We’re digging the recent action in mining stocks. Some of the biggest names in the mining industry are breaking out to fresh 52-week highs, driven by rising commodities prices. 

Precious metals and other commodities are breaking out, in part due to weakness in the U.S. dollar. The U.S. Dollar Index, which measures the greenback versus a basket of foreign currencies, recently fell below its 200-day moving average (red) and touched its lowest level since May.

Why would the falling dollar cause commodities prices to rise? The simplest explanation is that when the dollar weakens, it takes more dollars to buy an ounce of gold or a barrel of oil. In this manner, a weaker dollar creates inflation in the U.S.