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By Melissa Pistilli-Exclusive to Silver Investing News

Uncertainty over the future of the U.S. dollar and the global economy in general is understandably creating volatility in precious metals prices. After a close of $13.34/oz in New York on Friday, silver has started the week down as low as $12.99 on Monday.

CrownForex analysts mark the trading range for today between $12.85 key support and key resistance at $14.25 with a general trend to the upside as long as $12.00 remains intact.

A stronger dollar and profit taking are the major culprits in silver’s slide as it moves alongside gold. The Euro has been trading lower against the dollar after the European Central Bank (ECB) President Jean-Claude Trichet announced the possibility of additional interest rate cuts.

Further actions in the precious metals markets will be influenced by reports out later this week, which marks the start of a new quarter. “Tendencies on equity markets and the dollar will be the dominant,” said Commerzbank analyst Barbara Lambrecht. US March payrolls are due out Friday, the bank of England meeting and the ECB meeting are coming up, and of course, the G-20 Summit on Thursday.

“Technically gold and silver are in a neutral to bearish zone and they have to break key resistances to edge higher,” said Chintan Karnani of Insignia Consultants. “There will be a clash between medium term bulls and short term bears in gold and silver this week.”

The dollar has experienced gains against the euro as investors sought refuge from the possible demise of the US auto sector and confidence in the Euro fell after German Finance Minister Peer Steinbrueck announced that irresponsible budget actions will likely harm credibility.  The dollar’s rebound weakened investor sentiment toward safe haven assets like precious metals.

But the real test of the dollar’s strength comes on April 2 as the world’s leaders gather to discuss the global recession and the health of the international monetary system. As the debasement of the dollar and other currencies around the world becomes more likely, the threat of an international currency crisis has led many to suggest an overhaul of the system.

Central banks around the world, including Brazil, China, Ecuador, Europe, India, Middle Eastern countries and Russia have begun to increase their gold reserves in anticipation of a return to the Gold Standard. “Reducing reliance on the dollar and maintaining greater diversification in foreign exchange reserves is the only way to reduce the risk. As a result, an increase in our country’s gold reserves is necessary,” said the Director of the People’s Bank of China.

A return to the Gold Standard is obviously positive for silver in the long-term, making today’s $13/oz a bargain.

The fate of the US dollar is what’s really in play here for the medium to long-term outlook for silver and gold prices. Last Thursday, a panel of well-respected experts urged the United Nations General Assembly to rethink the dollar-dominated global reserve system. The biggest proponents of a new international reserve currency are, not surprisingly, China and Russia.  

Coeur d’Alene Begins Production at Palmarejo

Coeur d’Alene Mines Corp. (NYSE: CDE) (TSX: CDM) announced that it has started silver and gold production at its wholly-owned Palmarejo mine located in northern Mexico. Coeur expects to produce 5.3 million ounces of silver and 72,000 ounces of gold in 2009 at an average cash operating cost of around 50 cents per silver ounce. Annual production capacity over an 11-year plan is expected to average 9 million ounces of silver and 120,000 ounces of gold.

Coeur anticipates a 66 per cent increase in silver production over last year to nearly 20 million ounces once production from the company’s San Bartolome mine in Bolivia and the Palmarejo mine is included. Monday, shares of Coeur on the NYSE were trading at .89 cents, down from a 52-week high of $4.21.

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