Further, there is almost no inventory in Zurich, the main world storage point. Users are starting to stockpile, since they can't rely on warehouse stock. This makes the shortfall worse and will cause more buyers than sellers. Thus the course of least resistance for the price is to rise.

Readers of Leon on Sunday have made money. As others start jumping aboard, the rise will become a self-feeding mechanism.

Japanese companies are starting to hoard palladium and that is why I am happy with our position.

But you must use trailing stops. Each time it moves up, move your stop up. The palladium bull market is likely to end in a frenzy as more and more climb on board and drive it too high. By moving your stop up, you never have to close the position as the stop will sell it for you. And you will not give back your profit as the stop saved it.

Awaiting a silver lining QUESTION: ''You wrote that you bought silver contracts, one October and one December. How confident are you of silver's rise?'' Answer: Silver has made four failed attempts to rise in the last year. On technical charts it looks terrible. But for four years consumption has exceeded supply, so it must rise sometime. The question is when.

If the US is recovering economically, it is certain to rise. But I am not convinced the US recession is over.I am happy with October and December silver contracts, but believe there is risk.

However, there are only 150 million ounces of available supply which is less than a year's use. When users see the short supply they generally buy more than they need, just to be safe, so the shortage feeds on itself. Thus, the course of least resistancefor the price is up, since there are more buyers than sellers.

Platinum equation QUESTION: ''You suggested platinum and said you had bought an October 93 contract. How sure are you that platinum will rise?'' Answer: I had to make 100 calculations. For example: Production of catalyst equipped autos is rising in Mexico, South Korea, Spain and Italy but decreasing in Germany and California, which now has tougher requirements.

The catalyst requirement has now spread to diesel as well as petrol. The US used more in trucks and less in autos last year.

The new clean air law in the US requires much more platinum catalysts for cleaner gasoline refining.

Demand is down for nitric acid and glass production.

Russian supply is way down because they haven't any roubles to pay the miners.

Jewellery manufacturers in Hongkong have increased by 8.5 per cent export of platinum wedding rings and jewellery to Japan and worldwide.

Demand has increased greatly for silicon moulds for making plastic. The silicones absorb the platinum and it is not recoverable.

South African production is low because Impala postponed additional mining capacity. Lonrho has had a lack of cash to expand its three mines. Impala milled 2.4 million tonnes less than expected.

I guesstimate there should be 25 per cent more buying in 1993 than selling. I feel comfortable holding an October 93 contract.

All that glitters is gold QUESTION: What is the outlook for gold? Answer: My magic Pisa numbers say it will hit US$363 (HK$2,830), then retreat to $278 before it starts its big move to $2000 in 1994.

But I think Bob Prechter, (The Elliot Wave Theorist newsletter), is right. He says: ''Even though 1980 saw a top in precious metals and a bottom in stocks and bonds, these markets did not turn in the same month. What happened then was a signal that something big was happening. This same phenomena is likely to happen in 1993-1994.

Stocks and bonds may fall precipitously in 1993, and gold is likely to fall with them into a final bottom in a crunching across-the-board deflation. Then for five years, starting in late 1993 or 1994, gold should rise dramatically and stocks and bonds fall.

Buy gold mine stocks that are paying a dividend now, hold them through thick and thin, and then make a fortune when gold starts up in 1994 or even late this year.

Speculating with cash THE major determinant of currency values, or at least prices, are relative external account balances, relative real interest rates and relative inflation rates. A new factor has been added: speculation.

Foreign exchange is the world's largest investment field and at the same time has the world's lowest entry barrier. An Italian or American or anyone can invest in foreign exchange by buying, for example, a 50 Swiss franc travellers cheque.

You can invest in this largest and least regulated of all markets in several ways, including interest bearing deposits in safe banks.

There are times when cash is king. While most people have made these on a monthly basis and rolled over each month, now that interest rates are falling, it is better to deposit for a year to lock in today's higher interest rates.

The best currencies are the mark, guilder, Belgian franc, French franc and Japanese yen. The Swiss franc is good for safety, but is paying lower interest than the French franc so has lost some appeal.

Leon Richardson is an investor and well-known financial commentator