Golden ETF for China's Currency

While the WisdomTree Dreyfus Chinese Yuan(CYB) would also seem like an obvious play here, investors will make more money by figuring out what the Chinese would buy with appreciated currency rather than by buying the currency itself.

In the People's Bank of China's third-quarter report, the bank changed its language regarding the exchange rate and many took it to mean that the government may allow the renminbi to appreciate. The 46-page report states that: "Following the principles of initiative, controllability and gradualism, with reference to international capital flows and changes in major currencies, we will improve the yuan exchange-rate formation mechanism."

China's policy-makers are slow to move, and the country's leaders will likely wait until the opportunity feels right to let the currency appreciate. Mounting pressure from the EU, U.S, IMF and World Bank, however, underscored by Obama's recent visit, will keep more investors' eyes glued to the yuan.

While timing the appreciation of the yuan will be difficult, the best way for investors to play this shift is with alternative asset ETFs like GLD. Investors in emerging markets such as China and India have been turning to gold as a currency alternative. Soaring gold prices, economic fears and potential yuan appreciation should continue to fuel gold ETFs.

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