From BMO:

"Gold prices closed at an all-time high yesterday, breaking through $1,300. The commodity, which has traditionally been seen as a store of value for thousands of years, is seen as transcending economic ebbs and flows of modern day society. Year to date, gold has surged nearly 20 percent, about in line with the performance posted for long-maturity Treasury bonds. The premise for owning gold is logical. Worried that the Federal Reserve is set to employ about $1 trillion for quantitative easing, gold investors anticipate high monetary inflation. Historically, the opportunity cost for owning gold was considerable. However, now that three-month Treasury bills offer yields of a quarter of a percentage point, investors feel that they''re leaving less on the table. Is gold''s move justified? Several factors suggest that gold''s glistening gains make sense. Gold, not surprisingly, has maintained a cozy correlation with inflation. History suggests that gold''s year-over-year gains are consistent with two-to-three percent inflation. When measured against other commodities, like crude oil, gold''s gains are well within expectations."