Q: I recently purchased shares of Newmont Mining Corp (NYSE: NEM) due in part to its dividend. I’ve since learned that its dividend payout is determined by the price of gold. How does that work and is it something I should be concerned about?

–Glenn Kelly, Saginaw, Mich.

A: Gold prices may have soared over the past few years, but the share prices of mining company stocks have failed to keep pace. To better entice investors, many miners have dramatically increased their dividends, while those that didn’t previously have a payout policy have finally initiated dividends.

A couple of miners have gone a step further by actually linking their dividends to the price of gold in order to provide their investors with more upside as gold prices rise. This approach is also an attempt to counter the popularity of gold bullion exchange-traded funds (ETF) such as iShares Gold Trust (NYSE: IAU) and SPDR Gold Shares (NYSE: GLD), which don’t offer income. In Newmont’s case, its dividend is based on its average realized selling price of gold in the preceding quarter, with its payout increasing by 20 cents for each $100 per ounce increase in its average realized selling price.

Eldorado Gold Corp (NYSE: EGO), the other major miner to adopt a dividend linked to gold prices, takes a slightly different approach for calculating its payout. It accounts for both the gold price and the number of ounces sold, with step-up increases based on its average realized gold selling price.

Barrick Gold Corp (NYSE: ABX) is also reportedly considering initiating a dividend policy linked to gold prices.

These gold-linked dividend policies are a positive development in two respects: There’s far greater transparency as to the size of the payout, and investors will enjoy greater participation in the yellow metal’s upside. Of course, payouts could also fall if gold prices decline significantly.

Our outlook is for gold prices to continue rising despite the recent pullback. For now, gold has technical support at $1,530 per ounce, and we don’t expect it to fall below that price, especially with the drama surrounding Europe’s debt crisis. Additionally, central banks have become net buyers of gold over the past several years and that should help push prices higher after this current period of consolidation.

We would suggest holding your shares and perhaps adding to your position.

Q: You’ve written a lot about the future potential for inflation, but you’ve paid scant attention to deflation. Is deflation still a possibility, particularly if the eurozone were to fall apart?

–Robert Willis, San Bernardino, Calif.

A: Deflation is definitely a possibility, especially if the eurozone were to chaotically unravel. And we have seen some signs of deflation, as food, energy and a number of other commodity prices have fallen in recent months. But we see that as a minor blip on the radar and don’t expect deflation to become a major concern. Thus far, global central banks have shown a clear preference for stoking inflation to prevent deflation.

Although the European Central Bank (ECB) has been reluctant to fire up the printing presses—the region has a long and storied history with hyperinflation—don’t be surprised if it changes tack and pursues a more stimulative policy should the situation in Europe deteriorate significantly.

While Germany’s displeasure with its profligate neighbors is well known, a disintegration of the eurozone would call into question the debts of every European nation, pressure financial markets and potentially cost Germany lucrative trading partners. So even though Germany boasts the strongest economy in the eurozone, it would pay a heavy toll if the currency union breaks apart, and it is eager to avoid that outcome.

In the US, there’s been growing speculation that the Federal Reserve will embark upon another round of so-called “quantitative easing” (QE) in order to combat weakening economic data. QE is by definition inflationary, as it pumps additional liquidity into the financial system in the hopes of stimulating additional demand.

Even in the emerging markets, countries are pursuing inflationary measures to bolster their economies against slowing growth, particularly China. After almost four years of a hawkish monetary stance, China’s central bank has cut its benchmark interest rates, and the Chinese government is widely expected to begin supporting the economy through direct spending programs.

Given all this monetary easing, it would take a global economic collapse to prompt a deflationary spiral. At this point, the prospect of future inflation remains a greater concern.