Share By Melissa Pistilli-Exclusive to Silver Investing News

Monday, the spot price of silver came under further selling pressure under the weight of a stronger U.S. dollar. Commodities across the board tumbled yesterday on the latest report from the World Bank that the world economy is forecasted to contract 2.9 per cent this year as opposed to earlier estimates of a 1.7 per cent decline.

According to Angel Commodities, precious metals have been “trading sideways” along with “sideways to choppy trading” amongst the major currencies.  The silver price has also been affected by a recent slowdown in ETF and industrial demand.

Such short-term volatility is expected in an unsure global economy still fighting toward recovery. The long-term forecast for silver remains bullish, however, says FXstreet analyst Anna Couling “because the market is not fully convinced that the US Dollar is the safe haven that it once was, or indeed is purported to be at present.”

Already Tuesday morning the dollar is experiencing downward pressure ahead of the Federal Reserve’s policy announcement Wednesday, which is anticipated to not include interest rate moves. Rather, the Fed’s economic outlook and its debt-buying program are expected to have a greater impact on the dollar’s future and hence be of more interest to investors.

Of the utmost concern are the auction results this week of a record $104 billion in U.S. debt issuance. “A low demand will likely raise concerns about how the country will finance its huge deficits,” said Reuters reporter Wanfeng Zhou.

Many precious metals analysts are advising investors to watch the dollar for further cues to gold and silver’s price direction. 

As the dollar slides against the euro, the precious metals are gaining. As usual, silver is outperforming gold, 0.95 per cent to $13.88 per ounce compared to 0.37 per cent at $927 per ounce as of 12:48 PST.

Despite recent setbacks, the fundamentals of the silver market remain strong and like gold it is positioned to do well over the long-term.  Inflationary concerns are expected to remain prevalent, crude prices are anticipated to continue rising, and the dollar will most likely remain on shaky ground; all of these factors lend support to investment demand for silver. Also, once the global economy does pick up the industrial demand for silver will rise in step.

For now, any dips in the price of silver offer investors an opportunity to enter the market at a bargain.

Besides playing the physical or COMEX market, savvy investors with a healthy risk-appetite can take advantage of relatively cheap silver mining stocks.

On Friday last week, says precious metals analyst Clive Maund, “the big silvers rose on huge volume – record volume in the case of some of them – and this is believed to be evidence of Smart Money piling in ahead of a new uptrend.”

 ”We could easily see a doubling to quadrupling of most great silver stocks’ prices,” believes Adam Hamilton of Zeal Intelligence LLC. ”Silver stocks are a minuscule specialized sector with a trivial total market capitalization relative to not only the broader stock markets but even gold stocks (which themselves are a tiny sector).”

Besides silver ETF’s, “if you’re looking for a long-term investment in silver,” says Andrew Mickey, Chief Investment Strategist at Q1 Publishing, “silver mining stocks are the way to go.”

During the initial market panic that set in late last year, silver stocks were aggressively dumped causing share prices to plummet. Those stocks are still recovering and remain relatively cheap in comparison with their potential.

The table below highlights a random selection of ten silver companies.

For comparison, the table lists share prices in November of 2007 once silver started to make its first leap over $15 per ounce; in October of 2008 once the initial panic hit the commodities markets and silver’s spot price plunged to around $9 per ounce; and current share prices with the spot price trying to fight back from below $14 per ounce.

Precious Metal Miners                                Nov. 7 2007    Oct. 24 2008   June 23 2009*                                    

First Majestic Silver (TSX: FR)                       $4.76              .99                    $2.19

Endeavour Silver (TSX: EDR)                         $4.65               $1.08                $1.85

Great Panther Resources (TSX: GPR)             $1.65                .22                   .52

Avino Silver & Gold Mines (TSX.V: ASM)      $1.80                 .30                   .65

Oro Silver Resources (TSX.V: OSR)              $1.07                 .15                    .12

BacTech Mining (TSX.V: BM)                           .14                   .04                   .06

Kootenay Gold (TSX.V: KTN)                        $1.34                 .50                    .60

Hecla Mining Co. (NYSE: HL)                       $11.16              $2.63              $2.55

ECU Silver Mining (TSX: ECU)                      $2.57                 .92                     .61

IMPACT Silver Corp. (TSX.V: IPT)                $1.87                  .24                     .67

*(as of 12:53 PST)

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