One of my barometers for investing is the watching the fear index. The fear index, the VIX, in 1980 was extremely high and very volatile in the midst of all the speculators and public investors buying gold and stashing it in their back-yards.
In 1982, the stock market broke out of a 14-year bottoming process. However, no one took it seriously and remain looking in the rear view mirror until sometime in 1996; 16 years later. Is this starting to sound familiar?
In 2013, we see the price of gold down very dramatically. I hope you see the correlation.
Since my discipline is observing not predicting, I have no idea of the magnitude of what lies ahead. The price of gold started to tell you something amazing was happening 21 months ago.
The rally is being driven like in 1982 to 1990 by the institutional investor; the public barely has its toe in the water. This is why the rich get richer and those who hesitate are lost. This does not mean the indexes will continue to set new records every day but when respected academics call for 1700 to 1900 on the S&P they should be acknowledged. However, many will still sit it out and look back with “should have” as their excuse.