SILVER

While silver might garner some support from an overnight silver price forecast that called for prices to return to $32.50, a pattern of noted builds in silver exchange stocks could be poised to undermine the market. In fact, Comex Silver Stocks yesterday afternoon were placed at 121.1 million ounces for another noted rise of 2,019,191 ounces. Comex Silver Stocks are now at the highest levels since April 2nd of 2009. Silver stocks have increased in 16 of the last 20 days. However, silver hasn't paid that much attention recently to classic physical supply issues, as the trade instead seems to be more concerned with the ebb and flow of demand prospects. At times, silver has attempted to track tightly with gold and energy prices, but in general silver has been mostly faithful to a classic physical commodity market focus and that probably means it will generally track with US equities this morning. In fact, silver also seems to have strengthened its correlation with copper prices this week, but unfortunately for the silver bulls, copper prices have had a difficult week. In looking ahead, the silver bulls hope that US payrolls are strong enough today, to temporarily tamp down Euro zone debt and slowing concerns. With a pattern of lower highs on the charts this week, the bear camp would seem to enter the Friday morning trade with a slight technical edge. With news that a major aluminum producer was reducing capacity by 12%, it is possible that silver prices will see an outside market drag from copper and industrial metals markets. However, with gold and platinum starting out positive this morning and the US numbers expected to be at least temporarily supportive of silver prices, there might be a window of strength in silver prices this morning. On the other hand, we would suggest that aggressive traders consider selling March silver on a rally to $29.60, looking for a slide down to $28.55 early next week.