Many investors are hoping that the current stock market rally signals the end of the recession and a return to business as usual. They are expecting a profit-filled decade, just like what followed the 1982 rally.  David Rosenberg and Barry Ritholtz have put together the above chart.

It reinforces the theme of one Forbes article, titled “Don’t be a Sucker, Take Your Gains.”  Forbes says that the rally is over.

Odds are the huge rebound since March has run its course. And even though it yields nothing, it’s time to raise cash.

We do disagree about cash, though. Why have your money sitting in a savings account, slowly eroded by inflation, when you can buy gold, which has already gained 33% this year?

Dr. Marc Faber, economist and Swiss fund manager who predicting the financial crisis, sees the metal continuing to rise far into the future. Gold’s strength is its ability to hold value while paper currencies weaken under the weight of mass printing. The US Budget is nearing the debt ceiling allowed by Congress and the administration is petitioning to be allowed to raise the debt ceiling another $1 to $1.5 trillion. For this reason, Faber says that he can’t even predict how high the metal’s price will rise. As long as the government continues to inflate away its debt, gold will increase in value.

What will continue to happen is that the S&P 500 and the Dow Jones will go down relative to gold. I think gold will go up more from its support level.

Will it go $2,000, $200,000 or $2 trillion? I don’t know. But if you have money printing in the world, then the price will over time rise. It will go up more for things that you just can’t increase the supply, and the supply of precious metals is very limited.

Today Bill Bonner of the Daily Reckoning asks, “What’s the smart money doing?” We have heard that unemployment is still up, have been cautioned that prime foreclosures are on the rise, and even President Obama is worried about a double dip recession. Yet the stock market is going full speed ahead with a 10-point increase in the price to earnings ratio, meaning that stocks are essentially becoming more expensive.  Why do investors have such confidence? Bonner looks at what the different classes of investors are doing for an answer.

The Dow is now up more than 50% from its March low…and has regained more than 50% of what it lost. Are the insiders taking advantage of this dip to get bigger stakes in their own companies? No… They’re selling 18 times as many shares as they’re buying. Go figure.

The insiders know that their businesses are not really in good shape. They’ve been able to maintain profit margins by cutting staff. But sales are down. And they don’t see where additional sales will come from.

Meanwhile, investors have been hallucinating about a real recovery. They’ve bid up the price of shares as though they expected a stunning period of growth. Generally, earnings have held steady…but stock prices have gone up.

This has brought a 10-point increase in the P/E ratio, to greater than 27.

What would justify such an ambitious P/E? Only growth. Where might growth come from? We don’t know. David Rosenberg says stocks are priced as if investors expected profits to double next year. But it usually takes profits 5 years to double. And then, only when they have a reason to double – such as higher sales and lower costs.

This leads us to believe that exposure is quite high in the stock market. Companies can only minimize their operations budgets by so much, only lay off so many employees before they become non-functional. Gold remains our favorite store of wealth as well as a handy way to pick up great returns. Your retirement account is not limited to the stock market, either.  You can rollover a 401k, Roth IRA, or traditional IRA into a precious metals backed retirement vehicle. More and more investors are switching to a gold IRA as the writing on the wall becomes clear.

"I look at the board and every single stock is up. But there is no fundamental rooting as to why."

Meredith Whitney, financial analyst and media darling, stated today that the stock market is overvalued and we can expect a double dip recession. Whitney has been labeled the second best stock picker by Forbes and is renowned for her perception in the industry. CNBC also awarded her “Power Player of the Year” in 2008, beating out Ben Bernanke and Hank Paulson.  When such a respected mind states things like, “I don’t know what’s going on in the market right now because it makes no sense to me,” and, “There’s nowhere to hide at this point,” it’s time to listen. You can watch her interview at CNBC.

Are you still in the stock market? If Meredith Whitney thinks its overvalued, brace yourself for what’s to come. Better yet, buy gold before the bottom of the stock market falls out.

Dr. Marc Faber, who predicted the 1987 stock market crash and saved his clients, has made a statement the US stock holders will find depressing.

Stock price movements become extremely volatile and erratic in countries with a depreciating currency. In the long run, the depreciation of the currency will usually more than eliminate the gains in local currency terms. So, whereas in 2007 both the Dow Jones and the S&P 500 exceeded their previous highs reached in 2000 in US dollar terms, these indices failed to make new highs in Euro terms.

By examining the gains in both dollars and euros, it appears the outstanding stock market rebound may be little more than evidence of stealth inflation. Companies aren’t making more dollars, it just takes more dollars to buy a piece of one because our purchasing power has decreased. Buy gold and avoid the next market fallout.

Which would you have bought?

Almost 4 years ago, stock investment advisors at the Motley Fool conducted a poll. They asked their readers if they would rather own a share of Google or an ounce of gold.  Well, the gold price today is $1,138.80  an ounce and a share of Google is sitting at about half of that at $576.28.