Gold, Oil Rising on Weak Dollar -- and Something Else (USO, UGA, GLD, IAU, GDXJ, GDX)

We’ve already posted our opinions on the agreement which is expected to create a TARP-style program to prop up Europe’s weak banks. In our view, the proposal is not big enough and it doesn’t address the issue of Eurobonds except by not including them as part of the deal.

Oil traded higher this morning on the news, and it has only gone higher during the day as a strengthening euro has weakened the dollar. But the impacts are slightly out of whack. The euro is up less than 2% versus the dollar, while Brent is up 4.6% and WTI is up almost 5.9%. The premium represents the belief that the Eurozone got it fixed this time. Right.

We’re not the only skeptics. Here’s an analyst cited at MarketWatch:

“The EU has decided to create TCRP, the Troubled Country Relief Program, their offshoot of our Troubled Asset Relief Program,” emailed Peter Boockvar, an equity strategist at Miller Tabak.

“For now, party on and turn that hourglass over as more time has been bought, but only the symptoms are being fought as the underlying disease of excessive debt and lack of growth still remains,” Boockvar added.

And what about gold, up nearly 3% by early afternoon? Sure the weaker dollar is helping there too, but that doesn’t match up very well with a report at Bloomberg that traders expect gold to continue rising next week “on speculation that Europe’s debt crisis will boost demand from investors seeking to protect their wealth.”

So, either the European financial crisis is fixed (energy prices rise on anticipated increase in demand) or it’s not (gold prices rise as investors seek a safe haven). Or, in this case, both at the same time.

Gold buyers don’t believe a solution has been found to Europe’s problems, while oil traders do. “O brave new world, that has such people in it.”

The United States Oil Fund (NYSEMKT: USO) is up 6.7% at $31.49 in a 52-week range of $29.02-$42.30. United States Gasoline (NYSEMKT: UGA) is up 4.9% at $47.93 in a 52-week range of $44.65-$58.88.

SPDR Gold Shares (NYSEMKT: GLD) is up 3.1% at $155.76 in a 52-week range of $143.97-$185.85. The iShares Gold Trust (NYSEMKT: IAU) is up 3% at $15.62 in a 52-week range of $14.43-$18.63.

But the junior gold miners are really shining. Market Vectors Junior Gold Miners ETF (NYSEMKT: GDXJ) is up 5.4% at $19.17 in a 52-week range of $17.37-$39.50. The Market Vectors Gold Miners ETF (NYSEMKT: GDX) is up 3.6% at $44.88 in a 52-week range of $39.08-$66.98.

Paul Ausick