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Gold can’t be stopped — for now. The precious metal just surged to another high of $1,133 before falling back to $1,132. Gold bugs are celebrating as investors buy gold on the assumption that economic recovery is underway, and might bring with it inflation. Equities are markedly higher as well, banking on economic recovery optimism. Stock markets in Asia and Europe were higher today, and the U.S. market opened with a rallying cry. The bulls are charging, and that is helping commodities like gold.

And, of course, the fact that an economic recovery can’t negate difficult underlying fundamentals (like massive amounts of U.S. government debt) have investors quite nervous about the U.S. dollar, which is tanking spectacularly today against every major currency. Including the yen.

Oil is also up today, since it often moves in tandem with gold (and opposite the U.S. dollar). There are hopes that economic recovery will increase demand for commodities, and that is sending the speculators hurrying to buy.

Investing in precious metals

Investing in precious metals has become much easier in recent years. Index funds, ETFs and other instruments make it possible for nearly anyone to diversify his or her portfolio with precious metals, like gold and silver.

But is it really a good idea to go for gold right now? There are some that believe that all this gold craziness is a bubble, and that it can’t go much higher. Even if it does, the argument goes, gold will have to crash sometime. And when it does, it is most often the consumers who got in at the end who suffer. The biggest gainers are those who invested more than five months ago. Indeed, if you are looking to get rich fast, you better get in, clock some gains, and get out. Fast. And even that is a risky move. Who knows how long this frenzy will last?

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

While many investors have their eyes full of gold, some investors are turning toward silver. It’s hard to ignore the fact that gold is still sitting above $1,100 an ounce. But some argue that gold is already near its high for now, and that, even if it goes higher, it might not provide the kind of returns that have been seen the last couple of months. Instead, say some investors, it is time for silver.

Indeed, silver often out performs gold as bulls in the stock market gain the upper hand. MarketWatch reports on silver as an investment:

Silver is a precious metal, after all, one that has historically outperformed gold in a bull market and doubles as an industrial metal — and supplies of it are depleting at a much more rapid pace.

“Silver is unique in terms of being both a monetary and an industrial metal,” the Bullion Services Team at GoldCore said in a recent report, pointing out that it’s severely undervalued. “Silver remains the investment opportunity of a lifetime.” …

“Silver is highly correlated to the safe haven of gold and is, in effect, a leveraged sister of the precious yellow metal,” according to GoldCore, an international bullion dealer. “Thus, informed investors use gold more for wealth preservation purposes and silver in order to make a return.”

It’s an interesting thought. With many investors turning toward precious metals as U.S. economic fundamentals erode (recent reports showed another increase in the trade deficit, investors look for more tangible investments, eschewing the dollar.

Even if you decide that investing directly in silver is not for you, there are ETFs and other instruments that make it relatively easy take advantage of rising silver prices — if they really do materialize.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.

One of the most difficult things, especially if you are looking for an investment with solid value, is figuring out how to avoid a trap. However, there are a number of value traps that are present in the stock market. The Motley Fool offers some information on five value traps, and what you should do about them:

1. The quarter-life crisis
These are real heartbreakers. You find a dominant company whose once-sky-high growth has stalled, and its shares along with it. “TechWidget Corp. is trading at only 15 times earnings right now, only half its five-year average!” you say. “Its earnings have doubled over the past five years, but the shares are down over the same time period. Sounds like a steal!” …

Instead of returning incremental profits to shareholders via dividends, such companies wreck shareholder value by chasing growth through non-core expansion and high-profile acquisitions. Oh, and the ill-timed share repurchases that exist primarily to juice per-share earnings and help sop up all that stock option-driven dilution.

Steer clear of flailing tech titans until they’re ready, willing, and able to follow the lead of a Microsoft (Nasdaq: MSFT) or an Oracle (Nasdaq: ORCL) into dividend-paying adulthood.

2. The soaring cyclical
Here’s the thing about cyclical stocks: Their P/E ratios are counterintuitive. They always look the cheapest when they’ve reached their priciest, and look priciest when they’ve reached their cheapest. …

But savvy investors know that cyclical companies’ profits mean-revert, which is why cyclical stocks’ P/E multiples stay low during booms and high during busts. In other words, you should be looking at cyclical stocks as their P/Es expand, not shrink.

3. The small-cap Methuselah
The six-year small-cap bull run that came crashing to a halt last year was a painful reminder of a little-known value trap: the small-cap Methuselah. …

Show me a company with a long, proven history of creating serious shareholder value, and I’ll show you a mid- or large-cap stock.

4. The too-high yielder
A company usually has a high yield (think above 7%) for one of three reasons:

• It has limited growth potential, so managers return as much cash as they can to shareholders. Think regional telecoms.
• The company is in a clear state of decline and investors expect a dividend cut. Think terrestrial radio or newspapers.
• The company is in a tax-advantaged structure that doesn’t allow it to retain much capital. Think business development companies, real estate investment trusts, or master limited partnerships.

Broadly speaking, a fat dividend is a good thing. There’s a fine line, though. At Motley Fool Income Investor, we’re looking for that sweet spot where an attractive payout meets rest-easy status.

5. The unopened book
Book values need to be adjusted — especially heading into and during recessions. Acquisition-happy companies inevitably end up slashing the goodwill they’d booked while making bloated acquisitions in the years previous. …

We’re only interested in good values if they also happen to be great businesses, companies with years of exceptional performance behind and ahead of them.

In the end, it’s up to you to look for true value. And you may not find it in the trend of the moment. In fact, you are likely to find that the investing trend of the moment offers almost no true value at all.