(Fortune Magazine) -- Gold got off to a fast start in 2006, hitting a high of $725 an ounce in May. Though it has lost about $80 since then, it remains well above the $500 an ounce it was fetching when we suggested in last year's Investor's Guide that it still had room to run. Many of the factors we cited in making our call are still influencing the market, including strong demand from China and India, a weak dollar, and global worries about terrorism and political tensions. We'd add to that list the threat of renewed inflation in a world so awash in liquidity that private-equity mega-deals are now weekly events. So if you liked gold in 2006, chances are you'll want to stick with it in 2007.
Another trend fueling the gold rush has been the popularity of exchange-traded funds (ETFs), which make it much easier for retail investors to gild their portfolios with direct exposure to the metal. Two popular choices include streetTracks Gold Shares (GLD), which holds about 14.2 million ounces, or $9.2 billion, of gold bullion in trust. iShares COMEX Gold Trust (IAU) has 1.4 million ounces of gold in trust, or $880 million. Both are up about 30% so far this year. For investors who prefer traditional mutual funds, Franklin and Fidelity offer top-performing choices that give investors exposure to a basket of gold-mining stocks.
Finally, to put the current rally in perspective, James Turk, a noted gold bull and founder of goldmoney.com, figures that after adjusting for inflation, gold would have to surpass $2,000 an ounce to break its record of $850 an ounce, set in January 1980. Whether that means gold has room to run or simply that gold hasn't been a great investment over the long term, we'll let you decide. 
