The same cannot be said of oil, which is being crushed by the dollar’s rise. The United States Oil Fund (NYSEArca: USO) is off almost 4% in the past month while the United States Brent Oil Fund (NYSEArca: BNO) is lower by nearly 5%.Investors have yanked $10.8 million from USO since the start of September.

Though it may seem hard to believe at a time of dollar strength and gold weakness, some have a more sanguine view of silver.

“The silver price continues to languish under pressure from the stronger USDand its strong correlation with gold. Silver has been trending lower for the past 7 weeks and it is now getting close to attractive levels. While inventories remain elevated, signaling lacklustre industrial demand, the silver price is trading closer to its marginal cost of production that currently stands at US$15/oz. The Silver Institute expects demand for the metal to grow at around 5% per annum over the next two years thanks to a sharp turnaround in the global photovoltaic industry, led by China. In the medium term we expect the trend of destocking and price appreciation to resume as the global economic recovery gains pace,” according to ETF Securities.

Although investors have pulled cash from gold ETFs this month, the iShares Silver Trust (NYSEArca: SLV) has managed to add $35 million in new assets.

PowerShares DB US Dollar Index Bullish Fund


Tom Lydon’s clients own shares of GLD.