SK: How do you assess the performance of the gold ETFs in recent times and which do you recommend?

JN: Gold ETFs have been an important development making gold investment much easier, more accessible, and less costly (in terms of commissions and transactions costs) for investors – retail and institutional – around the world.

But as noted above, we recommend ownership of physical gold – small bars, bullion, coins, and even numismatic coins. Certainly, one of the main reasons for owning gold is to reduce risk – and physical ownership is the lowest-risk form of gold. As a “paper” gold vehicle, ETFs are subject to a variety of risks not shared by physical investment where the investor takes actual possession of his/her bars and coins.

SK: Is gold rally a 'bubble that can collapse any time'?

JN: The bull market in gold is certainly not a bubble that can collapse at any time. From the 2001 low point near $255 an ounce, gold today is up over 300 percent – outclassing and outdistancing virtually every other asset class.

The future rise in gold anticipated over the next few years in built not on a weak speculative base but on solid fundamentals. There are four cornerstones supporting the gold bull market:

First, an expansionary U.S. monetary and fiscal policy that assures rising inflation and a depreciating dollar over the next few years. With the unemployment remaining high, home repossessions continuing, low consumer demand, and a high level of economic angst across the country, tightening monetary policy is not a politically acceptable option.

Second, continuing rapid growth of investment demand in China – even with the recent and expected future steps to curtail monetary growth and bank lending. There is great pent-up demand for gold – after nearly six decades in which private gold investment was illegal – and more Chinese will be gradually buying gold as a traditional savings and investment vehicle as long as personal incomes continue to rise and even if inflation remains low.

Third, rising gold investment demand around the world, due to the expansion of the gold investment and distribution infrastructure, particularly the attractiveness and ease of entry afforded by ETFs to many investors – and the acceptance of gold as a legitimate investment class by many individual and institutional investors.

Fourth, as noted above, a change in central bank attitudes toward gold – and continuing net official demand in the years ahead

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