Gold hit a new record on Tuesday. Here are some things to keep in mind …

• Gold’s close of $880 means gold is up 37.9% since the beginning of 2007 – and we’re only in the second week of January.

• Last year was the best year for gold since 1979 -- when inflation was running at 13%.

• I believe inflation right now is a lot hotter than the 4.3% the government admits to. And inflation, combined with other powerful forces driving gold that I’ve been talking about recently (see MoneyandMarkets.com January 2), sets the stage for a rip-roaring rally this year.

• My target for gold this year, which I set using technical analysis is $1,100. However today’s breakout puts a target of $1,135 within reach. The way things are going, we may get there sooner than later.

• As the Wall Street Journal pointed out this past weekend, the streetTracks Gold Shares ETF (GLD) now holds 628 metric tonnes of gold. That’s more than the gold held by the People’s Bank of China (600 metric tonnes). If the Chinese start to buy gold to bring their stockpiles more in line with other central banks, as has been rumored, that could spark another fast and furious rally in gold prices.

Check out my new gold and energy blog at MoneyAndMarkets.com