No Stronger Uptrend Than With China's Yuan

| About: WisdomTree Chinese (CYB)

In 2005 and again in 2010 the People's Republic of China loosened a long standing peg to the U.S. dollar. Before initially increasing the available float in 2005, one U.S. dollar had fixed to equal 8.28 Chinese yuan for over a decade.

Due seemingly to lack of interest from investors and forex markets, the NYSE traded Yuan ETF (NYSEARCA:CYB) has failed miserably to track the appreciating currency. Trading appeal has been further subdued during speculative periods fueled by low interest rates in the United States, in which more liquid emerging market currencies have outperformed the yuan. Deflationary shocks have wiped out many gains in other currencies, however, while the yuan has held ground or risen against the world reserve currency during current and prior flights to safety.

After listing in 2008, CYB traded at a premium to NAV for almost two years. Massive selling while asset markets were weak in Spring 2010 reversed CYB to trading at a discount to NAV. It is up less than 1% in 2011 while forex trading has the yuan up 2% versus the USD on the year. More drastic moves may be necessary for performance to overcome relatively steep management fees.

Technical stock analysts likely glance at CYB and disregard the stagnant chart. Forex traders, however, know that the yuan is undergoing an unparalleled bull run. The currency has more buying power in terms of labor productivity than any other on the planet and belongs in all conservative portfolios one way or another.

Click here to look at the steadiest multi-year uptrend in any asset class.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.