Share By Melissa Pistilli-Exclusive to Silver Investing News

The silver bull has jumped into this week on a strong start with the price of silver trading between $13.61/oz and $13.92/oz. Analysts predict the silver price will continue its upside action towards $14.30/oz areas if a break above $13.86/oz can be maintained.

Bullish sentiment resounds strongly through the markets with top precious metals analysts leading the call. “Generally speaking, right across the board we remain positive on the prospects for gold and silver,” said Capital Research’s Senior Vice President and Director Barry Allan in an interview with The Gold Report. “We look at silver as really a derivative of gold. If we’re bullish on gold, as we are, we are also bullish on silver.”

The global financial crisis nearly leveled the mining sector, but in the last few days mining stocks have reached their “best levels seen in six months,” said Moneyweb’s Barry Sergeant. The world’s leading mining stocks have climbed out of the bottom by almost 88 per cent, as measured on an average value-weighted basis, noted Sergeant. Gold and silver miners are predominantly found amongst the sector’s top performers.

Doomed Dollar?

Much of the resurgence in gold and silver prices is linked to declining faith in the U.S. dollar.  Last week brought an unexpected and worrisome announcement from the Federal Reserve that it has “gone nuclear” in its approach to the financial crisis, resorting to what amounts to massive money printing.

Both silver (4.5 per cent) and gold (2.7 per cent) posted gains soon after the news hit the markets. “The gains would have been much more,” said Gold and Silver Investment‘s Mark O’Byrne, “but for an unusual and unexplained very sharp selloff in the precious metals” right before the Fed’s announcement.

The financial situation in the U.S. is teetering on a very slippery edge with a budget deficit expected to reach a record $1.8 trillion this year. The U.S. dollar has dropped significantly against all currencies. There are “justified and real” concerns, O’Byrne pointed out. Across the globe, the dollar’s reserve currency status is “increasingly coming into question.”

In fact, O’Byrne reports that leaders at the G20 Summit in London next week will be discussing the possibility of a new global reserve currency to replace the dollar. The call for discussion comes from Russia, which is also backed by China and other emerging nations.

The dollar’s role as world reserve currency is also being called into question by the United Nations, which will hold panel discussions next week on replacing the dollar with a shared basket of currencies similar to the old Ecu (European currency unit). The panel of experts, including the former head of currency research at JP Morgan Avinash Persaud, is known as the U.N. Commission of Experts on International Financial Reform and will meet to discuss this and other global currency proposals at the U.N. on Wednesday.

“This is of great importance and has profound implications for the current international monetary system and for the dollar,” warned O’Byrne. As central banks and sovereign wealth funds pull out of the dollar and other currencies and into a new global currency, he expects gold will “remain in a bull market for the foreseeable future.” And of course, whatever’s good for gold is good for silver as well.

Trader Tracks editor, Roger Wiegand anticipates silver prices at $16 to $17/oz for this spring and $21.50 or higher near the end of 2009. “Presuming we have no more Lehman events, silver might touch $25 to a potential $30 for a 2009 high,” Wiegand told The Gold Report in a recent interview.

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