Morning Silver Market Report 12/27

Compiled 12/27/12 6:00 AM (CT)

Statistics: London Gold Fix $1,655.25, -$7.25. LME Copper Stocks up 650 tons, and are now at 318,000 tons

SILVER MARKET FUNDAMENTALS: (6:00 AM CT) March silver has been consolidating in a fairly tight trading range this week but is showing little inclination to recover more than a modest portion of the more than $4.00 downdraft earlier this month. The fiscal cliff situation continues to hang over the market, which has been unable to sustain any rally since rebounding from 4-month lows late last week. At least in yesterday's trading session, silver seemed to favor its physical commodity market status. It has taken some direction from gold recently, but its return to safe haven status is far from complete. With the end of 2012 coming up next week, silver is vulnerable to extensive short-covering through the rest of this week. Well-received US data this morning would likely give March silver a further boost, but similar to gold, positive news out of Washington would provide the best chance of lifting prices clear of the recent trading range. Comex Silver Stocks were 147.096 million ounces up 216,675. Stocks have increased 14 of the last 20 days.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) Chinese equities were generally lower during overnight trading, with the Shanghai A Share Index down 0.60%, as China's housing ministry was expected to keep property curbs in place during 2013. Japanese share prices remain fairly strong, with the Nikkei 225 reaching a new 21-month high due to the extended weakness of the Yen. European stock markets are posting mixed results this morning, with Italian shares up more than 0.50% as their election season swings into high gear after the Christmas holiday. US fiscal cliff fears continue to impact sentiment in a number of markets. In US trading action today, the markets will see Initial and Ongoing Jobless Claims, Consumer Confidence and a new home sales release. While the main focus might be on the Initial Claims headline figure, the most important result of the day might be the Consumer Confidence report, as that effectively kicks off the cycle of US reports for the month of December.

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