SILVER

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GENERAL OVERVIEW OF SILVER MARKET

ISSUE DATE:  JUNE 1, 2006

Silver made our target 1 in the previous release, the IC1/M1 junction, or 1280 on May 31. The fact that after reaching 1280 on the day, price quickly fell through IC2, gave us a very bearish signal. Normally the target 1 area should hold price at least on the day. The signal is that silver is likely to break LEC somewhere along its length not later than July 1. Currently, Silver may be able to rally above LEC and get to target 1. If it does the likely break area would be as indicated, 3-7 days after target 1.

On the other hand, if silver can stay above LEC past target 1, expect a very strong rally that would likely take price to just above 1800 in the last week of July — a big ask, to be sure, but remember how fast silver has been moving over the past few months. One way or the other, LEC is the dividing line between the above scenarios.