There you go again, Jim, with that same ole 'gold bug' stuff again.

But before I get to that, let me poke away at your thoughts that buying the yuan is a “no-brainer.”

It’s a no-brainer in that eventually the yuan will be revalued against the U.S. dollar. But it’s hardly anything like a no-brainer for an investor facing the opportunity cost of locking up assets in a security that might not move at all for years.

While I totally agree with you on the direction of the yuan/dollar trade, I don’t have any idea on the time frame or the magnitude of that move. Where would a free-floating yuan trade against the dollar? And when will it go there?

The only honest answer to those questions is twofold: “higher” and “eventually.”

But that doesn’t mean the yuan's a good buy. It could be years. You’re wading into an exquisitely complicated area. Chinese economic policy can hold out for a long time before a significant revaluation.

Is it a no-brainer for an investor to allocate a portion of their assets to China? You could argue that. But a no-brainer for all investors? I don’t think so.

Now on to gold. I’d be careful with gold, at least in the short term. As Daniel Harrison points out in a forthcoming issue of ETFR, gold has become the ultimate safe haven asset. With investors moving money out of safe havens and into riskier assets, it faces fund flow headwinds.

Again, long term? Probably higher. But short term? Who knows ...

Finally, did you catch this article from Dow Jones Newswire? Hedge funds have been loading up on the SPDR Gold Shares (NYSE Arca: GLD) ETF in a major way.

John Paulson’s Paulson & Co bought 31.5 million shares of GLD in the first quarter of 2009, amounting to $2.8 billion at present value, making it the fund’s single largest shareholder.

And that's not all. Lone Pine Capital bought 2.65 million shares, or $240 million. Dow Jones says that, as of the latest filings, 20% of GLD’s shares were held by hedge funds.

The fact that hedge funds—among the more sophisticated investors out there—think that GLD is the most efficient way to gain exposure to bullion says something.

They could probably get cheaper exposure making bulk purchases of bars. By using GLD, however, they get massive intraday liquidity, and that (I’m sure) is worth the 40 basis point (0.40%) price of admission.