Are the ‘gold bugs’ right?

Weekend Argus (Saturday Edition) - - FRONT PAGE -

There is a sec­tion of the in­vest­ment com­mu­nity (or per­haps they could bet­ter be de­scribed as prophets of doom) that con­stantly ad­vo­cates in­vest­ing in gold. Ac­cord­ing to them, world equity mar­kets are about to crash and as­sets such as cash and bonds will be worth­less, too. They would have us be­lieve that the gold price will soon be US$2 000.

The wild and ex­trem­ist pre­dic­tions aside, do gold (as op­posed to gold-min­ing shares) and other pre­cious met­als have any role to play in a di­ver­si­fied port­fo­lio? If so, what pro­por­tion of one’s as­sets, on av­er­age, should be al­lo­cated to gold? Should the hold­ing be in the form of ac­tual phys­i­cal gold (such as Kruger­rands) or ex­change traded funds (ETFs) ?

M Skosana

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