The just-concluded Group 20 (G20) meeting left us with a chorus of very “prudent” governments and central bankers singing the praises of easy monetary and fiscal conditions. So where can we take refuge when all the central banks in the world print money and governments run deficits in order to spend like drunken sailors? The answer is gold.

Fortunately for us, we foresaw this scenario a while ago. On April 20, I recommended that investors diversify their portfolios by adding the SPDR Gold Trust ETF (NYSE: GLD).  The fund is up about 14% since that recommendation, but it’s not yet time to sell, as there are still a number of factors working in gold’s favor.

For starters, there is more and more talk of the U.S. dollar losing some of its luster as a reserve currency.  But this debate is moot for the moment.  The reality is

Two years into our “Great Recession” (or “Greater Depression,” depending on who you talk to) gold is selling for $944 an ounce. But back in 1980 – against the backdrop of double-digit inflation in America and a prolonged economic stagnation – gold reached a peak of $850. That’s the equivalent to about $1,900 in today’s money.

Of course, the world was a very different place in 1980. Deflation is now the bogeyman stalking the global economy (although here at Notes we believe a surging asset-price inflation is not far off). And back then, there were persistent rumors that Ronald Reagan was going to bring back the gold standard and send gold, in 1980 money, to $1,000 an ounce.

But as John Katz and Frank Holmes point out in their excellent book on the subject, The Goldwatcher (2008), the supply and demand

Inflation Hedging: Four Ways To Protect Your Investment Portfolio

by David Fessler, Advisory Panelist

Right now, the markets are caring about one thing: inflation. And they’re starting to get a little edgy. They need inflation hedging…

Why? The U.S. Treasury is printing money and dumping it into the financial system at historically unprecedented rates, in an effort to stimulate the economy.

Chances are good that the Fed won’t know when to stop the printing presses. Continuing to print money only exacerbates the inflation problem and deepens the hole.

And it’s quite a hole.

Jessica Hoversen - Fixed Income Analyst at MF Global - had this to say yesterday on CNBC: “The ratio of U.S. budget deficit to [gross domestic product] GDP is at the highest level since World War II.”

The government thought process goes something like, “If some stimulation is good, more will be even better.” And most politicians, who are

Put Your Gold Where your Mouth is

by The Investment U Research Team

Gold may be one of the biggest questions on the market right now.

It’s easy to see how commodities, equities, real estate, bonds, and even treasuries have been pushed down by our bear market - And even easier to see how they could spring back. Gold is a different story.

It leaves experts scratching their heads, and the “talking heads” embroiled in discussion…

On one side, it has run up during the downturn. On the other, it hasn’t really run up enough. And we’re not even going to get into the arguments on its inflation-adjusted value, or oil-adjusted value.

Gold is where investors will be hiding their money until the markets follow through on this rally or the dollar gains in value. If we’re coming our of the woods, gold will continue to trend down,

Asset Allocation: Why Investors Should Diversify Beyond Stocks

by Alexander Green, Oxford Club Investment Director

As someone who has spent more than two and a half decades as a research analyst, investment advisor, portfolio manager and financial writer, I’ve often felt the most important question an investor or trader can ask himself is, “What if I’m wrong?”

This is done too seldom, in my experience. And that’s unfortunate. Because when investment lessons are learned the hard way, it can be painful… if not devastating.

For example, when the market was flying high a couple of years ago, many investors became complacent. They blithely assumed that the market might hit a pothole here and there, but overall it would be a relatively smooth ride higher.

The long-term history of the market, of course, suggests something very different. But you didn’t need to be a market historian.

All you really needed to do

Our experts have cranked it up to high gear and have dug into some of the most controversial topics Investment U has covered recently. Like investing in gold.

Gold has been an incredibly hot topic over the past few months. On one side, it looks cheap from an inflationary perspective, and on the other, overpriced. Our own Louis Basenese even suggesting that we should consider shorting gold. The debate has ranged on our message boards pro and con…

But regardless of its short-term movement, we recommend holding 5% of any portfolio in precious metals - like gold. So what is the best way to accomplish this? We found a number of ways to do just that.

The Best Ways for Investing in Gold

Rick Rule, Chairman of Global Resource Investments, makes a compelling argument that gold isn’t a commodity in as much as it’s insurance. “Gold is disaster insurance. You

The Investment U Roving Reporter: Day 4 - Conference Report: “Golden Opportunities and Your Options”

by Dr. Scott Brown, Education Director

It’s our last day here at the Investment U Conference in St. Petersburg, and it seems we’ve saved the best for last. The weather has taken a turn for the better - if that’s possible - and our experts have cranked it up to high gear and have dug into some of the most controversial topics Investment U has covered recently.

Like investing in gold.

Gold has been an incredibly hot topic over the past few months. On one side, it looks cheap from an inflationary perspective, and on the other, overpriced. Our own Louis Basenese even suggesting that we should consider shorting gold. The debate has ranged on our message boards pro and con…

But regardless of its short-term movement, we recommend holding 5% of any portfolio in precious metals -

Gold Prices Creep Over $900

It’s been no secret that gold prices have been creeping up lately. At just over $900 per troy ounce, gold has run up over $90 in the past 16 days. And while we haven’t reached last year’s record price of $1002.80, moving over $900 is significant.

To put things in perspective, gold has only moved above $900 for a few brief periods historically – gold prices we’ve only seen in early 2008. If you’re looking at ways to invest at these prices, the SPDR Gold Trust ETF (NYSE: GLD) is an easy way to do it.

Option buying has been very bullish – traders still think the price has higher to go. And they may have something there. Gold does well in inflationary environments.

It’s no secret that the Fed has been flooding the markets with

…

Corporate Bond Funds Attracting Attention

While Treasury yields keep tanking, spreads with corporate bonds continue remain at historically high levels.

In this Barrons.com article, the risk vs. reward of adding more corporate debt to your portfolio is explored. A number of exchange-traded funds are mentioned as possible candidates, including the iShares Iboxx Investment Grade Corporate Bond Index (NYSE: LQD).  

You can see the story here.

Trend Watching In ‘09

With markets in such a state of flux, BusinessWeek has a look at what strategists and advisors see as the big trends entering a new year.

They talk about a range of investment vehicles to get ahead of the curve, including exchange-traded funds.

You can read the story here.

ETF's Gold Bullion Holdings Rise

This is just a short piece from Reuters, but might be of

A lot of contrarian investors are say gold is a bargain right now — “a one-way bet.” J. Christoph Amberger is not so sure. History shows gold prices trend in line with oil. This means if oil hits $50 a barrel, gold could drop back below $500 an ounce.

J. Christoph says the best way to play this move — and protect yourself against volatility — is through put options on the SPDR Gold Trust ETF (NYSE:GLD).

This from Today’s Financial News:

Increasing prices for crude oil result in increasing inflation… making their way into increased transportation, heating and utility costs until they’re eventually reflected in virtually every finished product, including food and commodities in general. Increased inflation in the dollar typically results in higher gold prices.

So — presuming the methods of calculating risk and reward are applicable in bull and bear markets — how would