Technical Outlook: Golden Inflation Hedge

Gold also benefits from the strong fundamental factors other commodities are currently experiencing. First, the demand for precious metals are dramatically increasing across the emerging markets and despite a tremendous amount of exploration over the last several years, mining companies have not been able to replace their depleting levels of gold and silver.

Let's take a look.

You can see that the price of gold broke out strongly in September of 2007 and made a strong run up to $1,000 an ounce. Currently, it is nearing intermediate-term support around $850. If that doesn't hold, a correction back to $800 would still leave the long-term trend intact. In fact, if we saw a drop slightly below that trend line to around $750, it would probably present a tremendous opportunity since it would shake out the weak investors.

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There are several ways that investors can benefit from the strength in the gold and silver market. You can do that through stocks, mutual funds or exchange-traded funds (ETFs).

Today we are going to take a look at a couple of ETFs that stand to perform well if prices resurge. However, investors need to be careful because these funds can trade at significant premiums or discounts to their net asset values, so you want to be careful on your investment selection.