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The silver market certainly started 2010 out on a slightly better footing than the gold market. In fact, silver market comes into 2010 with a much smaller relative net spec long positioning than gold, and silver also starts the New Year out at prices that are a fraction of the historical high. Silver didn’t see the type of speculative fervor that gold did last year, but one might also suggest that for most of 2009 silver was being held back by classic fundamental fears of slackening industrial demand. However, even though March silver has managed a climb back above its 50-day moving average and has been giving off signs of returning to a bull market status, the precious metals complex in general will be presented with a constant threat of pressure from either a soaring Dollar and or rising interest rates. In our opinion, the biggest chance of a rally in gold or silver will be in the four weeks following the January 6th release of the FOMC meeting minutes and the January 8th US Monthly Non-Farm Payroll report. We think these events will keep the Dollar off balance for awhile and that they will also push back the timing of US Federal Reserve’s tightening moves. However, the clock is ticking on when the markets will begin to factor-in rising US rates, and for the gold and silver markets to replicate the performance of 2009, it will require a distinct shift in focus from within the metals complex. It is also possible that the gold and silver bulls will also need to see some real evidence that the Chinese or Indian central banks are increasing their gold holdings.

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