I keep seeing the markets move in an upward direction and people are talking about the end of the recession. It is true that the markets will follow something that typically measures how well the economy is going; profit. But in this case I think we are in a bear market rally because there is very little substance to push it forward. One of the biggest bankruptcies in American history occurred on Monday and the stock market rallied. On Thursday they’re going to announce that over 100,000 people applied for unemployment in a week. Oil is pushing to $70/barrel and gold is pushing for a $1000/ounce.

News isn’t all that peachy. Yeah, the market moves on profits, the perception of profits or news that comes in better than expected. That sometimes can relate to the economy and a lot of times it doesn’t. Oil rallies show that their should be increased profits with oil companies, but that also means that other businesses are going to be squeezed of profits (just like ordinary consumers).

With the type of government action during this particular down turn, I’ve been very scared to call any sort of rally because I just don’t think there is any substance to it. I’m more interested in watching the price of gold to see what is going to happen. When Gold goes up – bad for the economy. When Gold goes down – good for the economy.

I think the run up on gold has been completely fear based on the devaluing of the US dollar. A run on gold shows that there are fears that the inflationary train is coming and it won’t be pretty. The US consumer is going to lose a lot of buying power and yet again people are going to get squeezed by increases in prices.

The economy is between a rock and a hard place, so I don’t see any turn around until the price of gold takes a significant drop in price – but I don’t see that happening.