^[1]By Melissa Pistilli-Exclusive to Silver Investing News

Increasing trepidation in the markets brought on by the reality of recession has sent precious metals and commodities prices tumbling this week.

The current drops have "nothing specific" to do with gold ^[2] and silver, said Dave Rinehimer ^[3], one of the directors with Citigroup Global Markets. "It's just renewed weakness in commodity prices on a stronger dollar."

Worried investors are pulling their money out of both, equities and commodities, which are usually inversely proportional. "Commodity demand is tied to economic growth, and to the extent that the equity markets are signaling continued economic slowdown, that means lower demand for basic commodity materials," said Richard Feltes ^[4], senior Vice President and Director of Commodity Research for MF Global in Chicago.

A slowing economy and reduced industrial demand has hurt the silver price the most this week. It's "more related to the economy than gold is," said Bart Melek ^[3], BMO Capital Markets global commodity strategist. Silver is functioning much more as an industrial metal rather than a precious metal at the moment.

In uncharted waters

In the previous months and weeks leading up to the utter destruction of the markets the majority of gold and silver buffs had prophesied soaring precious metals prices that would put March's highs to shame. The usual economic conditions that send investors running in droves for the protection of gold and silver have been falling into place; however, we have yet to see such heights. At least not in the paper market. Anyone with the slightest interest in precious metals knows the true price reality is in the premiums investors are willing to shell out in the physical market.

But this is of little solace to junior miners who have seen their stock values decimated.

"The severity and the speed of the crash in the precious metals and their stocks caught practically everyone by complete surprise. The meltdown surpassed everybody's expectations and has no historical precedents. As I have said in an earlier Hotline, ‘We are in uncharted waters'," said Greg McCoach ^[5] in the latest edition of The Mining Speculator ^[6].

McCoach believes precious metals and the junior mining industry will recover; however, "when  . . .  is the great question." Two key indicators the bottom has been reached, he said, will be:

1. When the paper trading short scams on the COMEX are forced to cover their positions
2. When the dollar resumes its inevitable decline

Once the bottom has been reached, McCoach assures us "we'll be surprised at how quickly the quality junior mining shares can and will recover." Notice, he said, "quality" juniors. It is obvious that the current conditions will purge those juniors with weak positions and inferior properties from the market. "But high quality, cash rich junior producers and explorers of precious metals who sit on the best deposits in the right areas will undoubtedly have a very bright future."

Brent Cook, geologist and editor of Exploration Insights ^[7], is also confident the resource sector will turn around, although "selectively." Once we've gotten past the current global financial meltdown, "the quality mineral deposits and exploration companies you can and will be able to buy now will certainly look like bargains in the rear view mirror," said Cook in a recent interview with The Gold Report ^[8].

Fortuna Silver is a buy

Fortuna Silver Mines Inc ^[9]. [TSX.V: FVI] is one junior recommended by The Mining Speculator. The company owns and operates the Caylloma Mine in Peru, which is currently generating positive cash flow and produces over 1000 tonnes per day.  Fortuna also has an advanced stage project in Mexico that is expected to produce 5.5 million ounces annual once online.

Fortuna has "tremendous upside potential with exploration as they control a very valuable land package," said McCoach. Production profits should allow the company "to invest in themselves and create even greater value for shareholders."

Shares of Fortuna ^[10] were trading Thursday at .45c, down from a 52-week high of $3.65.