It feels like 2008 all over again. Fear about continued market volatility coupled with a wave of bullish sentiment for gold has pushed prices for the yellow metal and its largest physically-backed exchange traded fund (ETF) to record highs.

Despite Europe’s $1 trillion bailout move, market stress is running high. What does that mean? You know it – many investors have flocked back into gold, sending prices to all-time highs. Gold closed at a record yesterday, and this morning it’s continuing the climb, trading close to $1,250 an ounce.

  • The truth is that investors are now troubled over possible defaults by eurozone nations. The huge infusion of money into the economy has raised questions about whether it’s left the eurozone more exposed to risks.
  • Adding to this trepidation is the fact that the recession recovery on our own soil is going to be a long and drawn-out process, explains Allen Syorka for The Wall Street Journal. [Why Gold is Great as a Haven and a Hedge.]
  • The cash floating around the world has also given rise to inflation concerns. Gold is viewed as a hedge against inflation, so investors are staking their claims now for future protection. [How Gold Got Back Into the Groove.]
  • And lastly, part of the rally can be viewed as a bit of a self-fulfilling prophecy. Prices are rising, luring more investors to take part, which is driving prices higher. Analysts now say gold’s next upside is $1,278. Are they right? Time will tell.

If you want to invest in gold, first be aware of your options. Funds such as those from ETF Securities, iShares and SPDRs are all physically-backed. The PowerShares gold fund holds futures, so it won’t move right in line with spot prices. The Market Vectors gold miner ETFs hold stocks of gold miners and are the least susceptible to daily price shifts. [4 Commodity ETF Types.]

Second, have a strategy in place. With bull runs like this, it’s always wise to know what your sell strategy is before you get in. We use a trend following strategy, which you can read about here. [How to Follow Trends.]

For more stories about gold, visit our gold category.

  • SPDR Gold Shares (NYSEArca: GLD)
  • ETFS Gold Trust (NYSEArca: SGOL)
  • iShares COMEX Gold Trust (NYSEArca: IAU)
  • PowerShares DB Gold Fund (NYSEArca: DGL)
  • Market Vectors Gold Miners (NYSEArca: GDX)
  • Market Vectors Junior Gold Miners (NYSEArca: GDXJ)

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.