This year's Prospectors and Developers Association of Canada (PDAC) annual convention which opened  Sunday was better attended than some had feared and seemed a little more upbeat in tone than some would consider justified by the global economic situation. Despite all the doom and gloom affecting the industry, attendance on the first day was strong and exhibit space was fully booked, although there were one or two empty booths for companies which just decided not to come, or which had not survived the recent fallout. The convention's overall attendance looks like it won't fall far short of last year's 20,000 plus making it one of the world's largest mining sector meetings which could be considered surprising in the light of the industry's overall downturn. Nevertheless, mining and mineral exploration in particular, have always been the place for optimists and it seems there are plenty still around. Perhaps that was because the gold mining and exploration sector largely dominates the event and some gold miners are recording excellent returns and stock price growth, as the yellow metal has outperformed virtually every other industrial sector worldwide.In a series of talks on prospects for the global mining sector though, speakers were a little more sanguine about the prospects for the world economy over the next couple of years, and in mining in particular.Opening the proceedings, with a talk on the global overview in a session entitled Commodities and Market Outlook, Alan Williamson of Galena Asset Management in London, UK, painted a slightly more cautious picture of the economy as a whole, feeling that it still was a little off its bottom, and that--rather than a straight recovery from the low point--he predicted a double bottom which might put back any serious recovery until 2011.While the state of the global economy will continue to impact on base metals output in particular, Williamson felt the base metals downside was relatively limited, due to so many mining operations operating at, or near, a loss with closures if the price dips further so reducing demand that the price could not fall much further.On the negative side for the mining sector, though, Williamson noted there was a correspondingly low upside potential as prices increases would bring mothballed production back on line thus limiting increases.  This, he stated, is the new world in which we live.The prospects for gold and silver are perhaps better, but still uncertain, according to Jim Steel of HSBC Securities in New York.  He did point out a number of relevant factors of which Mineweb readers will already be well aware: The gold price in real terms is still well short of its 1980 high; and it outperformed almost every investment sector in 2008 when the bottom dropped out of markets in general.Steel said the results of a Gallup poll in the U.S. showed a remarkable correlation over the past few years between the rise in the gold price and a negative assessment of the state of the U.S. economy by poll respondents.With gold attracting investment largely as an insurance policy against loss of wealth, rather than as a strictly appreciative investment, there may still be scope for further increases. But there are vulnerabilities in this scenario which could yet see the price crashing down again. The volume of gold pouring into ETFs could see a similar outpouring should sentiment change and holdings be liquidated.Even so, Steel felt that the current situation with investors long on gold and also long on the dollar was unlikely to last.  While gold had largely reversed its position of being a play on the dollar falling, recently gold and the dollar had both risen alongside each other. Gold had also decoupled itself from most other commodities, leading to the building up of a price overhang.  If the ETF market - the main driver recently of the rise in gold price--stutters or fades then the amount of metal coming back on the market could fall dramatically.The other problem is fabrication demand - notably in India, where gold jewellery is  a traditional wedding gift or dowry payment, which has so far this year proved to be almost zero - seems to be falling.  While other factors, such as declining mine output and reduced Central Bank sales may be broadly price supportive, jewellery fabrication demand dominates offtake, and this may be becoming, in effect, negative as demand is replaced by scrap sales. Steel is not particularly supportive of silver either, advising that, although silver may continue to be dragged up by gold, the fundamentals show that supply is likely to substantially exceed industrial demand over the next couple of years. Again, as with gold, the demand is supported by ETF purchases. These could fall away with a negative effect on the market.In spite of the negatives, Steel appears to feel that in the short term both gold and silver could show positive returns as key economists forecast further market strife and fall out. The insurance value in gold may keep price movements positive in the short term.