It's a tricky task but one that a camp of economists and investors think the Fed can achieve. If policymakers under the direction of Fed chief Ben Bernanke succeed, a big reason to buy gold evaporates.
"Since we believe Fed will do the right thing, will take remedial action, we're very wary right now," said Milton Ezrati, market strategist for Lord Abbett & Co., about buying gold.
"It looks like fears are overblown, and that gold is too high," he said. "We think there's a future in equities."
Countering that view is one that's grabbing more attention as gold futures hit new nominal highs over $1,150 an ounce last week.
There's nowhere for gold to go but up, say many of the major investors who have recently bought into gold, because there are too many powerful forces weighing against the value of the dollar, the most popular investment alternative to precious metals.
"The reason gold is running now has to do with concerns with deficits and worries about the strength of the currency," said Linda Duessel, equity market strategist at Federated Investors.
She says these fundamental concerns surrounding the U.S. economy mean gold has more room to rise.
With the U.S. budget deficit reaching $1.4 trillion in its year ending September, and the White House projecting annual budget deficits to add another $9 trillion to public debt over the next 10 years, the U.S. digging is itself into a bigger borrowing hole, many fear.
High levels of debt to national income can wallop a country's currency. If investors worry about a country's ability to pay its bills, they may avoid buying its bonds and other investable assets, and so don't need dollars to buy these securities.
"My fear," she said, "it's about the exact opposite of fiscal discipline, it's the concerns other countries have been voicing to the U.S., 'You have to get your act together.'"
Others, however, cite the money sloshing around in the system as posing the big risk to U.S. financial credibility and the dollar.
Hedge fund managers David Einhorn, John Paulson and Paul Tudor Jones have all been amassing gold stakes, betting that the surge in monetary stimulus here and in other countries will devalue paper currencies, particularly the U.S. dollar. That's also good for gold.
