Bristow also finds that bankers are encouraging dubious gold listings, under the guise of entrepreneurship.

He says that, while many investors are decrying the failure of ‘gold counters' to perform as traditional leveraged investments, many of those ‘gold counters' are not gold counters at all.

This, he says, is because many have gone into other metals along with gold, and are driven by offsetting other metal credits against gold costs.

This, he says, is confusing investors, who are turning to exchange-traded funds (ETFs), rather than equities, in order to gain exposure to the high gold price.

But the $875 an investor may pay for an ETF ounce, can buy two ounces of gold in Randgold Resources, along with two options - in the form of two reserve ounces and two resource ounces - as well as stand to be paid out a dividend.

What's more, the company's reserves are growing, making the first two ounces more than two ounces.

"But what you have to take a view on when you buy equities is management, operational and political risk, and that is the difference between an ETF and Randgold Resources. Equity is perhaps riskier, but it's got a lot more leverage," Bristow reiterates to Mining Weekly.

A pure gold play Randgold Resources this week posted another set of solid quarterly results, with profit up materially despite industry cost pressures.

Randgold achieved a net profit of $18,2-million for the March quarter, up 25% on the previous quarter and 42% on the corresponding quarter in 2007.

"I always point out that out of the IT [information technology] boom grew some very significant businesses, but nine out of ten failed, and the same with gold," he says, his company being one of a few start-ups to weather the austere period when gold dropped to $250/oz.

"Going from junior to big producer is not easy, and when you get on the treadmill, you have to keep replacing ounces.

"All the big boys, bar Barrick, have been caught in the trap of going long on promise and short on delivery," Bristow harangues.

"The gold industry is not in good shape", and is bereft of the big dividend payouts of the base-metals industry, despite the high gold price. Many mines are still marginal even at the higher gold price, causing one leading fund manager to lament that some gold miners are paying more in fees than in dividends.

If non-gold metal credits are subtracted from some margins, there is no margin increase at all.

On top of that, there has been a decrease in the gold supply and, if the lower volume is multiplied by the margin, there is no real logic to support the significant growth in market capitalisation of the gold industry on world stock exchanges.

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