MONTRÉAL—(Kitco News) Despite silver prices dropping drastically over the last few weeks, after flirting with the $50 mark in late April, John Smith, President and CEO of Silver Standard Resources said silver prices will bounce back.

“I try to look at more fundamental long term views around silver than the specifics of what’s happening day to day in the market,” said Smith.

Smith still thinks that the fundamentals which saw the white metal soar in price over the last year are still in place and the current correction was bound to happen.

“I think we’ve seen a fairly aggressive run-up in silver price and I think there’s a bit of the market drawing its breath, but at the end of the day there’s still something like 60 odd trillion in cash looking for an investment home,” Smith said.

“Silver has been a volatile metal in terms of pricing and we’re seeing it now but I think the fundamentals still support (a) strong silver price,” Smith added.

Aside from the investment perspective of silver, Smith said the industrial aspect will push silver prices higher in the long run.

“There’s no more conductive metal than silver so as more computer, computer-like applications and hardware are built, it is a growing factor not only in demand, but also (in) the amount of technology that’s part of our lives,” Smith said.

Electronics do use silver due its strong electrical conductivity. Applications range from television screens to radio frequency antennas to printed circuit boards. Circuit boards are used in computers and mobile telephones.

Smith also thinks silver serves as an important, but overlooked, part in medicine.

“A missing bit for me is the issue around medical uses,” Smith said. “Vaccines have been over-used and abused and yet silver is a very strong anti-microbial metal and can offer a lot of applications in terms of compounds around its use to deal with those things in the future.”

Considered a form of alternative medicine, silver ions and compounds are able to suppress some types of bacteria and are able to kill many microbial organisms in vitro. However, its use in medical fields is regarded as controversial.

Whether looking at the industrial or investment perspectives of silver, Smith feels the white metal will continue to move forward.

“So I think there’s a lot of bias for industrial use to the upside and if you look at the investment side of it, you still have a strong piece that says that the world is not in a good stasis now, which will support the investment nature in silver,” Smith said.

 Investing in Several Projects

The Pirquitas mine, located in the Jujuy Province in Argentina, produced 1.7 million ounces of silver in the first quarter of 2011, an increase of over 1 million ounces compared to the same period in 2010. However, production was lower compared to the 2.1 million ounces of silver produced in the fourth quarter of 2010.

“It’s a large silver mine, one of the largest primarily silver mines, it produced over 6 million ounces last year, we’re looking at 8.5 million ounces this year,” Smith said.

Another project is Silver Standard’s’ joint venture with Esperanza Resources on the San Luis project in Central Peru.

“We’re working through a process just now getting approvals both from an environmental and local community standpoint and getting that into a position to move forward with development this year,” Smith said.

With Peru in the midst of a general election, it is unclear who Silver Standard will have to work with and what policies will be adopted once the Presidency is filled.

“We’ll see what the outcome gives, but whatever the outcome, we’ll work with whoever is elected,” Smith said.

A third project, Pitarilla, located in the Durango State of Mexico, is currently being explored.

“We’ve got an underground silver mine that will have a feasibility study out mid-year,” said Smith. “We’re also looking at the oxide zones to get a mine going there which will help us with an earlier start and more production.”

Smith said the multiple projects are positive for Silver Standard moving forward.

“We’re not a company with one development that we just have to knock over,” Smith said. “We have a number of options, a number of developments which says that if one gets stuck on something, we can quickly get behind another one and move it along.”

By Alex Létourneau of Kitco News aletourneau@kitco.com

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