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Stocks hit record highs last week. And if you only listened to some in the mainstream media, you’d think that this is the perfect time to pour your money into the market.

But many experts are seeing past the hype; they’re keeping some perspective on these gains and seeing the forest for the trees. For example:

  • These record highs are merely a rebound from similar highs in 2007. We all know what stocks did in the time in between.
  • These aren’t really records at all; these “records” ignore inflation! If you adjust for changes in consumer prices, the Dow is still 10% below its high in 2007.
  • Stocks are being artificially propped up partly due to the Fed’s money printing. What happens when Ben Bernanke stops injecting 85 billion new dollars into the economy each month?
  • As we last reported, insiders are selling stocks twelve times more frequently than they’re buying. What do they know that they’re not sharing with us?
  • Most other economic indicators are negative. From Bloomberg Business: “Food stamp use is at a record high. Chronic unemployment borders on permanence. Real medium household wealth is at a decade low. Equity abandonment hit historic levels well into last year.”

Put into perspective, this “hype” doesn’t look so rosy…

Meanwhile, despite all the stock market volatility in the last 12 years, gold has gone up every single year. And in the six years since 2007 that it has taken the stock market to fall and rebound to current levels, gold and silver have more than doubled.

Where will gold go from here versus the stock market? No one can say for sure, and we certainly can’t say in the short term if the next $100 move will be up or down.

But what about the next BIG move from gold and silver versus stocks? Where will the next $500 move be for gold? Or the next 5,000 points for the Dow? Which is the logical one to bet on?

The facts, and history, could not be more clear.

Precious metals on the move

London Fix PM price at week’s end, and change over previous Friday:

  • Gold: $1,581.75, down 0.03%
  • Silver: $28.78, up 2.7%
  • Platinum: $1,588, up 0.6%
  • Palladium: $769, up 6.7%

In the news

U.S. economy remains in “neutral”
“It is not possible to create jobs through monetary policy alone. The U.S. remains the economic engine of the world… it’s not China, it’s not Europe, it’s the U.S., and the U.S. remains in neutral.” – Dallas Fed President Richard Fisher (link)

Morgan Stanley: The gold bull market isn’t over
“”We believe that gold has demonstrated considerable technical strength, offers good value at current prices both as an entry level to the trading range between US$1,540/oz and US$1,800/oz and as an option on any remaining upside surprise above this range that might result from the third part of the Great Monetary Easing.” – Peter Richardson, Chief Metals Economist, Morgan Stanley (link)

Economic recovery is “100 percent fake”
“It’s built on Fed money-printing and government borrowing. Both are at record levels. That’s absolutely crucial to this market rally.” – Robert Wiedemer, financial commentator and best-selling author of Aftershock. (link)

Stock market rally ‘will end badly’ so buy gold
“I think investors who today are rushing to stocks need to be reminded of the market bottom exactly four years ago.” – Marc Faber (link)

The week ahead

  • U.S. retail sales report to be released
  • Higher gas prices to reduce discretionary spending?
  • Gold demand from India to increase as wedding season kicks off?
  • Post Chinese New Year, will China keep up frenetic pace of gold buying?