Is a Dollar Bottom In Sight?

• By the tickerspy.com Staff
• On 10:10 am EDT, Thursday October 22, 2009

The dollar showed strength Thursday after China's economic growth spurred fear that the government-stimulated rally could lose steam on curbed incentives.

Amid stimulus spending, soaring equity markets, and seemingly ever-growing deficits, the dollar has been punished recently. The Wall Street Journal quoted Ben Bernanke earlier this month, "My colleagues at the Federal Reserve and I believe that accommodative policies will likely be warranted for an extended period." However, Bernanke also noted that "at some point" the Fed would need to "tighten monetary policy to prevent the emergence of an inflation problem down the road." Recently, investors have continued to buy gold and dump the dollar, but signs of a waning need for global stimulus could mean a rebound is in sight.

China reported 8.9% GDP growth in the third quarter, and while analysts still don't expect the country to restrict its stimulus efforts yet, the dollar is moving higher. RBS economist Ben Simpfendorfer told Reuters that lagging recovery in the private sector "makes it difficult to tighten early," but acknowledged that leaving policy too loose could result in an asset bubble.

In coming weeks, investors will be keeping a close eye on the Gold and Silver Stocks Index, as growing potential for a dollar reversal could pull the commodity back from current levels near all-time highs.

Goldcorp (NYSE: GG - News), Barrick Gold (NYSE: ABX - News), and Newmont Mining (NYSE: NEM - News) are all slipping today as the dollar gains on major currencies around the world.

Losses over the last five days have dragged Kinross Gold (NYSE: KGC - News), Agnico Eagle Mines (NYSE: AEM - News), and Pan American Silver (NASDAQ: PAAS - News) into negative territory on a trailing monthly basis.

In the last week, more than half of the Gold and Silver Stocks Index has turned negative, many components by more than -4%. Silvercorp Metals (AMEX: SVM - News) and Nevsun Resources (AMEX: NSU - News) are still hanging onto one-month gains of over 20%.

In the currency ETF market, the PowerShares DB US Dollar Bullish (NYSE: UUP - News) and WisdomTree Drefus Brazilian Real (NYSE: BZF - News) ETFs are moving higher in today's session.

As of this writing, the Gold and Silver Stocks Index is no longer ranked among tickerspy's top-50 performing Indexes over the last month. If governments around the world start tightening purse strings, it could fall even farther from the top.

Fun and informative, tickerspy.com is a free investing website where you can track multiple stock portfolios and compare against 250 proprietary Indexes tracking themes from stem cells to green energy to precious metals. Best of all, tickerspy.com lets you spy on the portfolios of nearly 3,000 Wall Street institutions and hedge funds and see graphs of their performance. Try tickerspy.com today and find out how you stack up against investing legends like Warren Buffett!

Buzz up!