SILVER

A couple of fundamental factors that may help silver over gold are 1) the fact that India's new budget calls for an elimination of the import duties for silver as opposed to a doubling of the duties for gold and improving economic outlook should improve the industrial demand for silver. But aside from that, silver is taking most of its cues from its value as a junior precious metal, as it was mostly a follower of gold last week, trading lower on good economic news as traders bailed out of their flight to safety positions. After the steep selloff last week, silver looks less vulnerable to additional selling this week unless there is a surge in economic optimism. The Commitments of Traders Futures and Options report as of March 13th showed non-commercial traders were net long 26,538 contracts, a decrease of 1,278 contracts. Non-commercial traders were actually net buyers of 1,228 contracts, leaving the estimated total spec position (non-commercial and nonreportable traders combined) holding a net long position of 41,391 contracts, a decrease of only 50 contracts. However, because silver's big break last week came on Wednesday, a day later than gold's and a day after the COT data was measured, the spec position likely declined more. Comex silver stocks were 132.231 million ounces, up 17,211. This was their highest level since October 21, 2008. May silver is consolidating at the bottom of last week's range, which typically means continuation, so we would not be surprised to see the market make another move towards last week's lows. Initial support this morning comes in at $31.95, with a major retracement objective of $30.90.