By Melissa Pistilli – Exclusive to SilverInvestingNews.com

On Wednesday, I expressed my dismay over silver’s steady decline after the big gains I had excitedly witnessed over the last couple weeks. But still, I remain optimistic that the precious metal will rebound from this latest set-back.

Obviously, exorbitant prices at the pump do deflate demand and falling crude oil prices directly affect inflation-hedging commodities like gold and silver. “Therefore, precious metals can expect little support from the crude front,’ says Walter De Wet, Standard Bank precious metal analyst. However, he does concede that persisting risks and uncertainty in financial markets globally should support gold and silver prices.

Currently, investors are selling silver against oil prices. “You’ve taken away the oil-inflation premium,” says Frank McGhee, the head dealer at Integrated Brokerage Services LLC, “We’re ultimately blaming the short-term moves on oil because it’s impacting everything.”

Some investors were also selling earlier in the week on speculation that Congress would vote to pass a Treasury plan to bailout Fannie Mae and Freddie Mac. The plan did pass the house Wednesday on a 272-152 vote, but is currently stalled in the Senate.

The dollar has strengthened in recent sessions. This turnaround, coupled with the $20 drop in oil prices, is placing downward pressure on gold and silver. Wednesday, crude prices fell to their lowest point in almost seven weeks after the Energy Department reported an increase in gasoline and distillate fuel stockpiles and a decline in consumption. And for a second straight session the dollar was on the rise to a two-week high against the euro. Gold fell the most in six weeks with silver futures for September delivery falling 7.2 percent in the past five sessions.

After closing at $17.41/oz in New York on Thursday, silver dropped to $17.05/oz earlier this morning. However, the precious metal quickly rebounded is currently sitting at its Wednesday close of $17.36/oz.

Although this week may have led some to doubt if silver really will see dramatic gains this year, many analysts remain positive. Analysts at Scotia Capital USA believe a drop below $17.50 will increase demand as investors move to get in while prices are attractively low. Those who make it their business to pay attention to historical precious metal price moves already know that this is the time of year when setbacks in prices normally occur before the fall uptrend sets in.

“This looks likely to be the last such sell-off prior to a strong rally into autumn,” says Mark O’Byrne. Ralph Preston of Heritage West Futures is inclined to agree, “The washout in metals has, for the most part, run its course. I’m comfortable wading back in.”

Silver Junior News: Avino Reports 4.75 Million Ounce Silver Resource from San Gonzalo Zone

Today, Avino Silver & Gold Mines Ltd. [TSX .V: ASM] announced completion of the first NI 43-101 resource calculation from its San Gonzalo deposit located in the historic silver producing region near Durango in west-central Mexico. The inferred resource concerns the San Gonzalo vein and was compiled by Dave Gunning, P.Eng., of Orequest Consultants Ltd. From figures compiled after completion of a 40-hole (9, 204 m) drill program, Orequest estimated the resource contained 4.75 million ounces of silver and 37,300 ounces of gold.

“We are extremely encouraged by the San Gonzalo resource figures,” said Avino President David Wolfin. “This area of the property holds significant expansion potential, and we will focus our near-term exploration on both upgrading and increasing the current resource.”

The promising results have prompted Avino to proceed with a 10,000-tonne bulk sample of San Gonzalo ore, which will confirm grade and tonnage of a specific block of ground in the deposit’s core and be used to compare grade with that from the surface drilling. The bulk sample will also provide concentrate for testing at various smelters. Presently, the company is re-commissioning the Avino mill to process the sample at a rate of 250 tonnes per day and intends to commence production full time after the bulk sample is analyzed.

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