By Melissa Pistilli-Exclusive to Silver Investing News

So far, February has been a good month for silver as it climbs more than a US$1 since the beginning of the month, putting in its biggest gains Wednesday morning.

On Friday, the precious metal closed at $13.13/oz only to fall to $12.88/oz Monday on profit taking.

Tuesday’s U.S. stimulus plan announcement sent investors looking for a safe haven and by 12:00 pm EST silver was reaching $13.60/oz with gold at $941/oz. “There’s a lot of investor anxiety out there,” said Matt Zeman, LaSalle Futures Group metals trader. “With all the money the government is planning to spend or print, at some point in the future, we are going to hit the inflationary wall.”

Tuesday, Treasury Secretary Timothy Geithner said the government may fork over as much as US$1 trillion to bailout banks. And the Senate announced it had passed an US$838 billion stimulus bill. While many view the plan as inadequate, others are wondering where all this money will come from, prompting large-scale inflation fears.

The stimulus plan will not deter any potential long-term inflationary outcomes, said Bill O’Neill, managing partner of LOGIC Advisors. “It has not alleviated the concerns that are already existing. There is going to be very much of a wait-and-see attitude to it.” All very bullish for precious metals prices.

Deepening fear over the monetization of debt, the effects of near zero percent interest rates, overzealous money printing and new concerns that government action in the U.S. will only breed inflation has created what many precious metals analysts would call a perfect storm for gold and silver prices.

“For precious metals, I’ve got an eye on gold because I am worried about the global economy,” said Peter McGuire, Managing Director at Commodity Warrants. “I think silver is probably got a little bit of upside. I wouldn’t be surprised to see $17 to $18 per ounce by the end of the year. So, I see quite a strong recovery.”

Resource companies to rebound?

Now may be the time to take a second look at resource companies whose pummeled share prices make them a bargain, especially when one realizes the fundamentals that contributed to the last resource boom are still strong despite the setbacks caused by the financial crisis.

A year ago, Steve Palmer, President and Chief Executive Officer CEO of AlphaNorth Asset Management, was “cautious” when it came to resource stocks, believing all the “easy money had been made.” But now that commodities prices have taken a beating and many resource companies are trading well below their cash value, “those resource opportunities are much more interesting at this stage,” said Palmer in a recent interview with The Gold Report.

Although Palmer believes “we are not out of the woods yet, we could very well see a ‘big bounce’ in the resource sector. When asked if he thought the bottom for junior resource companies came in November and December, he agreed.

But, he pointed out that this had nothing to do with the fundamentals behind the resource boom and everything to do with fear-driven liquidity in the market. “The level of panic was unprecedented. Compounding that was the timing of tax-loss selling that had to be done before year-end, so some stocks plunged to insanely low levels. This wasn’t due to fundamentals-it was all liquidity-driven, tax-loss selling driven and forced selling by various funds.”

Palmer thinks the market is getting back to normal now and investors are looking toward the fundamentals again.  We have already experienced some recovery on the TSX Venture, “more than 25 per cent, in just a few weeks,” he added.

Orko Silver Corp.

One junior resource company that Palmer likes is Orko Silver Corp. [TSX.V: OK]. “They have a property in Mexico they’ve been drilling, and should have an updated 43-101 report out any day now. It should add to the current inferred resource of 103 million ounces.” The junior miner’s properties are in the historically silver-rich state of Durango, Mexico near many known mines. According to Palmer, “They’re at the stage now where they’re proving up a resource and then they’ll do a scoping study.” The company also has $3 million in cash reserves.

Many of the larger miners have recouped, even doubled their share prices recently, so investors are beginning to look towards the smaller market cap companies that are still sitting at bargain prices. Palmer believes that juniors in the $50 to $70 million market cap range, where Orko lies, “will be on people’s radar screen.”

Although Orko hasn’t moved a lot in price like other juniors have since the resource market hit bottom, that’s why Palmer likes it. “It could double quite easily in the next couple of months,” he said. “Combining the commodity and the stock, this one looks like a good opportunity to get in on a timely basis and possibly double your money and move on.”

On Wednesday, shares of Orko were trading at .73 cents, down from a 52-week high of $2.13.