Dollar Dominating Precious Metals Stocks

• By the tickerspy.com Staff
• On 12:28 pm EDT, Wednesday October 28, 2009

The dollar's rally continued on Wednesday, and one expert said the trend could continue.

After sinking to a 14-month low, the dollar is headed north for its fourth straight session. Today's report by the Associated Press said simply, "The dollar is dominating energy prices right now." In the equity markets, precious metals stocks are feeling the pain even worse, and some think the dollar's rally could continue.

Jim Rogers, chairman of Singapore-based Rogers Holdings, told Bloomberg the trend could continue. "Whenever you have everybody on the same side of the boat, you know what you have to do," Rogers explained, referring to the overwhelmingly pessimistic outlook for the currency. He continued to note that the dollar's rally, and subsequent decline in commodities may go on for "a while."

Over the last week, the PowerShares DB US Dollar Index Bullish (NYSE: UUP - News) ETF is the only winner in the Currency ETFs Index. While its 1.5% gain for the period may not seem too impressive, a look at the Index's performance chart shows that movements among these ETFs tend to be less significant than those of the broad equity market.

Perhaps a better equity indicator of the dollar's strength the drastic reversal of the Gold and Silver Stocks Index. Miners seemed unstoppable as gold prices charged past all-time highs, but now the entire Index is off in the last week, half by more than -10%.

NovaGold Resources (AMEX: NG - News), Kinross Gold (NYSE: KGC - News), and Seabridge Gold (AMEX: SA - News) have been hurt the worst, down by more than -16% in the last week.

Meanwhile, large-cap play Goldcorp (NYSE: GG - News) has also slipped by double-digits for the period. Its peers, Newmont Mining (NYSE: NEM - News) and Barrick Gold (NYSE: ABX - News) are both down by more than -6.5% in the past five sessions.

Canadian mining stocks have fallen particularly sharply on the dollar's recent strength. North American Palladium (AMEX: PAL - News) is among the worst, down by -18% in five trading days. Its Platinum and Palladium Stocks Index peer, Platinum Group Metals (AMEX: PLG - News) is the top-performing Canadian miner for the period, down less than -2%.

As of this writing, the precious metals Indexes mentioned above are all ranked among the 40 worst-performing tickerspy Indexes over the last week, down by more than 8.5%.

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