With the price of gold soaring, investors may be wondering if it s worth adding some of the metal s shine to their portfolios.

Gold futures for December delivery struck at a new intraday high of $1,119.10 per ounce before easing a bit and closing at $1,114.20 on Wednesday, up $11.70 from the prior day. The price of gold has been rising for months; the metal is up about 26% for the year. And some analysts say more near-term gains are all but certain.

But before making wholesale changes to your portfolio, it s worth considering why gold is rising. Investors have driven up the price as they ve sought out an asset that will hold its value in the face of a declining dollar. Despite the fact that many parts of the world are now experiencing deflation, governments fiscal stimulus efforts are driving investors to gold as a hedge against potential inflation down the road, says Harry Milling, a mutual fund analyst at Morningstar who follows equity precious metals funds.

And it s not just nervous individual investors. Central banks have recently become net buyers of gold, after years of being net sellers, says Rodney Johnson, the president of HS Dent, an economic research company, and portfolio manager of the Dent Tactical ETF. With large buyers in the background and small investors buying out of fear, gold could rise another 20% in the near term, but deflation could bring prices back down in the second half of next year, Johnson says.

Individuals considering investing in gold should be aware that prices are volatile and pretty much impossible to predict, Milling says.

Gold should be viewed as a hedge against other investments, and investors shouldn t let it constitute more than 5% of their portfolio, says William Larkin, a fixed-income portfolio manager with Cabot Money Management. Basically, when the crisis hits, I want [gold] to zig when the other things zag, Larkin says. Because gold prices are so volatile and so high right now investors may want to wait for a pullback, or build up a position slowly, Larkin says.

For those who want to buy in, here are a few ways to proceed:

Actual gold
Buying gold coins, or purchasing either unallocated or allocated gold bullion is always an option, but assuming you re looking at gold as a hedge against inflation and not against some kind of financial collapse, buying the SPDR Gold Shares ETF is essentially the same as buying unallocated gold and the simplest way to invest, Johnson says.

Mining Firms
Investing in companies that mine gold is another option, but it comes with the additional risks and rewards of investing in a business rather than an asset. Historically, gold mining stocks have been twice as volatile as the price of gold itself, Milling says. Gold miners in the Market Vectors Gold Miners ETF are currently trailing the price of gold, so now could be a good time to buy, Larkin says.

Currency markets
Investors can also hedge against inflation in the dollar simply by holding another currency or investing in foreign markets, Johnson says. An ETF that tracks a gold-mining country like South Africa, Brazil, or Chile may give you less of a volatile ride than gold itself, while still benefiting from gold s rise, he says.