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Alternative Market Briefing

Craton's Bachmann: Gold should be an integral part of a well-diversified investment

Thursday, October 21, 2010

From Precy Dumlao, Opalesque Asia:

It's quite ironic that despite the outperformance of gold and the rise of its value up to 500% since 2002, the yellow metal is still being disregarded in terms of being recognized as a serious investment category.

Warren Buffet once wondered about gold out loud describing it as, "Gold is dug out of the ground, in Africa or somewhere else in the world. Then it is melted down and someone digs another tunnel to store it. People are paid to guard the tunnel around the clock. Gold has no benefit. A man from Mars would surely scratch his head in wonder at this strange behaviour."

Markus Bachmann, CEO and Fund Manager at Craton Capital, a South Africa-based specialist manager of portfolios in the natural resources sector, including precious metals, disagrees.

Bachmann believes that gold should be an integral part of a well-diversified portfolio, both as a means of investment and as a safeguard. In an article he authored titled, "The Role of Gold Post the Financial Crisis," Bachmann said, "It is a generalized fallacy that gold companies have an automatic leverage on the gold price and protect against market distortions even in times of crisis. Shares in gold producers are primarily equities and are thus subject to the 'normal' market laws. In periods of extreme volatility and aversion to risk, gold shares are not immune to falling prices, even if t......................

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