Risk on\" say fund managers. With cash returning rates lower than the rise in the price of food and goods, why save? Therein is your first push towards risk taking. Now add in the recently established fear that US and European governments might default on their debt; there you have a secondary push towards risk taking. With many of these European governments needing to roll over their debts in March, one is tempted to bring in the soothsayers\' warning to Caesar: \"beware the ides of March\". With the traditional safe havens looking vulnerable, one of the others, gold, remains \"different\"; it retains a safe haven reputation and through \"gold miners\" (companies producing the gold), they present a much vaunted risk opportunity. We covered the Gold Equities opportunity last month (DSAM Fund — 12 February 2012). Since then, HSBC Global Gold Index fell around 11 per cent. Clearly, not a good time for gold. So, is this a good time to give up on the idea? Not according to Investec\'s Bradley George: \"Since the end of February, gold and gold equities have sold off on the back of recovery signs in the US and stabilisation in the Eurozone. However, we remain positive towards gold and do not see this pullback as long lasting.\" Gold, it seems, remains inversely correlated to stabilisation and good news. Reminds me of a comment from Eric Meyer, CEO at the Dubai Shariah Asset Management (DSAM) Kauthar Gold Fund, who says: \"The worst thing about holding gold in your portfolio is that if our fund goes down 10 per cent, the rest of your portfolio has gone up!\" Now, that\'s a sales line with a difference. On that basis, good news or bad, gold should have a place in your portfolio. Say, around 5 to 10 per cent of a balanced portfolio. However, individual risk appetites will drag the weightings one way or another. Added bonuses for the DSAM version include: it is a Sharia-compliant fund which will appeal in certain quarters, plus, it has a long/short ability. You might recall that the DSAM Kauthar Gold Fund invests in equities, and not physical gold. George Bradley\'s take on the \"gold miners\" is that currently, the miners are \"generating higher free cash flow than historic averages and importantly that cash flow is being translated into higher dividend yields\". Remember, physical gold has no yield. It just sits there going up and down in price, whilst looking pretty on my wife\'s ears. More importantly, Bradley sees opportunity in the spread between gold bullion values and gold miners: \"Valuations are indeed very attractive. Of the 50 companies we value, we have on average 58 per cent upside potential to target prices derived from DCF and multiple valuation methodologies. Importantly, this uses a very conservative $1,300 an ounce long term gold price.\" The risks to Investec\'s bullishness include rising energy costs which are typically 40-to-50 per cent of the gold miners\' costs, and government. Government fear comes in the form of nationalisation and taxation. \"We are cognisant of where mines are located and the political/economic climate in these countries,\" Bradley says. Patience is key So, gold, good or bad? For Bradley, the conclusion is: \"We don\'t think the fundamentals have changed. Gold bullion can be volatile as investors react to short-term events. Patience is required with the related gold equities as they take time to generate cash flow and investors like to see evidence of cash. The valuation anomaly that exists in gold equities has seldom presented investors with such an opportunity for gold exposure.\"