Compiled 07/23/08 6:00 AM (CT)

Statistics: London Gold Fix $934.75 -$38.25 LME Copper stocks 129,450 tons +125 tons

SILVER MARKET FUNDAMENTALS: (6:00 AM CT) Despite renewed economic hopes for the US economy in the wake of the sharp ongoing slide in oil prices, the silver market looks to remain under pressure off flight to quality liquidation. With the silver market falling below a critical 100 day moving average overnight and recent positioning reports highlighting a moderately long spec positioning, the follow through stop loss selling action isn't that surprising. In fact, with the downside extension this morning, it is pretty clear that silver wasn't seeing the slightest support from news of a rather significant decline in 2nd quarter silver production by a Russian miner. It should be noted that investment interest in derivative silver investments continues to show up as a positive but apparently investment interest in silver is being overshadowed by safe haven liquidation. Like gold, the silver market will probably be watching the weekly oil inventory release closely today, as weak oil prices would seem to be the primary force for the bear camp.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) Despite seemingly concerning earnings and write offs from several US financial sector companies in the prior trading session the market continues to see a reduction in safe haven and flight to quality concerns. In fact, the sharp and ongoing slide in oil prices seems to have taken over the focus of a number of commodity markets and that in turn has prompted a rather impressive run up in global equity prices. With equity prices firm, the argument for flight to quality instruments like gold and silver is certainly undermined. Furthermore, the US Dollar was persistently deflated due to ideas that ultra high oil prices were set to damage the US economy more than other economies and therefore the reversal in energy prices is now giving direct support to the US Dollar. With the market also picking up on the prospect of rising US interest rates, the precious metals markets see yet another negative from the macro economic condition. With the US weekly oil inventory data scheduled for release this morning and the energy trade generally expecting another bearish report, it is possible that oil prices will keep the pressure up on the metals. With the market also attempting to fan talk of a developing hawkish tone inside the US Fed, it would also seem like support for the Dollar is capable of extending.

Technical Analysis:
Note: Compiled during previous session 07/22/2008 at 3:20 PM CBOT SILVER (SEP) 07/23/2008: Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The intermediate trend has turned down with the cross over back below the 18-day moving average. A negative signal was given by the outside day down. There could be some early pressure today given the market's negative setup with the close below the 2nd swing support.