By Melissa Pistilli-Exclusive to Silver Investing News

Silver climbed further Monday reaching as high as $12.27/oz. Analysts expect the precious metal to rally further as long as $11.26 support holds. The next level of resistance to watch is $12.80, which may clear the way for an advance towards $13.88. According to the Oil N’ Gold Team, a break above this level “is needed to invalidate this bearish case.”

Despite the hopeful promise of change offered by the Obama administration, the performance of both gold and silver prices this past week is a clear sign that the markets have yet to shake off fears of an impending economic apocalypse.  Last week, gold rose 6.43% (4.3% on Friday alone) and silver jumped 6.6% (up 5.1% on Friday) on speculation that continued government spending will lead to inflation and a much weaker dollar.

“The dollar is now looking acutely vulnerable to a steep drop,” said Silverseek.com’s Clive Maund. “And if this comes to pass it will be an additional driver for silver gains measured in US dollars.”

The US dollar is losing its investment appeal in light of the increasing national debt coupled with near zero percent interest and is expected to lose further ground in 2009. US national debt has grown to nearly 60% of the country’s GDP, and this has placed heavy downward pressure on the dollar over the last several years, noted TechnicalSpeculator.com’s Donald W. Dony. “This immensely heavy burden has pulled the Greenback down from $1.20 in 2001 to almost $0.70 in 2008,” he said.

Dony attributes the dollar’s recent strength at the $0.89 level to a “short-term flight-to-safety mentality.” But with the lowering of the interest rate to near zero and the billions or perhaps trillions of dollars in bailouts coming down the pipe, the dollar is teetering on the edge of a cliff. Dony points to the performance of the Euro in comparison with the dollar as evidence. The Euro, he said, “has found solid support at the $1.30 level and is beginning to stabilize and regain strength again after its plunge from $1.60.”

However, the dollar “has stalled in its flight-to-safety rise to $0.89.” According to Dony, downward pressure on the dollar will continue through February and March.

The promised stimulus plan is also expected to weaken the dollar further, according to analysts at Deutsche Bank AG. As the dollar declines, commodities such as gold, silver, zinc, nickel, and oil are likely to firm in price and eventually gain.

Silver as Safe Haven

A recent Reuters survey has shown that silver will outperform both platinum and palladium as investors seek shelter from the current economic instability. “Investment demand will help keep a firm note, as will a buoyant gold market,” said TheBullionDesk.com analyst Ross Norman.

Although the majority of silver demand is industrial, more and more investors are catching on to silver’s safe haven qualities. “Typically, when gold goes up, silver goes up by a larger percentage,” said precious metals analyst Timothy Silvers. “I think that will be the case again this year as investors focus less on silver’s industrial demand and focus more on its investment potential and lower cost to gold.”

Silvers, like many analysts and traders, recommends buying physical silver if you can find it. If not, silver and gold producing junior mining companies with good cash positions are a smart choice as they are likely “the next stock sector to renew a bull market,” said Silvers, who expects to see silver climbing more than gold this spring and reaching into the $14-15 range.

Great Panther Resources, LTD.

On Monday, Great Panther Resources [TSX: GPR] announced that new high grade silver, gold, lead and zinc mineralization has been identified in the Gregorio and Rosario Veins at the company’s fully owned Topia Mine in Durango, Mexico. Averaged grades of 1,299 g/t silver, 0.41 g/t gold, 5,54% lead and 11.73% zinc with a 0.30 metre width have been found along about 80 metres of srike length of the Gregorio Vein. Averaged grades of 1,259 g/t silver, 0.30 g/t gold, 7.05% lead and 5.82% zinc over a 0.39 metre width have been found along a 55 metre strike length of the Rosario Vein.

The silver junior has implemented cost reductions for 2009, but metal production for the year is expected to be comparable to 2008 with operating costs at around $10/oz. Great Panther anticipates ongoing expansion of silver production at Topia in 2009 and has negotiated lower cost mining contracts.  Many local mine workers already returning to work this month and the company has reopened eight of the recently closed mines. Currently, twelve of the former fourteen mines are being worked and are expected to produce over than 400,000 ounces of silver this year.

Shares of Great Panther on the TSX closed Monday at .38 cents, down from a 52-week high of $1.72.

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