Golden Opportunity?

The Leading Indicator index released today was better than expected, supported by a 100 basis point increase in the money supply (M2). This may be a sign that the credit freeze is slowly thawing, though I don't expect the credit clog to be flushed out for some time. This increase in M2 just goes to show how much money the Fed is throwing at the problem. A marginal increase in lending by the banks could promptly resurrect the threat of inflation; however, banks will remain wary until they can accurately value their books. Money supply aside, the rest of the indicators were ugly, including the mounting jobless claims which now sit at a 26-year high. Nonetheless, one should always be prepared for the unexpected. If the banks had followed this simple mantra, I likely wouldn't be posting on this topic. If the Fed executes perfectly, inflation shouldn't be a problem, but unfortunately my money is on an imperfect execution. Gold is a good way to hedge against unanticipated future inflation, and acts as a nice hedge against an Armageddon scenario as well (both possible, but one more unlikely than the other). I don't view gold as a long term investment, but rather a medium term hedge. The global economy will likely be intact at this time next year, but in such a volatile environment I've decided to create a little room in my portfolio for gold. Below I have included some interesting technical observations for the gold ETF: GLD.

GLD looks to have broken out of a significant downtrend over the past couple of days, but seems to be somewhat overextended. I'm hoping for a pull-back in the near term.