Compiled 07/03/08 6:00 AM (CT)

Statistics: London Gold Fix $939.75 +$4.50 LME Copper stocks 122,500 tons +25 tons

SILVER MARKET FUNDAMENTALS: (6:00 AM CT) The market inched over the May highs overnight before a setback to nearly unchanged. Futures are within striking distance of the April 17th highs at 18.8450. The gold fundamentals are helping to support silver, but the global economic concerns are likely to put some negative pressure on silver relative to gold. This may clash, however, with supply issues if the Peru strike drags on and sees increased momentum. In addition to finding support from outside market forces like the weak dollar and soaring commodity prices which make silver an attractive alternative investment, the growing number of mines going out on strike has also lent support. Reports that workers at two more mines in Peru threatened to go out on strike lent support yesterday. While the latest struck mines primarily produce copper, zinc and gold, the strike action in general appears to be spreading across all types of mines, which implies silver could be affected as well. Peru is the world largest producer of silver. Peru silver production in May increased to 310,676 kg., up 15.16%.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) The trade expects a 1/4% interest rate hike in Europe, and there is a general perception that the higher rate will drive the dollar lower and commodity prices higher. This, however, is already priced into the market, and the key focus is the US economy and the potential for the food/energy inflation trend to spark a global slowdown in growth and maybe more. Labor unrest is also a key issue. The Peru strikes continue to build momentum as more and more mines are joining the fight. This has resulted in a collapse in coal prices, a collapse in mining stocks and a collapse in big manufacturing stocks. Commodity prices were sharply higher for the most part yesterday, but commodity stocks were down. If the employment data shows a poor reading for the US economy, traders fear more inflation, a sharp drop in the dollar and a weakening world economy.

Technical Analysis:
Note: Compiled during previous session 07/02/2008 at 3:21 PM CBOT SILVER (SEP) 07/03/2008: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's close above the 9-day moving average suggests the short-term trend remains positive. The market has a slightly positive tilt with the close over the swing pivot.