Every market commentator seemed focused Friday on the sharp rise in oil, and in turn seemed to ask every on-air interviewee for an opinion on the rally. This is the type of distraction I continue to warn readers about. Yes, it is important news that oil has moved up sharply today, but investors need to understand the rippling effect these types of situations produce in the market.

Paying attention to how high oil and gas prices climb is not going to help you add profits to your portfolio. Deciphering the steps you need to take to protect your portfolio and profit against continuing signs of higher inflation and a poor fiscal policy are what investors need to focus on.

The Federal Reserve has been barking lately that it's beginning to worry about inflation and the dollar's going to rise and gold is going to fall. That may happen in the short term, but the long-term dynamics will not be affected.

My question is if the Fed were seriously worried about inflation then it would be taking immediate steps to raise interest rates, not lower them and let the central bank flood the market with loose money. Of course, we all know that the Fed's not going to start raising interest rates because it knows the housing market cannot handle it, and the Fed certainly does not want to add to the current banking crisis.

Worldwide inflation is close to 10%, and many leading minds believe that U.S. inflation is close to 8%, not the manipulated numbers with which the government tries to fool the public.

One of the ways to profit from higher inflation is to invest in gold or gold companies because that area of the market becomes a safe haven for investors as inflation heats up or financial fears in the market increase.

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.

For example, the Central Fund of Canada ( CEF), which is required to have a minimum of 90% of its assets in gold and silver bullion would appear on the surface to be a good way to benefit from rising prices. However, if you do a little bit of research you'll see that this fund is trading at a 10.5% premium to its assets. That means investors are paying $105 more than they need to on every $1,000 invested.

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A better option might be streetTRACKs Gold Shares Trust ( GLD). This fund is designed for investors who want a cost effective and convenient way to invest in gold. This fund is currently trading at a 0.23% discount to its net as a value compared to the 10.5% premium of the above fund.

Technically, the fund is holding near the $84-$85 support area, and as long as that holds it may be a good place to start initiating new positions.

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Another interesting option is the Gabelli Global Gold Natural Resources & Income Trust ( GGN). The fund isn't a pure play on gold because it holds other mixed assets than just gold companies such as its largest holding Petroleo Brasileiro SA ( PBR), which accounts for almost 4% of the total holdings. However, it is currently trading at an 8% discount to its net asset value and investors may benefit from both oil and gold holdings.

Technically, Gabelli Global Gold has been in a trading range between $26 and $31, and I think it's only a matter of time before it breaks out above the upper level and starts a new uptrend. By the way, there's one nice kicker while you wait for the move, because the fund is paying a hefty 6.5% dividend.

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Gold and gold funds can certainly be a volatile area of the market to invest in, but if inflation keeps rising and the long-term trend of the dollar continues down, gold and gold shares are likely to be a solid long-term investment for years to come.

At time of publication, Manning had no positions in stocks mentioned, although holdings can change at any time.

Mark Manning, AAMS, is an Accredited Asset Management Specialist and Registered Investment Advisor with Butler, Wick & Co., where he specializes in wealth management. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Manning appreciates your feedback; click here to send him an email.