Gold-miners offer better profits than the metal, says fund manager

ALL that glitters is most definitely not gold, according to at least one fund manager who is advising investors to avoid the metal and go for the gold-miners instead.

James Leslie, director of Guinness Flight Asia, part of the Guinness Flight Unit Trust Centre, said the actual profits from a rise in the gold price, at present hovering about US$392.73 to $393 an ounce, could be leveraged if investors went for gold-miners instead of gold.

And gold remained a hedge against inflation for those concerned about the US economy overheating.

'The fundamental point is there is a lot of chat about gold - will it go up to $400 an ounce, $410 an ounce? People are asking themselves, should they buy gold? That's crazy. They should buy shares in the miners because there are major profits for gold-miners from relatively small increases in the price of gold.' Last year, the gold price rose from $330 to $390, an increase of 18 per cent. Over the same period, the Guinness Flight Global Gold Fund, which invests only in gold-miners, rose 130 per cent, he said.

Last year, prices for the precious metal were volatile, peaking at $405 and dipping to just under $350, but Mr Leslie believes the recovery seen this year in the gold price is more orderly and sustainable, especially with inflation concerns in the US on the rise. The price has neared $400 recently, a key psychological level.

According to data supplied by the World Gold Council, demand in India in the quarter to 30 was 99.8 tonnes - including bars, coins, and high-carat jewellery - up 17 per cent on the previous three months and up nine per cent on the same period last year.