GENERAL MARKET CONDITIONS

The Fed surprised the markets by not surprising it as some traders positioned themselves for a surprise fifty basis point cut which did not happen and the sell off in equities and commodities. It’s back to square one for now and traders will be once again shredding every piece of US economic data and position themselves for the next interest rate meeting. We expect the Fed to continue with the quarter point easing till March 2008 and may be even till June and stop thereafter. In the first quarter of 2008 most of the central banks will have to make a choice between growth and inflation as crude oil prices were hovering around $60 a barrel in the first quarter of 2007 and lower base effect will result in higher headline inflation globally.

Base metals will be more volatile than precious metals and energies for the last three weeks of the year. In the first quarter of 2008, metals, commodities and emerging market stocks may get preference over equities, bonds and currency trading. The volatility, which we have seen in the first week of December in precious metals is just a trailer of the things to come in 2008. Silver has disappointed so far in 2007 and hopefully should be able to generate more investor interest in 2008. Globally physical silver stocks should decline.

COPPER -- MARCH FUTURE

Copper has to break $307.60 for $317.10 and $322.60. On the lower side, key short-term support at 293.30.

NYMEX CRUDE OIL -- FUTURE

Crude oil has to hold $86.32 to prevent a fall to $82. On the higher side only a break $92 will result in further gains.