SILVER

Silver has generally followed in gold's footprints this week but silver doesn't seem to be garnering as much classic flight to quality buying as gold. In fact, while gold is markedly above last week's lows and is approaching the June highs into the early Wednesday morning action, silver prices have forged a less impressive recovery attempt and the July silver contract this morning still sits roughly 94 cents an ounce below its June highs. However, the bull camp in silver might be benefiting from a pattern of higher lows and higher highs on the charts recently and silver might also be getting some lift from general central bank easing hopes. On the other hand, silver might be held back slightly by overnight news of another noted increase in Peru's April silver output relative to year ago levels. In fact, Peru's April silver production over last year, actually increased by just under 8%. While Comex Silver Stocks actually declined 100,765 ounces overnight, silver stocks recently have risen back to the highest levels since the middle part of 2008. In summary, silver is benefiting from safe haven and QE hopes, but silver might also see a bit more drag on prices from evidence of US slowing directly ahead, as silver has retained a portion of its industrial commodity market status. Therefore, some silver bulls might be a little concerned into the US PPI and retail sales reports later this morning. July silver looks to start the Wednesday US trade off minimally weaker but within close proximity to this week's highs. Apparently silver and gold are generally in a position to embrace the prospect of easing or as others think the silver market is seemingly poised to embrace safe haven views. Therefore we expect silver prices to claw back above $29.00 this morning but we can't rule out some form of back and fill action in the face of patently weaker PPI figures. In other words, weak US data might cause an instant negative reaction, before renewed easing hopes resurrect prices later in the trading session. Close-in support in July silver is seen today at $28.76 and there would seem to be very little close-in resistance on the charts today.