SILVER

At least to start today, March silver is outperforming gold and to extend that performance probably requires ongoing gains in US equities and perhaps even something positive from the US scheduled data front. In fact, with silver and copper managing higher initial trade action today, that would seem to distinguish the metals complex into precious and industrial metals components. As in the gold market, there are fears that the year end will see some investment money shifted out of silver, as managers move money to what they feel will be more lucrative instruments. It is also possible that some flight to quality investors in silver have become disenchanted as a result of 2011 weakness in silver prices, especially in the face of distinct flight to quality events. In other words, some silver investors are looking for a hedge against disaster and silver has largely shifted into a physical commodity market in need of better times and stronger growth. In short, silver is likely to track closely with equities and the silver trade is likely to take a lot of direction from a very active flow of US scheduled data this morning. The bulls have to hope that one or two US numbers is strong enough, to at least partially rekindle economic optimism. Comex Silver Stocks were 112.847 million ounces down 49,456 ounces. Stocks have increased 12 of the last 20 days. The silver market should have fairly solid support just under the market at $29.24 and then again down at $29.01. We get the sense that the silver market has to see very positive scheduled data this morning just to claw out minor gains on the charts today. In the event that any of the key US numbers are patently weak, that could throw silver back into sync with gold and platinum. To shift the bull camp into clear cut control probably requires a rise back above $29.63 in the March contract in the wake of the 7:30 US numbers.