Silver has seen soe increases in the COTR reports – MKS

( – We commence trade in London for the week with almost the excitement of the dreary winter weather outside the window. Topics this week are:

A) falling of Snow (USD)
B) the purchasing of a New Winter Jacket (SILVER)
C) Ski crash helmet. (Further demand stability)

After the metals gains last week and the outlook for continued falling of the USD (Our SNOW), things come to a sideways standstill with COTR reports indicating that the speculative net long gold positions have been less of a mover and shaker in the last month. In other words the spec longs out there don´t seem to be changing for what analysts and big short term bulls need for the next immediate push higher, IE Fresh longs. Well not just yet at least. The USD (our SNOW) is falling, however it is falling at a pace that is hardly what one needs to cover those long ski runs and pistes with deep powder, it is a trickle lower and the gains for traders will have to be patient like all those winter holiday makers out there dressed with up with skis and poles with no where to go but the ski lodge bar for a nice Vin Chaud.

Our New Winter Jacket (SILVER) has seen some increases in the COTR reports confirmed for nearly 2 months straight a non-commercial long position increasing up around 1500 contracts to 39000 odd. Our new jacket seems to be outperforming gold slightly, showing its new weather worthiness staying above the 14.00 mark with talks out there that 18.00 targets in mid 2007 being attainable. With December a historically volatile month for gold and silver we do believe that any pullbacks should be bought, the dealers still happy to buy dips.

The current demand for jewelry gold at these levels is still appearant but above the 650 area it might slow. However our Ski Crash Helmet comes in the form of sector industry demand for other metals and news that China´s gold consumption is expected to rise to 17 % for 2006 due to demand stemming from investment. With a total of 350 metric tonnes being used this year even at high prices. (Bloomberg) Next factor to mention is the growing popularity of ETFs in gold , investment banks predicting huge increases in exchange traded assets under management for the next 10 years.

Trading was limited on the top side to a high of 646.50 in the gold and was oscillating between the 645.00-646.50 area till well after the Pm London fix at 646.00. Traders still getting used to the new NYMEX/GLOBEX side by side outcry/electronic trading introduced today. Oil was seeing some intraday selling due to a Meteor forecast changing over the last fortnight from being below average temperatures, to changing to above average temperatures for the US til mid December. This in turn transferred some selling pressure to the gold hitting a low of 641.00 offered. The Dip was short lived and some fund buying rebounded us in minutes to 645.00, further strength added by our XAG New Winter Jackets resilience not budging under 13.98, a 2 cent dip for a 6 dollar fall in gold. Silver closing on the highs at 14.06. Gold closing steady at 645.50/646.00 Happy skiing.

MKS Gold & Silver, Daily Report


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Marion Mueller

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