The $30 billion First Eagle Global fund's Matthew McLennan maintains a roughly 10% gold position (includes mining stocks) at all times. It should be noted that First Eagle, led by the legendary Jean-Marie Eveilard, has been involved in gold since way before it became the bull market darling of the decade.
In his October commentary, McLennan explains why he's sticking with it (emphasis his)...
Gold has pulled back from recent highs, but it is pretty much the only commodity that is up significantly this year, and one of the few monetary assets that has materially appreciated versus the dollar. It has served as ballast for our investments in equities. Gold is not risk free, it never has been, but it has served its role this year. It remains the one currency that cannot be printed out of thin air. Commodities as a whole have fallen however, and the yield curve has flattened because long-term rates have come down, not because short-term rates have risen. Our interpretation of this is that we have entered a market environment marked by an erosion of faith in the ability of developed world policy makers to reflate, and with the fiscal pendulum swinging towards austerity and China showing some signs of slowing down, there is an emerging feel of a more deflationary environment setting in.
It seems that our fiat money system, where money can be created out of thin air, leads to political temptation to create jobs in emerging economies and private temptation for short-term profits in the banking sector of the developed world, and when these imbalances get rectified the response is for second order creation of money to counteract the deflationary pulse. So despite its volatility, gold will likely remain part of our holdings, and serve as a source of ballast, until the financial architecture evolves.
Gold has clearly lost a bit of its luster this month for short-term or momentum traders - but among the faithful, the longer term thesis remains intact.