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THE REAPER
P. O. Box 84901, Phoenix, Arizona
(October 9, 1997) METALS: Silver has performed nicely. Big Middle East buyers are accumulating silver. Physical silver stocks are at a 12-year low. Silver bullion supplies have fallen by 540 million ounces since the end of 1990. Demand for physical silver is increasing for fabrication purposes. Technically a strong close by December silver above $5.30 should accelerate the uptrend. Support is $4.80-$5.00. Gold is rallying sympathetically with silver. Gold is also rallying on concerns about conflict in the Middle East and the Asian currency crisis. Platinum and palladium prices remain volatile but in uptrends due to uncertainty about future availability from Russia. Supplies of platinum and palladium out of Russia have shrunk considerably since the start of the year. Global demand for platinum could exceed supply by 200,000 ounces this year. In copper, there is still heavy trade selling on rallies. Copper warehouse stocks on the COMEX and LME are the highest since January 1996. Asian copper demand is soft. Little trade buying exists. China is waiting for copper to bottom before accumulating it. China's needs approach 300,000 tons for 1998.
RECOMMENDATION–Investors who purchased December 1997 gold and silver call options–hold, but take partial profits, preferably on strength. Investors who purchased core holdings of gold and silver coins and mining stocks on weakness–hold. Only take partial profits in the mining stocks on strength. Futures investors profitably long December gold use $319.00 open protective stops. Take partial profits on strength. Futures investors profitably long December silver use $4.77 open protective stops. Take partial profits on strength. Futures investors profitably long October platinum take profits.
R. E. McMaster, Jr.
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