With gold near its all-time high, the most popular investment vehicle linked to the yellow metal, the SPDR Gold Shares ETF (NYSE: GLD) is fast approaching a big milestone: $50 billion in assets. At the end of the first quarter, there were only 11 U.S. stock mutual funds and one U.S. bond mutual fund above that level. Surely the extraordinary success of this ETF is contributing to a gold bubble and gold prices have reached a top.

It's not that obvious
Or not. As the following table shows, the ratio of the total assets held in SPDR Gold Shares to the value of total mined gold is roughly the same as that of the assets of the SPDR S&P 500 ETF (NYSE: SPY) with respect to the total market capitalization of the index it tracks:

Company

Net Assets (May 18, 2010)

% of Total Value, All Mined Gold / Index Total Market Value

SPDR Gold Shares ETF 

$47.6 billion

0.7%

SPDR S&P 500 ETF

$75.7 billion

0.7%

Source: The World Gold Council, State Street Global Advisors.

This doesn't prove that gold ETFs aren't having a disproportionate effect on the market; indeed, almost 95% of the total market value of the S&P 500 is free float, whereas the IMF and central banks have about one-fifth of all mined gold "locked up." However, data for 2008-2009 from the World Gold Council show that, barring the first quarter of 2009, the investment demand for gold via ETFs is less than that from other channels (bar hoarding, coins, etc.). Similarly, total investment demand lagged jewelry consumption (except in the first quarter of '09).

Did gold hit a top?
Did gold hit a top this month when it reached all-time nominal high prices? Undoubtedly, but I don't expect that top to hold up for very long (weeks or months possibly, not years). We are in an environment in which inflation could pop up unpredictably: Witness the most recent 3.7% print for year-on-year inflation in the U.K., which took the Bank of England off guard. If inflation and inflation expectations take off in the U.S., then we may see what a genuine gold bubble looks like.

A couple of ways to hedge inflation risk
In that context, the SPDR Gold Shares looks like an attractive inflation hedge, along with the Market Vectors Gold Miners ETF (NYSE: GDX). Unless you're a talented stock picker, I would recommend both of those ahead of individual miners such as Barrick Gold (NYSE: ABX), Newmont Mining (NYSE: NEM), or Yamana Gold (NYSE: AUY).

The Fed is creating a new set of risks for investors, but gold isn't the only way to hedge these risks. Tim Hanson highlights the top markets right now.

Fool contributor Alex Dumortier loves macro-themed investing. Alex has no beneficial interest in any of the shares mentioned in this article. The Motley Fool has a disclosure policy.