Let me start off by saying the market should be correcting. Sentiment has reached ridiculous bullish extremes, the kind of extremes that led to the January /February correction.

That correction separated the second leg of the bull from the third. But let’s face it, sentiment has been in this condition for several weeks now and the best we could muster was a minor correction of 30 points on the news the SEC was filing charges against Goldman Sachs for fraud.

We’ve had three opportunities to “sell the news” with the April jobs report and recently with INTC and AAPL earnings. None of them have panned out. The market could use the Greek excuse as a downside catalyst, the same as it did in January. And now Greek short term bonds are tanking as the EU waffles about writing that check in front of the German elections in May.

All in all it boils down to the market has had every chance to correct and it has failed to do so.

Last month I speculated that we were “On the Brink of an Asset Explosion” . Well, we may not be on the brink anymore. We may very well be moving into the heart of the explosion right now.

We’ve just seen one of the most powerful rallies out of a corrective low in many years. Until Friday the market had held above the 10 day moving average 42 days in a row. That’s the longest stretch in over 10 years. Since the February 5th low the market has risen 71% of the time. That’s the kind of stuff parabolic blow off tops are made of.

I don’t really think we are in a parabolic blow off top just yet. What I do think is that we may have entered a runaway move similar to the August 06 to February 07 time frame.

During a runaway move, corrections tend to be uniform in both magnitude and duration. During the 06/07 rally all corrections fell in a range of about 20-35 points.

If the S&P and Dow can follow the Russell, Nasdaq, NDX, midcaps and banks to new highs, the odds are going to increase dramatically that the market is now in one of these runaway rallies.

Perhaps our leaders should look at this chart and figure out that it isn’t the size of the dose that’s the problem. WE ARE USING THE WRONG MEDICINE!

If, and this is a big if, the S&P does manage to make it back to the old highs one would be looking at a 30% gain from today’s level.

At first glance there appears to be more potential in this sector than the general stock market. But is there really?

For one thing, the leading sector of the last bull rarely ever leads the next one. We can see from the chart this is, in fact, the case.

Energy is woefully underperforming and there is a reason for this. The world has now moved into a long period of ‘on again off again’ recession. The energy sector has lost a very important fundamental driver which is the demand side of the equation. Demand for energy is going to be permanently impaired during this prolonged period of high unemployment.

I’m afraid the energy sector will probably be on a wild roller coaster ride for years to come as monetary policy drives prices to levels that stymie economies, followed by price collapse as demand evaporates during periods of recession.

So even though it appears the energy sector has a lot of room to run, the reality is that the fragile global economy will collapse long before oil reaches $147 again. I suspect the upside in the energy sector is probably limited to 20-30% at best.

If the stock market isn’t a great place to put our capital and the energy markets are going to be impaired for years to come, which investment sector should we look at, you ask?

That one is easy to answer. We go to the one secular bull market that’s left. The one area where the fundamentals are actually improving. The one and only sector that stands to benefit from these insane monetary policies.

Gold! Precious metals.

This is the one sector where the fundamentals aren’t impaired. In fact, they are only getting better and better as the powers that be continue down their misguided Keynesian path to ruin.

Now let me point out that every secular bull market in history eventually ends in a bubble. Gold will be no different. After it has gone up far enough and long enough we will reach a point where the public comes to believe that gold is a sure thing, just like they thought tech stocks were a sure thing and just like they bought into the housing myth that real estate only goes up in price.

The difference is that the precious metal markets are fairly small markets. When the public finally catches gold fever it will drive a bubble the likes of which none of us have ever seen before. I expect $5,000 gold is probably a conservative estimate for a final top.

Now keeping in mind that this secular bull is far from over, let’s take a look at mining stocks.

Unlike the S&P and energy sector the mining sector has already tested the old highs. As a matter of fact the mining sector has led this bull from the very beginning.

When the rest of the market was putting in a final bottom in March of last year, the miners were already over 100% above their November lows. How’s that for relative strength?

From today’s level back to the old highs would yield miners a 20% gain. That’s probably equal to the best we can expect from either the stock market or the energy market.

However, miners are not limited by impaired fundamentals like virtually every other sector. The mining sector has an incredible wind at its back. Does anyone really believe mining stocks ($HUI) would be trading anywhere close to $519 with gold at $1,500? How about with gold at $2,000?

Before the secular bull is over I expect we will indeed see $5,000 gold. I would be completely dumbfounded if mining stocks don’t have 500-1000% of potential in them during the remainder of this secular bull market.

So one can fight with a secular bear market and impaired fundamentals for small gains or one can just get on board the only remaining secular bull market and hold on for one heck of a ride. This is how millionaires and billionaires are made. Not by trying to trade in and out of impaired markets.

So if we are on the verge of an asset price explosion I want to be invested in the one area best poised to benefit from the fundamental driver of that explosion…gold!