Gold Fever Heats Up Precious-Metals Funds

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NEW YORK (TheStreet) -- Investors' fears of another stock decline are stoking gold fever. The spot price of gold broke hit $997.80 an ounce on Thursday, the highest level since February.

Gold has risen 4.6% in the past week. Silver added $1.81 to $16.12 for a one-week surge of 13%. For the week ending Thursday, the average precious metals fund we track popped 7.6%.

The best-performing precious metals fund this week is the ProShares Ultra Silver(AGQ Quote), which tracks the U.S. price of silver in London with 200% leverage. This exchange traded fund skyrocketed 27%.

The Precious Metals UltraSector ProFund(PMPIX Quote), a mutual fund, was the No. 2 fund with a 16% gain. The fund tracks the Dow Jones Precious Metals Index with 150% leverage. It benefited from large holdings of Barrick Gold(ABX Quote), Goldcorp(GG Quote), Freeport-McMoRan Copper & Gold(FCX Quote) and Newmont Mining(NEM Quote).

If you prefer unleveraged funds, take a look at the Market Vectors Gold Miners ETF(GDX Quote), which tracks the Amex Gold Miners Index. The index's top performers of the past week included Vista Gold(VGZ Quote), up 31%; IAMGOLD(IAG Quote), up 22%; Golden Star Resources(GSS Quote), up 21%; and Northgate Minerals(NXG Quote) up 19%.

Best Performing Precious Metals Funds for the Week Ending Thursday Sept. 3 Fund (Ticker) Rating Fund Type 1 Wk Tot'l Return ProShares Ultra Silver (AGQ) U ETF 27.02% ProFunds Precious Metals UltraSector ProFund (PMPIX) E- Open-End 16.03% PowerShares DB Silver Fund (DBS) D ETF 13.16% ETFS Silver Trust (SIVR) U ETF 13.10% Market Vectors - Gold Miners ETF (GDX) C- ETF 12.84% E-TRACS UBS Bloomberg CMCI Silver ETN (USV) D ETN 12.81% iShares Silver Trust (SLV) D ETF 12.71% American Century Global Gold Fund (BGEIX) C+ Open-End 12.17% OCM Mutual Fund - OCM Gold Fund (OCMGX) C+ Open-End 11.94% Midas Fund (MIDSX) E Open-End 11.89% Source:Bloomberg & TheStreet.com Ratings

The U.S. Dollar Index, which is down this year, has another 10% left to fall to keep pace with 2008 lows. Efforts to stimulate the economy are contributing to a weak dollar versus the euro, a trend that would help sustain gold's long-term rise.

The U.S. economy lost another 216,000 jobs in August, boosting the unemployment rate to a 26-year high of 9.7%, the Labor Department said today. That means stimulus efforts are likely to continue, and a new low for the dollar may trigger the spot price of gold to blast past the March 21, 2008, high of $1032.70.