I rolled out of bed in the early afternoon, since I’ve been up all night working on various Internet projects, to find the Fox Business talking heads excited about the Dow hitting 7000.

“Huzzah!” everyone exclaimed. “We’ve hit the bottom and the economy is back on track.!”

Uh. Not so fast. I don’t like to rain on people’s parades but get your umbrella:

Stocks went up today on several announcements that has made “smart” investors  move in to make a quick buck. Roughly half of them will be out of the market in no more than a month or two as they turn a profit then head for safer ground. The rally was led by G.E. (which surprisingly didn’t lose it’s AAA rating)  and some financial stocks as well as news from Apple that they will release a cheaper, smaller Ipod. Fox Business has a report on the rally.

But the two main factors in the rally were banks announcing they were profitable (led by Citigroup who pulled that stunt yesterday) although the elephant in the room is that those banks are in part profitable based on their quasi-nationalization payed for by you and me, and a rise in oil prices which won’t help the economy in the long run obviously.

Personally I’m suspicious of the bank announcements. I think they’re ginning the numbers to create a rally so they can sell of their worthless shares  to suckers before everyone realized Citi, Bank of America and JP Morgan are effectively insolvent and are being propped up with bailout money and happy thought. The Gods help us if there’s a bank run.

Also the Dow being at 7170 is still horrible. It still has dropped by more than half in less than a year, and the “incredible” gain it made today still leaves us with billions in wealth simply gone. We are still at all time lows and just yesterday Blackstone CEO Stephen Schwarzman announced that 45% of the world’s wealth evaporated in the last year and a half. Think about that for a second. Trillions of dollars you and I thought were in the global economy are simply not there anymore, and the world’s financial activity is grinding to halt as a result.

The Washington Post ran an article recently claiming job losses will destroy any positive effect the stimulus would have had, Precious metal dealers are warning of a gold coin shortage and everyone is ignoring the$700 Trillion Elephant in the Room which is the derivatives contract that sends chills down the spines of every economist when someone mentions it.

Oil going up and the Democrats pushing more ethanol means you and I will be paying higher prices for food while the government’s hot printing presses will make the dollars we buy food with worth less. Investors see the writing on the wall and are trying to make quick cash while they can, but a Dow at 4000 by summer is a definite possibility. My personal prediction is the Dow will be at around the mid-to low 5000s.

So unless you’re a day trader get out of the market while it’s going up. Gold is a good place to put money but be sure you can take physical possession of it. Guns retain value in bad economies so if you live in a state that allows person to person sales (like South Carolina) buying a few extra unbannable guns (rifles and shotguns that are not semi-autos) to trade or pawn isn’t a bad idea. Silver and oil are good bets, as is farmland.

But whatever you do don’t let the talking heads convince you that you can sit back and let the government take care of things. Prepare yourself for the future. Put cash in the house, pay off debts and start stocking the pantry with long lasting foods now. This is a hedge against grocery inflation which will be hitting us hard in the next couple of years. Retail stores are in trouble so now is the time to get deals. Remember how your great grandparents lived and try to emulate them, because the rolling 2000s are not coming back in our lifetime, bear market rally notwithstanding.