And to me, gold stocks mean no more -- and no less -- than auto stocks, chemical stocks or semiconductor stocks. It so happens I haven't owned a gold stock for something like 20 years, a period during which gold itself has been in a long-term secular decline. Until last week. My interest in gold stocks now is a reasoned play on the possibility that gold itself is ready to recover from the dismal 22-year lows at which it found itself just last month. It's a contrarian call, to be sure. I shouldn't expect everyone to agree with me. Quite the opposite -- even on my own trading team, when I suggested we should start panning for gold in gold stocks, I got nothing but looks of stunned disbelief.

But I stood by my reasoning. Once again, it's "don't fight the Fed" -- the same reason that so many folks at RealMoney.com are citing to justify their bullishness in equities. What's sauce for the goose is sauce for the golden gander.

And that means that even those who hate gold had better root for it to go up. Because the fates of these two markets are inexorably intertwined right now.

It's all about the end of the deflationary spiral, of which the collapse in the gold price was the most prominent evidence. Now the Fed is willing to re-inflate, and that's a good thing for gold -- and for the stock market. We see re-inflation in the drop in the long bond and the widening of the spread between regular and inflation-protected Treasury bonds. We see it in the Dow Jones Industrial Average bottoming on March 22, the very day of the top in the yield of the long bond. We see it in the Nasdaq Composite bottoming on April 4, the day after the price of gold bottomed. We see it in the multitude of statements from Fed officials in the past 48 hours, all telling us that inflation is nothing to worry about.

And we see it in gold stocks, the most useful of which behave like levered investments in gold itself.

I don't accept that gold and gold stocks are doomed to march forever downward until they hit zero, and that the "barbaric relic," as John Maynard Keynes called gold, is consigned to the dustbin of history. I believe that gold always has had -- and always will have -- important monetary properties. But even without them, gold will respond to re-inflationary impulses in the economy. If nothing else, there is the fact that gold is becoming scarcer every day. Annual production now isn't even enough to keep up with the global demand for jewelry. But, of course, if I were talking about a production shortage in oil, I doubt anyone would be getting excited if I recommended buying oil stocks.

And yes, as I wrote Monday, shorts are covering right now. But that's not a rigorous reason for why gold -- or gold stocks -- should go down from here. Shorts are covering in the stock market, too, and that's no reason to be bearish on stocks. Gold shorts are covering because their world has changed. The shorts are saying "don't fight the Fed," knowing that their free-money trade made possible by high short-term interest rates is over and done with. These are smart guys. They're not covering because they think gold is going down.

Just Another Trade

We talking heads who write about stocks for a living share lots of ideas we believe in, and for me this is just one of them. In the fund I manage, I've invested slightly more than 2% of assets across three gold stocks -- Homestake Mining (HM:NYSE - news - boards), Newmont Mining (NEM:NYSE - news - boards) and Kinross Gold. Just part of this complete breakfast -- in my fund, and in my writing. Big deal, huh?

Based on the tone of the reactions from my colleagues at RealMoney.com, I guess it must be, although I can't begin to imagine why. Give me a break! Let's not make this into a bar bet where if gold stocks go down, I'm an idiot -- and if gold stocks go up, the other guy is an idiot. This is just another trade, and all trades are based on disagreements. That's why there's a buyer for every seller, folks. There's nothing personal or rancorous in it, at least not for me.

Well, what can I expect? That's the third rail of gold. And whether you agree with me or not, you should thank me for having the courage to touch it. Many of you already have. In the past 24 hours, my email has run 100% -- without a single exception! -- in support of the reasoned and principled way I've been discussing gold. Not necessarily agreeing, but urging me to keep calling 'em as I see 'em.