Compiled 07/12/12 6:00 AM (CT) Statistics: London Gold Fix $1,565.50 -$11.00 LME Copper Stocks 251,375 tons -975 tons SILVER MARKET FUNDAMENTALS: (6:00 AM CT) September silver managed a fresh downside breakout overnight and that is a little surprising after silver clearly outperformed gold in the Wednesday US trade action. Nonetheless, the markets are giving off broad based deflationary signals, with weakness in grains and energy prices recently accentuating the prospect of ongoing deflationary price action. In fact, the markets are likely to be presented with a decline in US Import and Export pricing this morning and that highlights the current slack environment. The bull camp has to hope that a minor decline in US claims serves to countervail the widespread expectation of slowing. While silver hasn't paid that much attention to classic supply side news lately, the market did see evidence of a modest increase in US silver imports for the month of May and that news was accompanied by evidence of an even sharper increase in US silver exports for the month of May. Another element the bull camp might have in their court to start today is a slight decline in key European yields and evidence of an increase in Euro zone bank lending activity overnight. Comex Silver Stocks were 144.465 million ounces down 697,535 ounces. Silver stocks have increased in 11 of the last 20 days. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) Hong Kong equity markets were sharply lower overnight and fell to the lowest levels in a month, but the mainland Chinese market managed a modest rise on the most active volume in more than a month. European equity markets were also weaker to start today, as investors there were disappointed with the lack of easing prospects from the US Fed on Wednesday afternoon. In fact, many global equity markets were weaker overnight off the idea that the US Fed would need to see even more weakness before taking action. In short, the world is mostly anticipating further slowing evidence ahead and that might assist the trade in discounting a minor decline in US claims data later this morning. In fact, with an expected decline in US Import prices to be released today, it is possible that minor improvement in the claims data will be mostly countervailed. There will also be a Fed Budget statement later in the session but the trade isn't expecting much of a surprise from that report.
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