SILVER MARKET FUNDAMENTALS: With a fresh lower low for the move this morning and weakness being see in gold, the bear camp in silver looks to start the session today with more arguments than the bull camp. Even a 500,000 ounce decline in silver exchange stocks looks to be fully discounted today, as a rise in stock prices seems to hint at rise in classic risk appetites again and that in turn might pull some money away from the silver market. Not surprisingly, the silver market isn’t getting much in the way of spillover support from strength in the copper market early today perhaps because the overt weakness in gold and platinum prices this morning is so definitive. One might have expected the silver market to garner some support from the strength in equity prices this morning but it could take a more definitive optimism toward the economy and even higher equity prices to see the physical commodity buying interests return to the silver trade. For the time being, one gets the sense that flight to quality liquidation pressure is the key feature of the silver trade and with a lack of first tier US economic reports due out for most of this week, it would seem like the safe haven angle is being shifted to a back burner.
OUTSIDE MARKET DEVELOPMENTS: With the only scheduled data point out of the US today, coming in the form of a Wholesale trade reading, it would seem like the focus of the precious metals markets will be partially focused on a slight up tick in global risk appetites. Not surprisingly a slide in the US Dollar is being mostly ignored by the metals markets this morning, and therefore it could take a slide and close below the 88.00 level in the March Dollar index before the metals trade gives any credence to the overall action in the Dollar. It also wouldn’t seem like firmer equity market action this morning is providing any support to the gold and silver markets this morning and that seems to extend a recent pattern of almost no direct correlation at all between precious metals and stock prices. In short, flight to quality and safe haven issues seem to have drifted onto the back burner and with Citi Group supposedly posting a profit for the first two months of 2009, it is possible that the market will attempt to tamp down the flight to quality angle even further. Just to add to the potentially negative bias today, the Chairman of the US Federal Reserve is expected to speak today and his recent dialogue has lent support to equities and has seemingly undermined the precious metals.