"High prices beget low prices," said our old friend Rick Rule, speaking in St. Michaels earlier this week. "High risk begets low risk. High confidence begets low confidence. High stability begets low stability."

Nothing is born under the sun that doesn't die in the shade - including bubbles, booms and bull markets. We read in today's news that the "Housing Boom has Gone Bust."

What begat this particular bust was, of course, the boom that preceded it. Boom begets demand, which begets supply, which begets glut, which begets bust. Before you know it, the whole misbegotten property market is falling apart.

That seems to be what is happening in some parts of America now, according to Canada's National Post.

A few months ago, "pre-construction" was a powerful compound word. The prefix was pure magic - at least in South Florida. It tipped you off that buyers didn't really want to own another condominium apartment. They didn't even want to see it under construction, and they certainly didn't want to pay for it. What they wanted was something without a roof or a mortgage that they could unload to someone without a dollar or a clue.

That is what you get at bubble peaks. During the great tech stock bubble, too, the wildest profits were made in the weirdest investments - the dot.com equivalents of un-built condos - Internet companies with no revenues, no business plans and not a prayer of success.

But that is just the great glory of our free-market system; it allows people to make fools of themselves and lose their money on their very own with a flourish. (See the essay below for a current example.)

Thus, it is that in the south of the balmy state of Florida, the party is coming to an end. Gone is the razzle when a new development is launched. Gone are the acrobats, the clowns, and the bubbly. Gone are the lines of people waiting to buy pre-construction or post-construction. Gone, too, are the sales. According to the National Post, buyers are walking away from $80,000 deposits rather than close on new apartments.

As many as 29% of the people who took out a mortgage last year have zero equity in their houses, reports the Wall Street Journal. And there are 3.5 million units waiting to be sold - 30% more than a year ago. Delinquency rates are "soaring," says the Journal.

Sic transit gloria bubbli.

*** "In Gold We Trust," begins an op-ed in yesterday's Wall Street Journal.

"If none of the usual suspects is responsible for gold's sharp rise, what is? We believe it represents an equally sharp decline in the confidence of investors - large and small - in the likelihood that Washington will pay back its mounting obligations in un-depreciated money. Throughout history, and especially in wartime, governments have escaped from fiscal over-commitments by letting their currencies depreciate. Ambitious spending initiatives, threats of international conflict, and even Washington's political unpopularity all contribute in the fear that this is happening again now."

*** Yesterday, gold dropped to $680. Should you buy now? Or wait for further correction?

There is no good answer. Yesterday, also, the Dow lost another 70 points. The stock market seems to have topped out for this cycle. Your best strategy is simple - continue executing the Trade of the Decade that we have been following since 2001 - buy gold on dips; sell stocks on rallies. Sometimes you'll get the timing right. Most often you won't, but at least you'll be tracking the major trends, rather than fighting them.

"Bull markets and bear markets follow one another as surely as a person
in- and exhales," adds our old friend Doug Casey. "And, as with breathing, the longer you hold your breath, the more urgent and powerful the subsequent intake. Commodities in general, but precious metals in particular, went through a deep bear market that lasted an entire generation. Gold fell from over $800 in 1980 to $256 in 2001; silver from $50 to $4. These are fantastically deep and prolonged bear markets. But they were even worse than they seemed because the dollar was losing about two-thirds of its value at the same time. For Americans to keep track of value, over time, with dollars is as idiotic as for an Argentine to try to do that with pesos.

"The financial crisis of the late 1970s drove the metals to those highs. We're now looking at another crisis, one that will dwarf the turmoil of the 1970s and likely bring on a depression worse than the 1930s. With so much trouble just ahead, there's good reason to believe that the metals will exceed their old highs - which, in today's dollars, means gold over $2,000. Let me reiterate what I've said for years: This time, gold isn't just going through the roof. It's going to the moon.

"Generally there are three stages to a bull market. The first is stealth, when prices go up but nobody cares or even notices. With commodities, that happened from about 2000 to 2003. Next is the 'Wall of Worry' stage. People see that prices are rising, but expect them to fall back to the bear market levels they'd gotten used to. People come up with all kinds of reasons why they're overpriced. They are confused by the new reality, and many 'old hands' and commodity producers take the opportunity to sell, since they haven't seen good prices for years. This is the stage of the market we're now in. Finally, there is the mania stage, when broad masses of the public get involved. It's where the big profits - but also the big risks - are. Personally, I'm more comfortable buying when everyone says you're an idiot for doing so, or at least when they're skeptical. When we're all hearing about what a great investment gold is, I'll be looking for other opportunities. But my guess is that we won't really be there for another year. And when it arrives, the mania should last for some time, as it did most recently with the Internet stocks.
 
"While I was expecting to see a big surge - and went on record with that expectation on March 22 when gold was trading at $550 - there's little doubt that gold and silver may be getting ahead of themselves for the short term. A market trend, even an unstoppable one - which is how I view the current metals bull market - is still going to periodically correct.
 
"Get used to it.
 
"That is especially true if you're an investor in the mining shares, which is absolutely, without question, the right way to play this market. Buy on dips (historically, we see buying opportunities in the summer months) and don't be chased out of the market by volatility.
 
"When this thing does finally come to an end, the better-managed gold and silver stocks will be trading for many multiples of what they trade for today.
 
"This trend is your friend...get comfortable with it."

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.