Share By Melissa Pistilli-Exclusive to Silver Investing News

Silver spot prices dipped over 3 per cent on Thursday following gold’s retraction below the psychological $1,000 level as the US dollar picked up gains. Silver is also under selling pressure as COMEX October options expire today.

Recently, several analysts and consulting firms have weighed in on silver’s projected price movements and the majority of projections remain bullish, although Forex analyst Anna Coulling admits the technical evidence remains “conflicting.” But, what do you expect from such a volatile market as silver?

Silver continues to take its cues from gold, which is in turn tied to the direction of the dollar; although, let’s not forget China’s recent influence over the precious metals market is anticipated to keep gold and silver prices from encountering any extreme corrections.

While prices aren’t expected to take any considerable losses in the short-term, just how far prices will advance in the medium to long-term is up for debate. While Coulling’s technical analysis suggests silver’s “bullish momentum remains intact”, she quickly points out that prices are nearing a “critical point . . . as they attempt to break through the heavy congestion area immediately ahead, which at the moment seems to be providing solid resistance to any move higher.”

Coulling suggests some exciting news is needed to move silver through this resistance and into the $16.80 to $18.50 level.

Precious metals investors have been reacting to any news regarding the demise of the US dollar as the world reserve currency and this issue is likely to remain at the forefront for quite sometime as the US continues to devalue its currency through so-called quantitative easing methods.

“At the end of the day when the world finally realises what the US has done to the world reserve currency, international investors will shift into an asset that no government can print. In our opinion the US dollar’s status as a ‘port’ in the financial storm has officially come to an end,” said Sprott Asset Management in its latest remarks concerning global markets.

While the dollar may be making slight gains today, long term it is projected to falter further and precious metals prices will likely increase, says Mineweb’s Lawrence Williams commenting on Sprott’s statement.

In its “review of all things silver” RBC Capital Markets anticipates a short-term redaction in silver prices over the next several weeks. However, RBCCM also expects demand to heat up in the fourth quarter and into 2010 with silver potentially reaching the $20 level seen in March 2008.

Like most analysts, their view is also based on a weak dollar outlook leading to stronger gold and silver prices.

ScotiaMocatta sees silver gaining whether the economy recovers or the financial markets suffer further. Silver’s dual role as industrial and precious metal will allow it to succeed in ether climate. And, of course, any sell-off is bound to attract bargain-hunting investors.

Silver “may suffer some selling if equities correct,” says ScotiaMocatta, “but any price weakness in silver is likely to attract even more buying as investors rotate from equities back into safe-haven products, such as silver and gold.”

Silver Miners Outperform Their Gold Cousins

In the three week period from August 27 to September 17 the price of silver jumped 22.3 per cent compared to gold’s 8 per cent, according to VM Group Metals Monthly report.

Not surprisingly, silver mining companies have also been outshining gold companies as their share values climb along with precious metals prices.

Silvercorp Metals [TSX: SVM] closed Wednesday at $4.86 up from $3.74 on August 27. Motley Fool contributing analyst Dave Mock says the small miner has managed to reduce its cost of sales by 38 per cent by improving operations and cost controls, leading to an increased cash balance. The company is advancing its GC project in Guangdong Province, China towards production. Over the past three years, Silvercorp’s revenue growth rate has advanced 122.5 per cent.

Fortuna Silver Mines [TSX.V: FVI] closed Wednesday at $1.49 up from $1.16 on August 27. In a recent interview with The Gold Report, Greg McCoach tells readers why he loves Fortuna Silver.

Fortuna’s Caylloma mine in Peru is currently producing and the company is advancing its San Jose property in Mexico through to production. “They have a very low cost of production,” says McCoach. “The material is good grade and it’s high profit with higher silver prices. This company will do very, very well. You’ll see a multiple gain in this stock price.  . . If you believe silver prices are going higher, Fortuna Silver is a no-brainer.”

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