Here at silver prices we have been observing silvers behaviour at a micro level and are really pleased with what we see. Patients are not our strong point as we have said before but we have managed to sit on our hands during this pull back.

From the chart we can see that the 200-Day Moving Average has not been significantly penetrated and silver has managed a very nice bounce to higher ground. We try not to be overly emotional about such a small move in our favour but GO, SILVER GO! There that feels a lot better.

The downside, although choppy is now limited and the upside potential could go ballistic, so we are holding on to the stocks that we own and are searching for new faces. We do not own many stocks and we are not in favour of the “buy a 100 stocks at a 10 cents philosophy” in the hope that some will strike it big time rich.

Precious metals are becoming harder to find despite the advances in technology. So those silver mining stocks with one foot on the reserves we believe will do very well.

Watch out for the negotiations taking place between Silver Wheaton and Gold Corp. We are of the opinion, despite some shareholders objections that the takeover of Glamis will go ahead. This opens the way for Silver Wheaton to negotiate itself into a very strong position indeed with the additional silver that Glamis will bring to the party. They have 180 days to thrash out a deal so don’t expect anything too soon. However, to add even more silver resources to your reserves at advantageous silver prices strikes us as a golden opportunity. Consider also that Silver Wheaton is not a labour intensive operation requiring skills that are in short supply, no; they manage with about a staff of about seven.

Good luck and stay calm.

28 September 2006