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Silver futures market

Silver futures continued to trade in a relatively narrow range yesterday, and despite the recent strong gains in gold, the industrial metal is still failing to correlate to any great extent with the precious metal, a trading relationship that was once firmly established. The reasons for this are unclear at present, but as the commodity is classed as an industrial metal, this could be signalling concerns that US and world equity markets may be reaching a peak with the potential for a sharp sell off in the next few weeks as we emerge from the summer doldrums and into another US earnings season. Overnight, the silver futures market saw little reaction to production news from Hochschild mining, which has reported that it is on track to meet its silver production targets, and given the lack of any significant market moves as a result, silver futures seem set to take their lead from both the equity and currency markets later today.

Comex silver stocks were 109.935 million ounces, a fall of 566,480 ounces with stocks having fallen in 11 of the last 20 days. With equity markets generally lower or trading sideways, this is now being seen in the silver futures market, and should we see a dramatic fall in US and world equity markets in due course, then this could be reflected in a pullback for silver futures as a result.