Like many in the precious metals sector, Phillips Baker has watched in surprise as gold has tumbled in value. Usually a safe bet against insecurity in the stock market, prices for the precious metal, along with the firms that mine them, have ping-ponged.

Baker's company, Coeur d'Alene, Idaho-based Hecla Mining, paid off short-term debt of $200 million acquired from the purchase of Greens Creek Mining in Alaska by floating $163 million in stock sales in September. Still, his stock is down significantly. In October it was down 75% from its high of $13.14 a share in April.

But Baker, Hecla's president and chief executive officer, is more than bullish about the sector, and for his company as well. He is betting that precious metals will be one of the few sectors to eventually shine through in the coming months as the storm clouds darken, and that his 117-year old firm will be that silver lining.

Q: How do you imagine a recession would affect the precious metals mining industry?

A: It's difficult to see any growth in production. It's either going to be flat or negative, but that has more to do with the fact that it's hard to discover and operate new mines despite the prices for gold. For silver, growth is probably better, although there are headwinds, not the least of which are the lack of people to work and develop new mines. Silver went through a [20-year] recession. So today we don't have nearly as many mining engineers as, say, computer engineers coming out of universities.

Q: The precious metals market is behaving unusually in this downturn. What do you believe is causing this?

A: It's a bit disconcerting to see precious metals declining with all these events in the market. I attribute that largely to a real interest by the central banks in keeping a lid on precious metals as well as their selling gold into the market to generate cash. Also, it's in the interest of central banks to keep gold down against the value of the currency. Of course, if you talk to the person on the street, it makes sense that precious metals are more attractive than the obligations of government, which is currency. We will see them outperform currencies. I'm just surprised it hasn't happened yet.

Q: Will silver grow stronger as currency or as an industrial metal?

A: The picture is extraordinarily good for silver. If you go and try to acquire coins, you're told you have to wait a number of weeks to get a supply of silver coins. So it continues to have investor demand but also an industrial demand. Every new iPod and device like this requires silver. The fact that people change these units so rapidly is great for industrial demand, which is growing at a rapid rate of about 6% over the last five years, as compared to 2% over the last 20 years.

Q: Hecla recently bought Greens Creek Mining. Do you think the tightening of the credit markets will make transactions like this harder?

A: These credit markets make it difficult to enter into major transactions at this time. You have to have cash. But I think that holds true for any sector.

Q: Is Hecla following the debate about opening up public land for mining in Alaska?

A: There are certainly lands near Greens Creek that we look around at. If we could have exploration and mining rights, we'd be interested.