Investors were driven into gold’s safe arms by a disappointing unemployment report that was the country’s worst in 26 years. (The unemployment report).

Allen Sykora for The Wall Street Journal reports that December gold peaked at $1,101.90 an ounce, a fresh record for a most-active contract on Comex. December gold eventually settled at $1,097.70 an ounce, while silver was up 11 cents to $17.52. (Can gold ETFs and prices go higher?)

Who’s going to drive gold prices? Although gold is typically driven by economic factors, these days  investors and traders are in the driver’s seat. Many analysts expect the uptrend to stick around for the time being. Eric Lam for Financial Post reports that the seasonal impact that drives gold is also a factor, as September to December has guided gold higher over the past decade. (Gold’s use as an inflation hedge).

Before investing in gold or other commodities, be sure you have a stop loss in place that you can execute when the trend winds down. (How to employ a stop loss).

For more stories about gold, visit our gold category.

• SPDR Gold Shares (NYSEArca: GLD): up 23.7% year-to-date

• PowerShares DB Gold (NYSEArca: DGL): up 21.9% year-to-date

• iShares COMEX Gold (NYSEArca: IAU): up 23.5% year-to-date

• ETFS Physical Swiss Gold (NYSEArca: SGOL): up 7.3% since inception

The 10.2% unemployment figure is far worse than what economists had expected, and they don’t see any sign of relief until next year. While the pace of layoffs has slowed, the unemployment rate is continuing to climb, reports Javier C. Hernandez for The New York Times.

Unemployment isn’t just as issue here, either; millions around the world don’t expect to see relief in the form of jobs anytime soon. The European Union forecast unemployment in the eurozone to rise to 10.7% in 2010, up from 9.5% this year. Unemployment ranges from 3.5% in the Netherlands to 18.3% in Spain, reports Greg Keller for the Associated Press. In China, the official urban unemployment rate is 4.3% in the third quarter. Brazil’s unemployment was 8.1% in August, almost unchanged from the previous month.

Gold futures have soared to a record $1,100 an ounce today. While some profit-taking briefly sent gold lower, it resumed its course and analysts expect it to continue to move higher, reports Allen Sykora for The Wall Street Journal. SPDR Gold Shares (NYSEArca: GLD) is up about 0.4% year-to-date. (More on gold can be found here).

Businesses slashed inventories for a record 13th straight month in September, although sales rose for the sixth consecutive time. Many hope that improving sales figures will encourage businesses to start lifting production, although a rising jobless rate heightens fears that consumers won’t start spending anytime soon, reports Martin Crutsinger for the Associated Press. (An ETF to play holiday shopping).

The world’s largest insurer, AIG (NYSE: AIG) reported that it was profitable for the second consecutive quarter. Although things have stabilized, the company’s CEO said that earnings will remain choppy while they restructure.  SPDR KBW Insurance (NYSEArca: KIE) is up about 0.6% this morning.

G20 Finance Ministers are meeting this week to discuss financial reform and economic recovery. While these economies have put in place certain policies in order to push along a recovery, they’re not policies anyone wants to keep in place forever. The general consensus is that it’s too soon to reverse the measures, but it’s not too soon to begin talking about when and how it would happen. Government debt in developed G20 countries is likely to reach 118% of annual national income in 2014, reports Andrew Walker for the BBC.

For more stories on the global economy, visit our global ETF page.

The Central Bank will keep rates unchanged, but the widening yield spreads between mortgage-backed securities (MBS) and federal agency debt against Treasuries may be an essential factor in determining the Fed’s stance on the direction of interest rates, reports Julie Haviv for Reuters. The Fed will buy $1.25 trillion allotted for its MBS program by the end of the first quarter of 2010. (ETFs to shelter against a weak dollar).

Purchase programs have inflated some securities to the point that investors are beginning to turn to the risk/reward of alternative spread products like corporate bonds. For instance, the yield spread on the 30-year Fannie Mae 4.5% current coupon stood at 1.47% over the 5- and 10-year Treasury blend, says Arthur Frank, director and head of MBS research at Deutsche Bank Securities.

The Fed’s decision ultimately could keep the dollar weak for the time being. To capitalize on continued weakness in our currency, consider some of the following ETFs:

• PowerShares DB U.S. Dollar Bearish (NYSEArca: UDN). UDN is up 7.2% year-to-date. This ETF seeks to reflect the performance of the short side of U.S. dollar – basically, the dollar goes down the fund goes up. (More on UDN and a weaker dollar).

• CurrencyShares Euro Trust (NYSEArca: FXE). FXE is up 5.4% year-to-date. A straight forex play on the appreciating euro. As the dollar depreciates against the euro, the euro gains in strength. FXE tries to reflect those gains. (More on FXE and the euro)

• iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM). EEM is up 54.1 % year-to-date. By holding non-dollar-denominated assets, such as emerging market equities, investors  can hedge against weakness. Emerging market investments get the benefit of the “dollar kicker” since assets denominated in foreign currencies are eventually converted back to weaker U.S. dollars. (More on EEM and emerging markets).

• iShares S&P GSCI Commodity-Indexed Trust (NYSEArca: GSG). GSG is up 12.5% for the year. This fund, like other commodity funds, can be a weak dollar hedge. GSG owns futures for 24 different commodities. (More on GSG and commodities).

• SPDR Gold Shares (NYSEArca: GLD). GLD is up 23.1% year-to-date. Gold is another weak dollar hedge because it’s considered a store of value. The current high supply of the dollar in the economy can result in high inflation and many investors have turned to gold as a way to protect against inflation. (More on GLD and gold).

For full disclosure, Tom Lydon’s clients own shares of EEM and GLD.

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

Max Chen contributed to this article.

What’s driving gold prices today isn’t necessarily what drove them 40 or 100 years ago.

• Today, wealth preservation is the key driver for gold investment. Investors want to protect their assets, and gold holds its value, reports Eric Lam for the National Post.
• For most of the last decade, gold has performed well between September and December. Some investors may be considering these seasonal factors.
• The International Monetary Fund (IMF) sold 403 tonnes in September, and rumor has it that China is interested in it.
• India is also stepping up its gold holdings to 558 tonnes, up from 358 tonnes, as it seeks to diversify away from the U.S. dollar.
• In an attempt to revitalize the U.S. economy, the federal government has turned to printing massive amounts of money. The dollar has lost ground against its counterpart currencies, which has led many to believe that inflation is on the horizon.  As we all know, a good hedge against inflation is gold. (Other ways to hedge against inflation).
• Supply is becoming constrained. Of the world’s three biggest gold producers (China, Australia and South Africa), only China has increased production.

What’s the appeal of gold for the average investor? Lakshmi Iyer of Kotak Mahindra Mutual Funds states:

• Gold offers diversity, liquidity, safety and security to investors.
• Gold reduces the risk of losing money in the event that a preferred asset underperforms or when a specific sector is not doing well. (How to utilize precious metals).

For more stories on gold, visit our gold category.

Gaining access to gold is easy  through the use of the following ETFs:

• SPDR Gold Trust (NYSEArca: GLD): up 20.2% year-to-date

• iShares COMEX Gold Trust (NYSEArca: IAU): up 20% year-to-date

• PowerShares DB Gold Fund (NYSEArca: DGL): up 18.4% year-to-date

• ETFS Physical Swiss Gold Shares (NYSEArca: SGOL): up 7.1% since its inception

For full disclosure, Tom Lydon’s clients own shares of GLD.

Kevin Grewal contributed to this article.

The efforts of the U.S. government to salvage the economy has led to a deflation of the U.S. dollar. Gary Gordon for ETF Expert says that any investor must consider going forward that there are ways to hedge against inflationary pressures that stem directly from less valuable dollars in circulation.

When it comes to reasonable-risk returns to overcome inflation/dollar devaluation, Gordon notes the appeal of precious metals, thanks to their relatively lower risk. SPDR Gold Shares (NYSEArca: GLD) carries a risk grade of 76, compared to the S&P 500 which gets a grade of 83.

Even though gold is around $1,000 per ounce, and the other precious metals may look enticing, there are still reasons to like gold. (Is gold overheated?)

That being said, don’t forget about silver, which is outperforming gold these days. iShares Silver Trust (NYSEArca: SLV) is up 43.8% year-t0-date. (Why silver is outperforming).

No rally’s continuance is guaranteed. Watch the trend lines and have an exit strategy for when gold decides it’s done. (How to follow trends).

For more stories about precious metals, visit our precious metals category.

The Dow Jones Industrial Average finally crossed a milestone 10,000 points this month. Though the mark was greeted with cheers on the trading floor, it didn’t stay there for long, and ultimately closed the month below 10,000 and ended the month flat. The S&P 500 lost 2% and the Nasdaq fell 3.6%.

October was largely a month that saw a weakening dollar. This was to the benefit of commodity ETFs, including SPDR Gold Shares (NYSE: GLD), which gained 3.7% for the month. United States Oil (NYSEArca: USO) gained 8.6%.

Earnings season was a largely encouraging one. The number of better-than-expected reports outnumbered the worse-than-expected ones by a ratio of about 6:1. But there are still big concerns about consumers: spending dropped 0.5% in September. As long as consumers aren’t spending, the recovery could be long and difficult.

To view our full performance report, click here.

For full disclosure, Tom Lydon’s clients own shares of GLD.

As the commodity market sets up to appeal to investors, there are certain areas of the market to focus in on.

According to Lee Lowell for Investment U, these are three areas poised to move:

Gold. Gold is one area that has not disappointed. Gold has regained the elusive $1,000 per ounce and has motored to all-time highs of more than $1,060 per ounce. The U.S. dollar remains weak, giving weight to the argument that gold still has some shine left yet. Some analysts are even calling for the $2,000 per ounce mark. (What you can do if there’s a bubble).

• SPDR Gold Shares (NYSEArca: GLD): up 16.4% year-to-date

Silver. Silver has rallied back to the $18 per ounce area – a new high for the year, but still $4 per ounce below its all-time high of $22 from February 2008. That being said, it has handily outperformed gold this year. If gold continues to move, silver should follow. Because the silver market is smaller than gold’s, it can be volatile, so watch the trend lines and pay attention to the 200-day moving average. (Can silver benefit from inflationary pressures?)

• iShares Silver Trust (NYSEArca: SLV): up 41.6% year-to-date

The colder winter months lie ahead, making the case for natural gas stronger. Natural gas has finally moved off the lows it has logged since the highs of 2008. After bottoming in price just a few weeks ago, natural gas has rallied back up to levels last seen in early August. Bulls and bears are duking it out, though: the large amount of reserves in natural gas are re-enforcing the bears case for a pullback in this commodity. Bulls think winter will eat up those reserves. (A tale of two natural gas ETFs).

• United States Natural Gas (NYSEArca: UNG): down 55.3% year-to-date

For more stories about commodities, visit our commodity ETF category.

For disclosure, Tom Lydon’s clients own shares of GLD.

Gold has declined slightly from its highs down to a three-week low, reports Jan Harvey for Reuters. One metals analysts notes that while interest has waned slightly, it appears to be a temporary pause because the long-term bull factors for gold are still there. (What’s driving gold’s uptrend?)

When considering investing in gold ETFs, Don Dion of the Street.com suggests tailoring your choice to your preferences about the quantity of underlying gold, liquidity concerns and geographical location. For more stories on gold, visit our gold category.

There are three choices you have when it comes to playing gold through ETFs:

• SPDR Gold Shares (NYSEArca: GLD) is up 17.7% year-to-date and has seen an astonishing increase in assets, surpassing the $35 billion mark as of Oct. 23.  Additionally, GLD is the largest ETF when measured by assets. Gold that underlies GLD is held in the form of allocated 400-ounce London Good Delivery bars in the London vault of HSBC (NYSE: HSB) Bank USA, or in the vaults of subcustodians.

• iShares COMEX Gold (NYSEArca: IAU) is up 17.6% year-to-date and shares of IAU are backed by gold held by the custodian in the vicinity of New York, Toronto, Montreal, London and potentially other locations in the future.

• Physical Swiss Gold Shares (NYSEArca: SGOL) is up 4.9% since its inception on Sept. 9 and has $201 million in assets as of Oct. 23.  SGOL has an external auditor inspect the gold holdings twice a year and the gold bar identification numbers are published on the fund’s site. There are also outside audits of the gold holdings. (Why gold is rising).

For full disclosure, Tom Lydon’s clients own shares of GLD.

Kevin Grewal contributed to this article.

It’s not just a weak dollar and inflationary concerns that are driving up the price of gold.  Eric Hommelberg of Gold Seek states that gold had another trigger: as the Gulf states, China, Russia, Japan and France began to talk about ending dollar dealings for oil, “all heck broke loose.” Any new basket of currencies, Hommelberg says, will likely include gold. This sparked a buying spree. (Is the rally overheated?)

Hommelberg also states that a weak economy facing an uphill recovery battle is making gold attractive.

As impressive as gold’s price run has been, consider silver, which has been outperforming gold this year. Silver – the “poor man’s gold” – is also a good way to hedge against inflation, and it benefits from its appeal as both an industrial and precious metal. This means that it can be treated as a safe haven investment, as well as an investment for investors looking to benefit from an uptick in industrial demand. A note of caution:  since silver’s market is smaller than gold’s, it can be more volatile. (More on gold, platinum and silver).

For more stories on precious metals, visit our precious metals category. For a list of all the precious metal ETF options, go here.

A good and easy way to play gold is through the SPDR Gold Trust (NYSEArca: GLD) which is up 19.9% year-to-date.

As for silver, an easy way to access the market is through the iShares Silver Trust (NYSEArca: SLV) which is up 55% year-to-date.

For full disclosure, Tom Lydon’s clients own shares of GLD.

Kevin Grewal contributed to this article.

According to John Spence for The Wall Street Journal, industrywide, ETF assets have topped $750 billion  with year-to-date inflows of nearly $56.3 billion.  A large portion of those assets are heading toward ETFs that track the international markets, bonds and commodities. All three classes offer protection from either inflation, a falling dollar or both. (For more stories on commodities ETFs, visit our commodity ETF category.)

Emerging Markets. Emerging markets are the talk of the town. One of the benefits of investing in emerging markets, aside from diversification, is the “dollar kicker” when assets denominated in foreign currencies are converted back to U.S. dollars. Investors get the benefit of differences between two currencies. (Watch Tom on CNBC to learn more about investing overseas).

One of the top selling international ETFs is the iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM) which has nearly $37 billion in assets and is up 65.4 % year-to-date.

Also consider more narrowly focused emerging market ETFs, too, especially if your risk tolerance is higher. Our Ultimate Guide to the BRIC ETFs outlines the options available to investors when it comes to Brazil, Russia, India and China, and more ideas can be found in our emerging markets category.

Bond ETFs. In the bond arena, the iShares Barclays TIPS Bond Fund (NYSEArca: TIP) has been popular because it offers investors protection against inflation.  The ETF has $16.9 billion in assets and is up 8.6% year-to-date. (All of your TIPS questions are answered here).

PIMCO also has some newly launched TIPS funds: PIMCO 15+ Yr. US TIPS Index Fund (NYSEArca:LTPZ) and PIMCO Broad US TIPS Index Fund (NYSEArca: TIPZ). (Three ways TIPS help hedge inflation).

Commodities. As for commodities ETFs, many have been drawing assets and attention.  The SPDR Gold Shares (NYSEArca: GLD) boasts $37.5 billion in assets and is up 19.5% year-to-date.  Commodities ETFs have really felt the heat this year as the Commodity Futures Trading Commission (CFTC) has stepped up regulation and is expected to impose position limits on certain ETFs soon. (Is the gold rally overheated?)

As with global ETFs, there are commodity ETFs that go from broad to narrow. Learn how to pick your spots here.

The Dollar’s Short Side. PowerShares offers two ETFs that seek to reflect the performance of the U.S. dollar long or short. As the dollar heads lower, investors might find the PowerShares DB U.S. Dollar Bearish (NYSEArca: UDN) appealing. It’s up 8.3% year-to-date.

Dollar hedging can also be done with ETFs that track other currencies. Our currency special report has a list of the available ones out there, as well as explanations of how they operate.

As with any sector or asset class, always have a plan in place for both entry and exit. No trend goes on indefinitely, so by having a strategy and being prepared to act when necessary, you can give yourself the opportunity to be in for a potential long-term uptrend and out in time to protect yourself on the downside. (How to follow trends).

Kevin Grewal contributed to this article.