Morning Silver Market Report 11/21

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November 22, 2012 2:33 AM EST

Statistics: London Gold Fix $1,726.75 -$7.25 LME Copper Stocks 253,875 tons +175 tons

SILVER MARKET FUNDAMENTALS: (6:00 AM CT) December silver has seen a lower low in the early Wednesday US action, as prices were negatively impacted in the wake of more violence in the Middle East. However, silver showed some buoyancy off favorable action in Chinese equities and from signs that the Germans called for an expansion of the ESF. However, silver and other physical commodity markets were obviously tripped up by comments from the US Fed Chairman yesterday, that the US Fed lacked the tools to effectively cushion the US economy from a trip over the fiscal cliff. Silver might have been undermined by a cut in a silver price forecast from a European bank analyst overnight, but silver is probably set to take most of its direction from big picture macro economic developments and not from minor changes in silver supply and demand fundamentals. Silver seems as if it is destined to remain focused on demand prospects, and therefore silver probably needs positive leadership from US equities and from the US economic report front. Comex Silver Stocks were 142.332 million ounces down 274,550 ounces. Silver stocks have declined 11 of the last 20 days.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) After some initial weakness, Chinese equity markets righted the ship to log a mostly positive trading session. The Hong Kong market managed to reach a 2 month high today, while the Shanghai composite managed to reject its lowest trade since the beginning of 2009 and then managed a return to positive territory. European shares clawed out minor gains early on, but the markets were a little surprised with suggestions from Germany's Merkel that the ESM Stability fund might need to be expanded. Apparently hope for aid payments to Greece remains in place but unsettled and that has left sentiment in the Euro zone mostly balanced. Early US equity market action was mixed, as the markets remain somewhat off balance after comments from the Fed yesterday afternoon that suggested they lacked the tools to deal with a fall over the fiscal cliff. Today the US will release initial and ongoing claims, with claims expected to rise slightly. Also due out today are a weekly mortgage application survey, a Bloomberg Comfort Index, a Michigan Consumer sentiment report, leading indicators and some weekly energy statistics.

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*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.

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