“Gold continues to climb…stoked by inflation worries,” says a headline in the International Herald Tribune.

Yesterday was another exciting day on Wall Street. The Dow rose 131 points…and gold shot up $25 to a new record, $1043.

Welcome to Zombieland…where the most amazing things happen…Starring Ben Bernanke, Tim Geithner and a cast of millions…

The new movie – Zombieland – about a group of survivors in a world of zombies, was the biggest grossing film in America and Canada over the weekend. It must reflect the zeitgeist of the North American public…a deep feeling that we are living in a decaying world.

The longer the rally persists, the more dangerous it becomes.

Not much happened yesterday. The Dow fell 47 points. The newspapers attributed the reversal to surprisingly low consumer confidence numbers. Apparently, consumers aren’t so sure this crisis is over. As we reported yesterday, they’re saving money… maybe even at an 8% rate.

The rally may end any day, but it didn’t end yesterday. Stocks rose 127 points, as measured by the Dow. Oil closed at $66. Gold rose $2.50.

It is a gray morning, here in London. We sit in the building with the golden balls, look out the window, and wonder…

…how does it all work?

Personal conversions sometimes mark dramatic turns in history. Saul of Taursus saw a vision so bright it left him blind. The next thing you know, he had changed his name and was pushing Christianity all over the world. According to Gibbon, the Roman Empire fell as a consequence. Then, on the advice of his mistress, Gabrielle, Henry IV became a Catholic, leading to the Edict of Nantes and its subsequent revocation.

The inflation/deflation debate is hot… It crackles and pops like a pine fire. But it gives off little helpful light. Abe Lincoln may have read by the light of an open fire. But when we tried it, we singed our eyebrows. It made us suspicious of Old Abe; maybe he wasn’t quite as truthful as he pretended to be. Later, we realized he was a mountebank. But that’s another story…

The trouble with being a contrarian is that you can never be quite contrarian enough.