February 10, 2013
With the Dow crossing 14,000 and investors seemingly infatuated with the stock market’s latest rally in the last few weeks, gold closed sideways last week and finished at 1,668.25. But before anyone falls too hard for stocks, some perspective may be in order. First, red flags and “sucker alerts” abound as reports surface that insiders have been nine times more likely these past few weeks to sell shares of their companies than to buy new ones. This doesn’t bode well for the long term, not when insider selling usually foretells a drop in the markets. Second, put the value of the Dow today against the price of gold – despite this rally – and the Dow is down since 2009. The moral of the story? An abrupt end to this “sucker” rally could be near. But even if stocks continue to grow, history suggests that gold is likely to continue to outpace them. Keep your eyes wide open.