Share By Melissa Pistilli-Exclusive to Silver Investing News

Last week, the spot price of silver hit a 10-week low; however, spot prices began to recover later in the week as a faltering dollar and higher oil prices boosted its safe-haven appeal.

Silver had a pre-summer doldrums rally on June 3, almost doubling its October 2008 low, reaching $16.22 an ounce. However, it’s suffered a few slides over the past month on profit-taking, improvements in the dollar, and uncertainty over industrial demand.

Silver finished out last week at $13.41, up 6 percent from last Friday, outperforming gold’s 2.7 percent. Precious metals were up Friday with investors seeking an inflation hedge as oil closed at its highest level in nearly two weeks.

Gold and silver are also benefitting from renewed inflation concerns brought on by positive signs that the U.S. economy may be stabilizing. “It increasingly looks like the U.S. is turning the corner and indicators suggest that maybe the worst is over,” said John Stephenson senior VP and portfolio manager at First Asset Investment Management Inc. in Toronto.

The prospect of approaching economic recovery bodes well for silver prices, as it does for most commodities, since it signals a pick up in industrial demand.  “It’s particularly good for commodities and the suppliers of these commodities,” added Stephenson.

On Monday, the silver price closed at $13.63 an ounce, but has taken a few steps sideways Tuesday to close at $13.57. The Bank of Canada’s announcement that it will leave interests rates alone for now and Ben Bernanke’s comments about keeping interest rates low for a “very long haul” probably eased off inflation concerns.

Forex’s Anna Coulling is not surprised by silver’s “bullish tone . . . given the mood of optimism” in the equity markets. Nevertheless, Coulling warns that Fed Chairman Bernanke’s testimony to the Senate Banking Committee this week may cause “heavy market volatility” as his comments are known to create.

“Silver traders will be particularly keen to hear the Fed’s exit strategy from its current loose monetary policy together with the likely direction of short term interest rates and the fate of the US Dollar,” said Coulling, “all of which can impact the price of spot silver in the short, medium and longer term.”

Ted Butler on Silver’s Price Direction

Where does silver guru Ted Butler think the white metal’s price is headed? In a recent interview with The Daily Bell, Butler said he believes “the long term looks better than ever.” In fact, he sees us all reflecting back on today’s prices in awe of “how cheap they were, much like we look back at $4 silver now.”

Once the “general perception of silver” moves more in line with the reality of its strong fundamentals, the price will “adjust dramatically higher,” according to Butler. He points out that although most investors are aware of silver’s dual role as an industrial and a precious metal, this “uniqueness” remains “deeply underappreciated.”

It’s this unique quality, says Butler, that will inevitably lead to an unavoidable “bidding war between industrial consumers and investors.”

Silver Miners Performance

As the silver price continues to perform well, so do silver mining companies; especially in relation to their gold mining counterparts.

Forbes reported Monday that the stock of major silver mining companies climbed along with rising silver prices. Even smaller silver companies were up six or seven percent, while gold company stocks posted gains of only one or two percent.

Some analysts are saying a few silver miners may be on their way to joining the ranks of the majors and gaining the respect of large-share investors.

Endeavour Silver: Drawing Interest and Respect

“Right now, gold and silver deposits . . .  really interest me because of the inflation potential down the road,” said Dr. Michael Berry, creator of Discovering Investing, in a recent interview with The Gold Report.

Dr. Berry also finds Endeavour Silver Corp. (TSX:EDR) interesting and thinks it has a “good management team.” He’ll be visiting their operations in Mexico later this month.

The silver producer currently has two operating mines, one in the silver-rich region of Durango and one in Guanajuato. The company’s shares have been outpacing almost all its competitors, according to Thom Calandra, co-founder of CBS MarketWatch.

Recently, Endeavour was dealing with ongoing increases in processing service costs as Penoles raised its smelter fees. Management has now decided to truck its silver concentrates from the Guanajuato mine to its Guanacevi mine for processing into dore bars. These bars will then be taken to a Torreon refinery for refining and sale.  

“Even though we lose a bit of the silver in the leach process at Guanacevi, it reduces our cash cost per ounce for Guanajuato by $1.50 per ounce,” Endeavour’s CEO Branford Cooke told Calandra.

On Tuesday, shares of Endeavour on the TSX closed at $2.06.

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