Call of the auction: 'High, O Silver'; a Tulsa 'sleeper'

Uncle Sam gets to sing "Silver Bells" this week when The Great Silver Sale gets under way. Some 1.25 million ounces of the metal will be sold in Washington Wednesday by the General Services Administration (GSA) as part of a program by the Reagan administration to unload some US inventories that are not considered essential. All told, the government expects to sell 46.5 million ounces of the precious metal this fiscal year.

The Hunt brothers may not be in on the action Wednesday, but most traders will be watching anyway.

Many analysts say the sale won't dull the price, which is resting at about $9 .50 a troy ounce. Rather, notes Charles Stahl, publisher of Green's Commodity Market Comments, an investment letter, public auctions "are normally stimulative for the price. The public sees the auction-well bid and then the public starts buying futures." "Whatever the price is on Wednesday," Mr. Stahl predicts, "I expect on every auction thereafter the price will be higher." The GSA has tentative plans to auction off silver every week.

Ronald Shorr, a precious-metals analyst at Bear, Stearns & Co., says "The Sale" should have little effect on prices. But he's hedging his bets on the idea that any near-term dip to $8 an ounce would cause the government to back off from its auctions until the price rose again. He says that over the longer term, as the 139 million-ounce government inventory is unloaded, the outlook for silver will become more bullish. Mr. Shorr also predicts the price will rise as interest rates fall. When interest rates are high, investors often steer their funds into such relatively risk-free places as money market funds or Treasury bills. Furthermore, tensions in such places as Poland, Afghanistan, and the Middle east will continue to make investors anxious -- usually a good sign for gold and silver.

Bette Raptopoulos, a precious-metals analyst with Bache Halsey Stuart Shields Inc., is not so certain, however. She says the future for silver is very "nebulous." Until recently, she comments, the silver markets have shown no discernible trend. Only with the instability in the Middle East have precious-metals prices firmed up.

Mr. Stahl, the bullish investment letter writer, says he expects silver to be at $14.50 in a few months and then move above $16 an ounce. He predicts a 10 percent increase in consumption and cites a big demand by the Los Angeles Olympic Organizing Committee. It needs 14 million ounces of silver for Over the past decade, theh gold-to-silver ratio has been 32 to 1. With the decline in silver prices, that ratio widened to 50 to 1 and stands at 48 to 1.

Ms. Raptopoulos notes that the silver markets should also be affected by the closing of Bunker Hill's mine in Idaho, which produces 10 million ounces of silver per year. But she concedes that this shortfall will be taken up by the GSA sales.

Of course, there is no guarantee silver prices will rise. The Hunt brothers, who nearly cornered the market in January of 1980, found that out. After rising to nerly $50 an ounce, the price fell to $10.80 by April. So far this year it has been depressed, falling to less than $10 a troy ounce in June. This has prompted some retailers, such as Tiffany's, to mark down their silver prices between 33 and 50 percent.

He scored a Homer . . . On Oct. 22, Sotheby Parke Bernet will auction off a Winslow Homer painting that will culminate a true rags-to-riches story. About 25 years ago one William Roehrick, vacationing in Tulsa, Okla., discovered a small oil painting with the initials "W. H." on it in a small antiques store; " 1874, East Hampton, L.I." was on it, too. Mr. Roehrick, who was a young actor, bargained the dealer down to $35, the amount of money he had in his pocket. The dealer kept the picture frame, telling Roehrick it was "worth the initial asking price alone!" Roehrick knew better, recognizing the works as a Homer.

Sometime in the late 1960s he sold his painting for an undisclosed amount of money to an anonymous private collector whose estate has now put it up for auction. The house, Sotheby's, is estimating it will be gaveled down at between

Middle East tensions and profit taking slowed the market's rebound last week, but stocks still posted a gain. For the week, the Dow Jones industrial average picked up another 12.27 points, closing at 873.00. The Dow has gained about 60 points in the past two weeks.

Merger candidates provided most of the excitement. Santa Fe International was actively traded and up about $17 a share after the Kuwaiti government said it would pay $51 a share, or $2.5 billion, for the oil driller. Dean Witter Reynolds, the object of a $607 million cash and stock merger with Sears, Roebuck , was also sharply higher, tacking on 13 1/2 points.