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Tickers in this Article: GSG, GLD, SGOL, PHYS, GDX, GLDX, XRA, NG, DGL, AGOL
The continued debt crisis in Europe, the slowing economic situation in the United States and the debt ceiling debate has caused panic and uncertainty to return to the market. Many analysts and economists have begun to seriously question the indebtedness of both Europe and the United States. The long term viability of the euro and dollar is becoming a real concern. To that end many investors are flocking to hard assets as way to bypass these concerns. Funds like the iShares S&P GSCI Commodity-Indexed Trust (NYSE:GSG) have surged in popularity as these concerns play out. However, one yellow metal is quickly becoming the favorite among emerging markets.

TUTORIAL: Risk and Diversification

An Increase in Buying
Much has been written about gold's power as an inflation hedge and a store of value throughout times of crisis. It seems that both citizens and central banks in the developing world are taking those attributes to heart. Gold and precious metals buying in the emerging world is skyrocketing. Overall, gold demand increased 11% to 981.3 tons during the first quarter of 2011, worth $43.7 billion at quarter-end's price levels - and that number is continuing to grow as income levels rise across the emerging world. (For more, see Coping With Inflation Risk.)

Central banks became net buyers of gold in 2010 after two decades of heavy selling. Emerging market countries have turned to gold bullion as a means of diversifying away from the faltering dollar. The Bank of Mexico bought nearly 100 tons of gold throughout February and March, marking one of the largest purchases by a central bank in recent history. Mexico follows on the heels of other developing market central banks. China has bought over 454 tons of gold over the last six years. The Reserve Bank of India bought 200 tons of gold directly from the International Monetary Fund (IMF) in October 2009. Russia continues to purchase gold on the open market, purchasing around 400 tons of bullion over the past five years. Even Bolivia recently reported a purchase of 7 tons of gold in May.

Aside from monetary authorities looking to shore-up their reserves, gold's greater demand could come from emerging market investors look to protect their assets from rising inflation. Global demand for gold as an investment grew 26% in 2010, and demand for gold bars and coins were up 62% and 42%, respectively. In addition, higher savings rates and income levels is spurring investment in gold. China has become one of the fastest growing markets for bars and coins, rising 123% during the first three months of 2011. Since the Chinese government deregulated its gold market in 2001, demand for investment gold has grown at a 14% annually in the nation. India's gold demand remains vigorous, driven both by investment and cultural forces. Hindu festivals where it is considered auspicious to buy gold, such as Akshaya Tritiya, coupled with rising incomes will help India's annual gold demand grow in excess of 1200 tons by 2020, or about 33% higher than today.

Playing the Love Affair
This new demand from the emerging markets is helping to buoy and drive long term prices higher. For investors, adding some glitter to the portfolio makes sense not only as a hedge, but a growth opportunity as well. Here are a few ways to bet on gold's continued success.

The SPDR Gold Shares (NYSE:GLD) is still the largest direct play on physical gold prices. However, there are plenty of other ways to get your gold fix. The ETFS Physical Swiss Gold Shares (Nasdaq:SGOL) allows investors to store their gold in safe-haven Switzerland, while the Sprott Physical Gold Trust ETV (Nasdaq:PHYS) allows investors to take physical delivery of their gold.

With their considerable fixed expenses, gold mining companies can act as a leveraged plays on gold prices. In addition, many of these top-tier miners do something that physical gold doesn't - pay dividends. The Market Vectors Gold Miners ETF (NYSE:GDX) is the most popular way to access gold miners, offering exposure to both U.S. and international firms. Focusing on the small fries in the gold world, The Global X Gold Explorers ETF (NYSE:GLDX) follows a basket of junior miners such as NovaGold (NYSE:NG) and Exeter Resources (NYSE:XRA).

Bottom Line
As various market strategists continue to predict that massive inflation and uncertainty will plague the major reserve currencies, investors in the emerging world have turned to gold for safety. As their incomes continue to rise, gold and precious metals will undoubtedly continue to be bigger part of the emerging consumer's savings plan. Domestic investors may want to follow suit. The previous funds along with the PowerShares DB Gold (NYSE:DGL) are great ways to play gold's rise. (For more, check out 8 Reasons To Own Gold.)

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