There is currently a bit of a second gold rush occurring in the U.S., however, this time instead of California, it’s happening on Wall Street.

When the economy took a sharp downward turn toward the end of 2008, the federal government and the Federal Reserve Bank all began pumping money to jumpstart the flat-lining economy.

With all the money flowing into circulation, many investors began to fear inflation would rear its ugly head down the road and cut drastically into investment returns.

The traditional go-to safe haven in these situations was to invest in gold. Whether it is the physical substance, an ETF investing in gold, gold futures or gold mining companies, investors have been slowly but surely allocating more and more of their portfolios to the precious metal.

Every day on Wall Street the price of gold continues to rise breaking all time high records as investors panic about the threat of inflation.

For the longest time gold struggled to break the $1,000-an-ounce barrier, but on Monday the precious metal closed at $1,138.

It seems that many investors, gripped by fear, are jumping on the bandwagon and are piling their money into gold, a tangible asset that has no real value other than what the market puts on it.

This seems to be the making of an asset bubble as investors continue to pour money into a hard to value asset, based on fear.

A more solid approach to inflation proofing a portfolio may be income generated from high-quality dividend-paying stocks.

Gold over the 10-year periods of 1980-1989 and 1990-1999 has had returns of negative 38 percent and negative 27 percent respectively, where as large-cap stocks over the same period experienced triple-digit gains.

Dividend-paying stocks also provide a stream of income during good times and bad. In addition, stocks can be tied to hard assets just the same as pure gold can be.

By Investing in companies such as Exxon Mobile, Chesapeake Energy or Alcoa – which all deal with hard assets in their operations – people see their results move the same way commodities do.

The problem with gold is it has no real intrinsic value, where companies have tangible assets and cash flows that can justify the asset’s price. Even in inflationary times, cash flows can adjust as prices do.

So when you go to inflation proof your portfolio, know there are more options than the norm and be weary of the bandwagon-jumpers.