Once upon a time, gold and stocks were thought to be inversely correlated. That is, when the market went up, gold would go down, and when the market was down, gold would go up as investors abandoned risky assets for the safety of sound money. Put another way, stocks were for "normal" times and gold was something you owned as protection against abnormal events like long bear markets or sudden crashes. See the 2008/2009 part of the first chart below (blue line is the Dow, green line is gold) for an example of inverse correlation in action.
But post-crash, with the government borrowing trillions and running the printing press flat-out, gold and stocks became positively correlated, as newly-created credit pushed up the price of pretty much everything.
And now the relationship seems to be breaking down altogether. In the past week, stocks went up and stocks went down -- and gold just went up. As this is written on July 11, the Dow is down about 1.3% for the day, while gold is up a few bucks to near its all-time high.
What, if anything, does this mean? There's no way to know for sure, but one possibility is the expected impact of the Pan Asia Gold Exchange, which will bring gold to a new, potentially huge, market. See this King World News interview for a more complete explanation.
Or it could mean that investors have finally figured out that all possible economic outcomes are good for gold. If Washington's prodigious borrowing sends the economy into inflationary overdrive, capital will pour into precious metals. If QE2 was a bust and the economy starts to sink, that guarantees an even bigger stimulus plan in the near future. Either way, gold is the one clear winner.
Or maybe the marketplace is finally catching up with years of price suppression and bringing gold into line with the amount of paper currency that exists in the world. Estimates of the gold price that's necessary to bring about this balance vary, but they're all far higher than the current price.