a "Buy the Dip" mentality and that bodes well for gold in the next few weeks ahead. The rampant bearishness of the past few weeks has been vanquished. We now await the breach of $400 although some backing and filling might be necessary first.
Dan Norcini
dnorcini@earthlink.net

This can only be a positive for gold demand:

Individuals to directly buy, sell bullion in China
http://www.chinaview.cn 2004-05-28 16:43:31

BEIJING, May 28 ( Xinhuanet ) -- Chinese individual investors can buy and sell gold bullion beginning in June in Beijing and Shenzhen through the China Merchants Bank ( CMB ) , according to CMB sources Thursday.

Big news:

-U.S. miners launch bids for Wheaton, Iamgold

Thu May 27, 2004 10:14 PM ET

By Nicole Mordant

VANCOUVER, British Columbia, May 27 (Reuters) - Two Canadian mining firms due to merge next month received separate unsolicited takeover offers on Thursday from two U.S.-based miners looking to break up the planned marriage.

Idaho-based Coeur d'Alene Mines Corp. (CDE.N: Quote, Profile, Research) offered $1.7 billion (C$2.5 billion) in stock and cash to buy mid-sized gold producer Wheaton River Minerals Ltd. (WRM.TO: Quote, Profile, Research) (WHT.A: Quote, Profile, Research) , which agreed in March to an offer from rival Iamgold Corp. (IAG.A: Quote, Profile, Research) (IMG.TO: Quote, Profile, Research) to create one of the world's 10 biggest gold miners.

Separately, Denver-based Golden Star Resources Ltd. (GSS.A: Quote, Profile, Research) (GSC.TO: Quote, Profile, Research) launched an all-share bid worth about $884 million for Toronto-based Iamgold, a company with ambitions to expand its gold portfolio outside of West Africa.

In an unusual move, Golden Star and Coeur, the world's biggest silver producer, agreed that if they are successful, they will split the break-up fees from the Wheaton River/Iamgold deal. The net result of this would be that Coeur would pay Golden Star $26 million, according to Golden Star.

Coeur, in a letter sent to Wheaton River chairman and chief executive Ian Telfer, said that it was prepared to offer the equivalent of $3.28 per Wheaton River share (C$4.50) to acquire the Vancouver-based company -- a 14 percent premium to Wheaton River's closing stock price on Thursday.

Salman Partners analyst Haytham Hodaly said that the premium meant that Wheaton River shareholders would be better off under the Coeur offer than the earlier Iamgold bid. But he warned that the premium was small and could be easily erased in a single trading day.

"Investors are going to to have to look at the qualitative aspects as, on the quantitative aspect, (the Coeur offer) is not that much more attractive," Hodaly said.

Both Wheaton River and Iamgold declined to comment. Last week both said competing bids were unlikely.

Keen to elevate itself into the ranks of the major gold producers, Iamgold unveiled a $2.2 billion friendly all-equity bid for Vancouver-based Wheaton on March 30. However, as the share prices of both have dropped substantially since the announcement, the bid is now worth about $1.6 billion.

Wheaton River shareholders are due to vote on the Wheaton River-Iamgold combination on June 8. \\

Peter Bradford, Golden Star Resources CEO, was gracious enough to phone after his conference call today to explain the rationale for their attempt to take over Iamgold. The essence is it is a perfect fit for both and makes more sense for IAM to mesh with GSS than with Wheaton River. This comes from Iam’s major shareholders who would prefer Golden Star win the bidding for IAM. During the conference call, one of the institutions which owns 9% of Iamgold announced he was going to call Iamgold management and give his ardent support for the proposal.

Basically the match is good for both for the following:

*Iamgold is a more mature gold producer and has outstanding assets in the ground.
*Golden Star is an up and coming gold producer, yet one with better production expertise than Iamgold
*Both are focused on West Africa.
*If the merger goes through, it will result in an 800,000 ounce per year gold producer.
*The cash flow from both companies will allow the new firm to expand and go ahead with their plans without further dilution.

Golden Star would become one of the premier intermediate gold producers in the world. With the gold price going much higher in the years to come, it will mean windfall profits for the shareholders.

To listen to their conference call this morning, go to:
http://biz.yahoo.com/cc/7/43247.html

To combat the arbitrage selling, which buried the price today, Peter Bradford will be making the circuit to introduce money managers to the potential new firm. If this deal goes through, larger financial institutions will be able to purchase GSS because of the much greater capitalization. Thus, in the very short term the merger plan is a negative for the share price, but a big plus in the intermediate term.

An opinion on oil:

Bill,
The article by Sol Phala on the perfect storm is the exact conclusion that I come to over the last 2 months.

He states "It is not going to be the metals sector that is going to lead this commodity based bull market, but energy."

For those of your readers interested in the relevant research that proves this thesis - the Peak Oil phenomenon will be the main driver of this energy inflation. Its reality is upon us today. Most do not understand that Peak Oil ceased to be a theory in 1970 when the 1956 prediction by King Hubbert re the US 48 production peak was proved correct. Its application to the world reserves and production point to the year 2000-2008 as the world hydrocarbon production peak from which there is only terminal decline similar the US experience - only this time against the backdrop of soaring world demand on the back of the industrialization of Asia.

Those interested can visit the website of the association for the study of peak oil and gas at http://www.peakoil.net This is a professional association backed solidly by oil professionals and academics the world over. They have just held their conference in Berlin over the last week. I am told that audio and video interviews will be posted from this event on http://www.globalpublicmedia.com

Jim Puplava also has some great articles on this very subject as well.

http://www.financialsense.com/series3/part1.htm

Hope this is useful information for the readers.
Regds David

Just back from an enjoyable lunch with Mahendra and Nanik from Spain. Charles Pace and I then took them to the airport.

The Mahendra presentation and reception for him was most fun. There were 55 of us there with people coming from Switzerland, Spain, New Mexico, California, Arizona and Oklahoma to hear what Mahendra had to say. Some features of his presentation:

The essence of the outlook for this century has to do with nature, which will be a controlling factor for many decades to come. In that regard gold and oil will be of extreme importance in the years to come, leading to a grab for both by many nations. As we all know, via the Iraq adventure by the US, this grab has already begun. Some of Mahendra’s predictions:

*The best play of all is silver with the downside limited from here. The eventual upside? Pick a number - $48 per ounce to $98 per ounce. If silver can stay above $7.95 for 21 days, it will take off for the $12 area by year-end.

*Look for gold to continue to trade higher, maybe even making new highs before September 4th. From there on, gold and silver could really take off. In the coming years gold will rally to $1600 per ounce, then tank back to $1,000 which will be its long-term base area.

*Years from now, say 5 to 8, certain nations will nationalize their gold firms.

*The price of oil could go as high as $100 per barrel and will play a pivotal role as far as geopolitics and financial markets are concerned. The big run in oil will be over the next five years. After that, alternative energy sources will come into play which will affect the oil price.

*While he was bullish on the stock market for the very short-term (like this week), he is very bearish as this year wears on and for next year, looking for the DOW to eventually tank down to the 5,000 to 7,000 area. This will be significant as so many in the general public have their money in the stock market as compared to 1929 when few did.

*To try and make an extra 3 to 5 to 10% in the stock market at this point in time is not worth the risk. Those who are long the stock market should exit on rallies over the next few months.

*Bank stocks will be hit especially hard.

*The US housing market is in BIG trouble.

*South Africa will come under severe stress in 2008 and have major problems.

*Fiat money will collapse. Not just the dollar, but other currencies also. Mahendra related this as akin to what happened in Zimbabwe where the exchange rate with the US dollar used to be 8 to 1. It is now 100,000 to 1. Even those who once had the equivalent of $100,000 are poor, as it is only worth two to three hundred dollars today. This will precipitate an enormous appetite for gold.

*The exception for currencies will be the yen, which will maintain some independent strength, eventually going to 60 against the dollar.

* *There will be no major terrorist attacks in the US, perhaps some smaller ones. However, some time in August there will be a substantial one in Europe.

Mahendra says his predictions have been 80 to 85% accurate. The reason they are not more so are due to his own limitations as a human. He went on to say astrologers have a bad name today, just like doctors did 150 years ago. This will change in time.

Meanwhile, August gold traded $398 last evening, so he nailed that one almost to the penny. And coffee, which is one of his largest positions, shot up another 5.55 cents today to 85.50 cents.

Exploding coffee:

http://futures.tradingcharts.com/chart/CF/74

We all had a wonderful evening at Sipango and I can assure you Mahendra, who has a wonderful relaxed delivery, caught more than a few people’s attention. They will want to know what he has to say and will be much more focused on his insight of what is come in the financial market world, just like so many institutional money managers are doing already.

Almost forgot:

This took the cake to end the evening. As I mentioned earlier, Mahendra’s focus in on nature. Not too long before we were to leave the restaurant, a number of guests returned saying it was raining too hard to go outside. Mahendra got all excited and told me this confirms what he was saying tonight and that those in attendance who acted on what he had to say will certainly profit. I am sure he will say more about this.

Then, the rain stopped. However, as we walked across the street to go to another restaurant for dinner, the loudest thunder and lightening I have heard and seen in a long time erupted. It was wild, almost as if nature was saying to us that Mahendra is right. Not long thereafter, it began to pour again.

A special thanks goes out to my friend Charles Pace of Pace Securities Group who went out of his way the past three days to make sure Mahendra was taken care of properly. Charles, a most thoughtful host, has had a long term interest in the precious metals markets, attending the first Blanchard Conference in New Orleans – when Richard Russell and Bunker Hunt made presentations.

The HUI finally took a breather, settling back down 1.47 to 199.93. The XAU fell .66 to 89.81. In the HUI, Golden Star fell 34 cents to $4.97, while Iamgold gained 21 cents to $5.64.

The prospects for gold to move a good deal higher in the weeks to come are outstanding, so remember:

GATA BE IN IT TO WIN IT!

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A glint of chicanery in silver market?

Mike Blahnik
May 30, 2004MIKE0530

Is the silver market tarnished?

Hundreds of silver investors passionately believe that prices have been manipulated downward for years by a coalition of financial institutions, costing investors millions of dollars and creating a dangerous supply shortage that will end only with an astronomical surge in prices.

Nothing short of manipulation, they say, can explain the 33 percent plunge that took silver prices from a 15-year high of $8.22 an ounce in April to $5.52 this month.

Galvanized by an outspoken analyst who writes commentaries for a Minneapolis precious metals broker, Investment Rarities Inc., these investors -- who own coins, bullion, silver certificates, futures contracts, mining-company stocks and mutual funds -- have taken their complaints to market regulators.

The uproar grew so loud that the Commodity Futures Trading Commission has taken the unusual steps of addressing the allegations on its Web site and sharing its own market analysis.

Zitat

"We believe the allegations of manipulation in silver futures made by one analyst for so many years are based on false assumptions and faulty analysis,"

CFTC Market Oversight Director Michael Gorham said in a nine-page response to more than 500 letters sent to the CFTC.

Ted Butler, the silver-tongued analyst who caused the rain of letters, says he didn't expect the CFTC to say it had found any manipulation, but wishes it had revealed more about the trading activities of the commercial banks that frequently take large "short" positions in silver, betting on a price decline.

Still, he sees a silver lining in the CFTC's market analysis, which confirms that the use of silver continues to outpace new production.

Zitat

"They really gave a lot of information about silver being in a deficit and acknowledging that world inventories have been drawn down dramatically," Butler said. "This is a first. This is like a historical document, giving you confirmation that the government is saying kind of the same thing I'm saying."

Silver's supply/demand fundamentals have seemed to favor higher prices for several years, a fact Warren Buffett cited for purchasing more than 100 million ounces of the metal in 1997.

Supply is seemingly limited because after many years of stagnant prices, there has been little incentive for mining companies to explore for new ore bodies.

On the demand side, industrial uses of silver have continued to expand because of the metal's superior conductivity and other physical properties.

"If we had a much higher price, not only would the miners be looking for more silver, we'd also have users looking for substitutes and trying to minimize usage," Butler said.

So far, the annual imbalance between demand and new supply has been covered largely by government stockpiles worldwide. China is a big seller. The U.S. government, which once owned more than 5 billion ounces of silver, sold the last of it a few years ago and now must buy more than 10 million ounces each year for coin minting.

Unlike his conspiracy counterparts in the gold market, Butler doesn't contend that governments or central banks are willing accomplices in silver market manipulation.

In the silver market, big commercial banks at times sell large quantities of futures contracts as hedges for their customers (often silver miners who stand to lose money if the price falls) but also as speculative positions.

These big banks have more financial backing than the speculative buyers (usually hedge funds and individual investors), so they can amass huge short positions. Before the recent selloff, those short positions grew to be four times as large as the deliverable quantity of silver stored in New York Mercantile Exchange warehouses.

According to the manipulation allegations, the large commercial banks, which also function as market makers by actively buying and selling to create market liquidity, have the ability to engineer a slide in prices by simultaneously dropping their bids. The selling then cascades as hedge funds and other previous buyers sell their contracts to lock in gains or limit losses. At that point, the commercial shorts cover their positions by taking the other side of the panicked selling.

Zitat

"They know how to coordinate their buying and selling so that it goes against your logical sense of what should happen," Butler said. "They've never lost in the Comex silver arena in the 15 years I've been watching it. There's no way that these guys are that lucky and are never wrong."

Butler's allegations have brought him a wide following among individual investors. But his rantings prompted Pan American Silver Corp. Chairman Ross Beaty to call him "nuts" and label his commentaries as "drivel," and most precious metal mutual fund managers won't touch the topic with a 10-foot bullion bar. But Butler, his mettle tested by such criticism and the recent price drop (although prices have rebounded back above $6), remains committed to silver despite the rigging he believes exists.

Zitat

"When the manipulation ends -- and it has to at some point -- you know the price has to explode," Butler said.

Maybe. But investors should approach any market that falls 33 percent in a matter of weeks with extreme caution.

Mike Blahnik is at mblahnik@startribune.com

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Silver prices seen to stay firm this year

BY SANDHYA D'MELLO

29 May 2004

DUBAI - Bullion traders in UAE expect silver prices to stay firm this year. Traders say shortage in world market and rise in demand has made silver prices move up in international and local markets.

Silver prices in Dubai are currently traded at Dh740 per kilo. Last month the prices in local market had moved up to Dh1050 per kilo and has now receded back to a range of Dh700-750 per kilo.

Shekhar Patni, owner, Jewel Trading LLC said: "After having seen a peak in silver prices of Dhs1050 in recent months, the market has come back to a level of Dhs 700-750 per kilo and are expected to remain firm at that level. The factors which have aided in rise in silver prices are speculation, shortage of physical commodity in world market and rise in demand from jewellery and industrial consumption in large consuming markets such as India." Internationally, prices are currently quoted at $6.15 per ounce against $5.80 per ounce same time last year. Last month the prices had soared to a level of $8.40 per ounce. Traders predict that international price may hover in range $6-7 per ounce this year. Rise in global prices can be attributed to world wide demand for silver jewellery, silver ware and industrial uses like electronics and photography.

Recently, research firm GFMS Ltd commented that investors in international market had sold heavily in 2003. However, active buying by the commodity funds in late 2003 had created a short term bubble in prices which led to a price rise of $ 8.49 per ounce in April 2004. The prices crashed around December 2003 to $ 5.50 per ounce.

Statistics from GFMS reveal that silver supply moved up 1.1 per cent last year to 880.2 million ounces. The global production slipped by 0.1 per cent to 595.6 million ounces.