Gold is likely to lose some more of its lustre

"GOLD gets dug out of the ground in Africa, or someplace; then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

When Warren Buffett said that in 1998, gold averaged about US$300 per ounce. By 2011, gold had surged six-fold to reach a record US$1,900, driven by investors spooked by a likely "melt-down" scenario following the 2008 financial crisis. Gold's 40 per cent plunge since that peak has partly borne out Mr Buffett's warnings - outside of an Armageddon scenario, gold has much less value.

This truism was brought home once again in August as global equity markets corrected, volatility surged on China and Fed-related uncertainty, and the euro, Japanese yen and Swiss franc gained against the US dollar on risk aversion among investors, gold barely rebounded.