Recent economic news from the U.S. Treasury and Federal Reserve could stoke inflation fears, even though the most up-to-date number shows CPI floating at about 1.8%.

The Fed announced last week that it would buy $300 billion in U.S. Treasury bonds. This fueled a nice little rally in global stock markets, but underlying all the hype is inflation. While the world is in a recession, this fear hasn’t had the teeth it normally does, and the Fed has used this time as an excuse to cut policy rates nearly to zero and open up the floodgates for the printing press.

The numbers are staggering, and eventually, we’re all going to have to pay the piper.

That’s why, Bloomberg reports, “gold may rise for a second straight week as the slumping dollar boosts demand for the precious metal as an alternative investment.”

But gold is still off its record high of $1,034 an ounce… Can gold still be a safe haven?

Why isn’t gold skyrocketing in the face of such inflationary policies?

One of the reasons could be because that record high was set last year – nearly to the day – and was supported by massive hedge fund buying and institutional fervor.

That passion has proved to be unsustainable.

But now, real economic news seems to be indicating a resurgence in popularity for the precious metal. Last Friday, gold hit at three-week high after the Fed announced its $300 billion bond purchase.

Investors are starting to take notice, CNNMoney says.

“Calyon metals analyst Robin Bhar said while the weaker dollar was benefiting all commodities, it was the longer-term implications of the Fed's move for inflation that was largely driving gold higher.”

In fact, the U.S. dollar dropped 3% on Wednesday, its largest single-day drop since 1985.

Analysts expect gold to rise and fall as investors take profits and reinvest according to economic news.

The Wall Street Journal’s Allen Sykora says, “Craig Ross, vice president of ApexFutures.com, suggested some consolidation was probably in order after the sharp rise since the Fed statement. Otherwise, he also suggested the Fed action is inflationary and supportive for gold.”

This type of profit taking can be a good sign for investors bullish on gold.

It could mean a good entry point for investors still sitting on the sidelines waiting to see if they really need to hedge their portfolios against inflation.

Investors should note that 21 of 28 traders, investors and analysts surveyed from Tokyo to Chicago on March 19 and March 20 advised buying gold, according to Bloomberg.

The research department of Taipan Publishing Group found that precious metals are a good way to “weatherize” your portfolio in a recent report titled, “How to Invest in Gold and Silver.”

According to the report, “Precious metals act as a hedge against market downturns. For example, when the Dow Jones Industrial Average dropped 380.48 points and fell below 8,000 on February 10, 2009, gold futures climbed $21.40 in a single day.”

Interest in gold ETFs has also climbed. Investment in the SPDR Gold Trust (GLD:NYSE) jumped an amazing 41% this year.

ETFs aren’t the only way to invest in gold. Taipan Publishing Group’s report highlights four ways to invest in precious metals, including mining companies, futures, and bullion and coins.

Other Related Topics: Gold Investments , Inflation Rate , Recession , Sara Nunnally , Taipan Insider

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