Morning Silver Market Report 12/26

Compiled 12/26/12 6:00 AM (CT)

Statistics: London Gold Fix $1,662.50 N.A. LME Copper Stocks N.A. tons at 317,350 tons

SILVER MARKET FUNDAMENTALS: (6:00 AM CT) While silver is showing some minor positive action in the early post holiday trade, it might face adversity from indications of a weaker US equity market trade and the potential for adverse currency market activity. Silver has recently taken its direction from gold, and some traders suggest that it is the result of gold and silver increasing heir safe-haven sensitivity. In other words, fears of significant anxiety off the approach of the US fiscal cliff seems to have given rise to some flight-to-quality bidding in the silver market. However, March silver hasn't been able to forge much in the way of a recovery move in the wake of some rather significant early December losses, and some traders argue that the recent bounce was year-end profit-taking by shorts who had been in the market from the February, October and late November highs. Traders will be watching silver this morning its reaction to US scheduled economic news, as that will give some traders confirmation on the focus of the trade. Comex silver stocks were 146.880 million ounces, down 24,482. Silver stocks have increased 13 of the last 20 days.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) Chinese equities started out softer, but prices recovered to finish in positive ground, mostly because of talk about Chinese government plans to spread development into rural areas. Indian shares were modestly higher, supposedly because of looming option expirations. European markets were subdued because of continuing holidays, but US fiscal cliff fears were reportedly limiting sentiment in a number of markets. In the US trade action today, the economic report slate will show a couple private weekly chain store sales reports, a Case-Shiller Home Price survey, and a Richmond Fed Business Activity Index report. There are reports that the President will return from Hawaii this week in an effort to work out a deal on the fiscal cliff.

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