"...If you need to chase 25% gains each year to get a good night's sleep, then the City of London's got just the 'structured' gold fund you might be looking for..."

WHY MAKE SOMETHING SIMPLE when you can make it complex?

That way, you can get investors to pay you 1.5% per year for the pleasure of over-complicating their risks and potential...plus one-fifth of any gains they make on top!

"We believe that gold and silver is the cheapest asset class at the moment and that the cost of production has put a floor under the price," says Mark Mahaffey, a former director at Bank of America and now co-manager of Hinde Capital Ltd, a London-based precious metals fund.

"We are at a monetary juncture so it is not only advisable to invest in gold - it is a must," he adds. Hence the urgency in setting up the new Hinde Gold Fund in record-quick time.

Registered in the Virgin Islands, this new gold-based hedge fund took less than three months to gain approval from the City of London's regulators, the Financial Services Authority. And charging 1.5% per year - plus 20% of the gains made by those clients choosing to make the minimum $100,000 investment - the Hinde Gold Fund is certainly less expensive than some other hedge funds.

Launched with $5 million of the management's own money at stake, it also requires only one month's notice on withdrawals, and there is no lock-up period for new investors either.

What's more, it also applies what's known in the industry as a "high water mark". Every time the fund makes a new high, you'll only pay that 20% performance fee on gains made above and beyond that level. If it slips back, the managers will make do with their 1.5% annual charge.

So far, so revolutionary! But besides buying gold on behalf of Hinde's investors, what will the fund do for its customers that...well...that Buying Gold alone will not?

"The startup will also use 'plain vanilla' derivative strategy to enhance performance," says HedgeFund.net...

"The fund employs a macro environment analysis [plus] a fundamental and model approach," adds FINalternatives...

A final technical and sentiment model will "further refine allocations and entry and exit points for each trade," adds a brokerage document released to journalists.

Something on the edge of rocket science, in other words, will enable the fund to offer "smoothed-out volatility in the gold sector," claims the fund's other manager, Ben Davies. Formerly head of trading at RBC Greenwich Capital, he says "we want to give people the opportunity to invest but sleep well at night.

"We will invest in bullion but also in equities and the derivatives [because] what people need is a structured and well managed way to re-allocate into gold."

But is a "structured" product really what investors moving into the Gold Market need?

Sleeping well at night, as far as Hinde are concerned, mean an annual performance of target of 20-25% total returns.

Anyone simple-minded enough to just Buy Gold and hold it, on the other hand, made average gains of nearly 13.5% per year (before costs) between New Year's Eve 1999 and the start of 2007. They've also suffered volatility twice as great as that delivered by the S&P index on a weekly basis, too.

So Hinde hope to pretty much double the average return on Gold Bullion Investing seen so far in this bull market, while cutting out the short-term dips. How? The stated plan is to go long of those gold-related assets they think are going up, as Davies told Global Money Management magazine at the start of November...and to sell short those assets - such as gold bullion itself and mining stocks - when they're about to take a bath.

Either that, or Hinde are secretly hoping gold will just keep repeating the gains seen in 2007 to date...now pushing 25% for anyone buying with US Dollars on the first trading day of January.

Holding the S&P index, by contrast, would have returned less than 2.0% annually since the start of 2000. So far in 2007 it's delivered 3.5%, even after reaching new all-time highs in the summer. And again, these figures - whilst excluding dividends, just like most tracker funds - also come before costs, now slashed to just 0.07% per year if you put $100,000 or more into Fidelity's FSMKX tracker. (Compare that to the annual management fees of 1% plus regularly charged by mutual-fund index trackers as the Dot Com Dump turned into a crash!)

Glancing at the outlook for the S&P vs. gold here at BullionVault today, we can't fault the logic behind Hinde's big, noisy launch. "We are all waking up to the idea that the government has been able to erode the purchasing value of currencies," Ben Davies told Hedge World at the end of last month.

"Our premise on the macro side is that it wasn't until 2003 that exploration in the mining industry got kick-started" - so any meaningful growth in mining output will take until 2014 to come online.

New gold deposits also tend to sit in unstable or inhospitable parts of the world. Gold mines in established fields, meantime, have to be dug deeper, all the way down to 4 kilometers and more in South Africa. And all the while, growing pressure from the environmental lobby is adding to costs, hassle and over-runs.

Yes, gold's looking good from here - not least because everything else is starting to smell so bad! But where we do part company with Hinde's views, however, is how private investors might want to take best advantage of whatever gains in gold are yet to come.

Simply Buying Gold - that simplest of assets...a mere lump of metal that's becoming increasingly valuable as investors walk away from securitized and structured products - has delivered a series of strong, solid annual gains so far in this bull market.

Of course, "past performance is no guide to the future" as Hinde's government-run regulators in London like to remind potential investors whenever the City's about to close a sale. But if you cut your Gold Dealing costs to a minimum - and you pay wholesale rates for secure storage, with insurance included, so you don't have to put up with the hassle of taking gold into your physical possession - then the performance of gold is all you will need worry about.

The chances of, say, a well-paid hedge fund manager mistaking a big move in gold...going short when it's about to surge, or even gearing up with call options just before it takes a dip...won't need to keep you awake at night.

It really is that simple.