By Melissa Pistilli – Exclusive to Silverinvestingnews.com

Silver rose slightly on Thursday to $17.79/oz as the dollar fell marginally against other major currencies. Later in the day though, the dollar got a boost as crude oil prices dropped amidst concerns that a weak economy might spell future decreases in demand.

Although the latest batch of data concerning the health of the U.S. economy paints a worrisome picture, the dollar has managed to fight off serious declines, keeping precious metals prices from gaining any lost ground. The Labor Department reported today that non-farm payrolls had decreased by 51,000 last month. The number of layoffs was 20,000 less than what most economists had expected, a signal that layoffs have softened since early this year, and this helped to insulate the dollar from greater losses.

But after data was released showing U.S. manufacturing activity had gone flat, and spending on U.S. construction projects had dropped, the dollar shrugged off its earlier gains. According to the Commerce Department, construction spending dropped 0.4 per cent in June, slightly more than the 0.3 per cent expected by economists.

“At first glance, some of the economic reports released this week looked relatively good for the U.S. economy”, said David Beahm, a Vice President at Blanchard. “Upon review, however, very little of the news showed real renewed strength in the economy,” he added. Weekly initial jobless insurance claims rose 44,000 to 448,000 and the unemployment rate for July jumped to 5.7 per cent, the highest level since March 2004.

“These reports are a reminder that the dollar’s fundamental woes are not limited to banking write-downs and high oil prices,” said Ashraf Laidi of CMC Markets US, “but are also a manifestation of weak macro-economic data, at the top of which is the continued deterioration of the job market.” It seems the U.S. is likely to give out further economic recession signals before the year is out.

Market Corrections in Silver

Many analysts believe silver has bottomed out its correction this week. On Thursday, the gold/silver ratio rose to 53.02, “the top of the range,” according to Franklin Sanders. “Extremes in the ratio usually mark price extremes in metals.”

Yesterday, silver price bounced 32.8 cents out of its bottoming range to $17.75/oz.  “Also,” says Sanders, “silver’s trading since the July 24 low at $17.24 buttresses that conclusion. Since then, the trend has been on the higher side so it looks like silver has successfully defended that level. Silver price traded from $17.42 to $17.24, back & forth.”

Silver usually experiences normal rallying between July and September, and then, between November and February every year. These rallies are based on speculation that the demand for silver is likely to increase during the holiday season as jewelry (with gold above $900/oz, holiday shoppers will be more inclined to purchases silver), electronics, computers, and camera sales increase dramatically.

Silver Company in the News

Aurcana Corporation [TSX.V: AUN] announced yesterday the release of the a NI 43-101 compliant resource estimate on its 100 per cent owned Shafter silver mine in south-west Texas.

An economic cut off of 4 oz/t was calculated for use in a pre-feasibility study. The results showed a 15 per cent increase over April’s resource estimate of 41.2 million/oz (5 oz/t cut off) to a total resource estimate of 47.4 million oz of silver. Shafter is an historical silver producing region that gave up 35 million oz of silver at an average grade of 15.24 oz/t from 1883 until 1942 when the War Act halted mining operations. Aurcana acquired the property in July 2008 - its third acquisition in two years - and has plans for production start up at 3.2 million ounces of silver. The mining method most likely to optimize production capacity and maximize profits will be selected by the pre-feasibility study. Initial calculations show daily production could be sustained at a rate of up to 1,500 tons per day.

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