Silver prices are in a win-win situation ahead of a Federal Reserve announcement Wednesday about what it intends to do (or not do) to stimulate an economy that is close to if not already in a double-dip recession.

If, as is widely expected, the central bank takes any kind of action, it will be perceived as either cheapening the value of the U.S. dollar, thus enhancing the value of all precious metals, or as actually energizing the economy.

Should the Fed announce new initiatives to energize the economy, investors would have reason to anticipate increased industrial demand for silver and thus a rise in silver's price.

Such initiatives could take a number of forms. The most widely anticipated is Operation Twist, in which the Fed lengthens the maturity of its balance sheet to suppress interest rates. Another initiative would be buying more bonds. Besides these options the central bank could eliminate interest paid to commercial banks on excess reserves or buy foreign government bonds.

If the Federal Reserve surprises the world and stands pat it would most likely be interpreted as leaving the U.S. economy to twist in the wind, which would hurt the dollar and Treasuries, safe-haven investments that normally compete with precious metals. The upshot of this admittedly unlikely scenario is less competition for precious metals, including silver.