The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.By Ivan Martchev, Navellier and Associates, for InvestorPlace NEW YORK ( InvestorPlace) -- For 11 consecutive years investors in gold bullion have seen only gains. Those involved in financial markets know that no winning streak lasts forever, so does it make sense to chase the Midas metal at the present lofty price levels? While anything can happen on a three-to-six month horizon, none of the drivers of the rally in gold bullion have gone away. One could credibly argue that they have gotten stronger.
The deliberately and slowly ever-appreciating Chinese yuan will become fully convertible some day and will rival the yen as a reserve currency. Having recently surpassed Japan by GDP size, China now is the world's second largest economy so it is only normal for the yuan to gain international prominence. But it is the Chinese themselves that have the most at stake in the forex reserve diversification conundrum as they hold $3.18 trillion in forex assets, approximately two-thirds of them dollar-denominated.
When originally launched two years ago, PHYS shares for a while traded at over 20% net asset value premium, making them initially unreasonably pricey compared to physical bullion (a major marketing angle is the ability to PHYS shares to be exchanged for the underlying gold bars with a large enough amount). As the GLD and PHYS performance has now largely converged, the current 2.5% net asset value premium is well worth the peace of mind, given that the physical bars are audited on a regular basis in a vault in Canada.