Thus, if one were to simply follow the technical position of silver prices, this bout of fresh movement in silver is truly a very bullish sign. The rally to a level of $5.70 per ounce is perhaps the closest thing to a hint of a bull run just around the corner. More so since in recent times international silver prices have managed to rally upto the $5.46 level, but have failed to sustain these levels. In a technical term, now it has broken the falling trendline which is supposed to be a positive indicator. In fact, the technical indicators suggest that there are chances that the price could very well cross itsFebruary's high of $7.60 per ounce.

Stocks at New York's Comex, although an imperfect guide to the state of market supply in the short-run (as they represent only a fraction of available metal wordwide), are also in favour of a price rise. Stocks fell to a new low of 81.57 million ounces on Wednesday. During the first quarter of 1998, the average stock stood at 87 million. Stocks are on a continuous decline since the last quarter of 1994 when the average stock was at 259 million ounces.

The rally has also brought Warren Buffett's exit strategy into discussion among the market circles. Reports suggest that the current rally will be used as an exit opportunity by Warren Buffett, who bought almost 130 million ounces or 15 per cent of the annual global supply during last year.

Officially, there has been no news on this front though, a complete exit by Warren Buffett is completely ruled out, at least in the next 6-12 months. This is mainly because if a complete exit takes place, the prices are unlikely tobear the load of such a large quantity and would result in a sharp fall in prices which would in turn mean a loss for Warren Buffett. Since Warren Buffett has the holding capacity and the fundamentals are in his favour, expectations of a complete exit at the current price or at a price marginally higher than the current level is not fair.

On the other hand, holding on to the investments would make much more sense for the man simply because the long-term demand-supply factors are still positive. Consider this: According to the World Silver Survey 1998, for the ninth consecutive year, the conventional supply failed to keep pace with the fabrication demand. Silver demand exceeded supply from mine production and the recycling of scrap by 198 million ounces in 1997. The fabrication demand during 1997 stood at 863.4 million ounce, up by 6.06 per cent from previous year's 814 million ounce.

The increase has been on account of developments in the industrialised world, in contrast to 1996 when growth in offtakewas mainly accounted for by silver jewellery and silverware in two countries, Indian and Mexico. The fabrication demand in the current year is expected to maintain this rate of growth.

Perhaps, for an uptrend in the international prices, what is required is a slight push from the Indian sub-continent which depends on the monsoon, given that this is an agrarian economy. On this front, fortunately for silver investors, till date the monsoon has been good in India and is expected to push up the demand. In fact, in the process, the rising prices may also attract speculative buying. As such, overall the medium-term outlook for silver and silver investors appears to have got its gleam back.