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OUTSIDE MARKET DEVELOPMENTS: While the metals markets will be presented with a series of potentially important US economic readings this morning, it is possible that ongoing weakness in the US Dollar will only serve to partially countervail or offset the typical bearish influence of the soft US numbers. On the other hand, given the weekend G20 meeting, slightly higher US equity prices this morning and an impending US FOMC meeting later this week, it is possible that the flight to quality crowd in the gold and silver trade will be somewhat fearful of upcoming developments. In fact, given that the strength in the equity markets clearly extends strength from last week it is possible that equity market action will siphon off some interest from gold and silver, especially since the metals are also being presented with noted weakness in oil prices this morning. Apparently the gold and silver markets aren’t seeing much support from the ongoing concerns being expressed by Chinese officials regarding the massive amounts of Chinese capital sitting in US Treasury instruments.
SILVER MARKET FUNDAMENTALS: Talk about a sliding Dollar and record Gold ETF holdings seems to be providing the silver market with a minimal amount of outside market support. However, the direction of the gold market remains a paramount influence on silver prices. With gold prices seeing some slight long liquidation pressure again this morning off the ebbing of financial sector anxiety, it is not surprising to see silver prices settling back in the early going today. In fact, the silver market doesn’t seem to care about a slight supply side threat from a Mexican labor mining dispute and that clearly suggests that silver prices are tracking financial sector issues instead of classic physical commodity market factors. While a number of bulls are hopeful that the markets will be able to transition from flight to quality views, to an inflationary view, the mid ground between those two arguments could bring about a very choppy and two sided market. At least in the early going today, the May silver contract seemed to be content to waffle around both sides of the even number level of $13.00.
