SILVER

At least in the early action today, silver appears to be under ongoing pressure, with the March silver contract falling to the lowest level since October 20th. In addition to fears that soaring Italian debt yields will ultimate sink the Italian government and economy, the silver trade is also disappointed by the lack of easing promises from the FOMC yesterday. While the Chinese seemed to softer their monetary stance overnight in forward economic forecasts, the trade apparently needs to see something mechanical from the PBOC to see attitudes toward silver and other physical commodities improve. While the US economic report slate is relatively thin today, the silver trade might see strong demand for the US 30 bond auction as just another confirmation that anxiety toward the Euro zone remains very high. It is possible that silver is also feeling some spillover pressure from negative analyst views toward gold over the last 24 hours. About the most positive factor for silver this morning, is the slightly higher early action in US equities, but despite a technically oversold condition, March silver has remained under noted pressure this morning. Some traders suggest that even numbers on the charts at $30.00 might provide some limited support, but unless the attitude toward Europe improves, the bear camp probably feels pretty good about their positioning. Comex Silver Stocks were 111.047 million ounces up 84,399 ounces. Comex Silver Stocks are now at the highest levels in a year. Comex Silver Stocks are at the highest levels since 10/25/2010. Stocks have increased 11 of the last 20 days. Comex Silver stocks are at their highest levels in the past 10. The path of least resistance is pointing downward and our only reservation about pressing the short side of silver is the fact that March silver this week has already seen a high to low slide of roughly $2.02 an ounce. Given the track of fundamental sentiment, we suspect that silver prices are set to erode consistently and that the March silver contract will see a new trading range defined by $30.00 on the upside and by $28.80 on the downside. In fact, with the last COT positioning report, pegging the Non commercial and non reportable net long to be above 27,000 contracts, there should be more stop loss selling action ahead.