OUTSIDE MARKET DEVELOPMENTS: With a number of equity market measures seemingly poised to forge more new highs for the year again this morning, favorable OECD economic forecasts and news of increased Chinese bank lending activity overnight, it would appear that a world recovery view is still being embraced by most markets. With the addition of more new lows in the Dollar this morning, the bull camp in gold and silver would seem to have plenty of arguments in their camp. It would not seem like classic inflation arguments were a primary bull theme this week, but some bulls might latch onto the inflation threat that was fomented by an ECB official overnight. Apparently an ECB official suggested that raising interest rates can’t wait until after inflation rears its head and that seems to keep the inflation beat alive in the absence of classic inflation signals. While the markets will be presented with US Import/Export prices and a US Wholesale trade figure this morning, the most critical economic report for the markets today might be the Michigan Consumer sentiment report.
SILVER MARKET FUNDAMENTALS: With December silver forging another somewhat impressive range up extension this morning, one could discount the fact that silver prices, from the prior session’s lows, have already managed a huge bounce of 83 cents an ounce. Like the gold trade, many silver traders doubt that the silver market is garnering that much of its recent buying interest off the news of a slight tightening of silver supply. In fact, the silver output decline noted by the United States Geological Survey overnight was many months old and the precious metals markets recently haven’t been that interested in classic physical supply side stories. Therefore, the silver market is likely to remain focused on the fresh new low pattern in the Dollar, positive global equity market action and generally up beat macro economic expectations.
