Breaking up is hard to do. Drumbeat for unbundling of gold majors gets louder

AngloGold Ashanti (NYSE: AU) is hedge fund manager John Paulson’s favourite pick in his Advantage Fund.

AngloGold is the world's number three gold miner behind Barrick (NYSE:ABX) and Newmont (NYSE:NEM) with annual output of over 4.3 million ounces which is set to grow to some 5.5 million ounces over the next two years.

Paulson, closely watched by the gold community, picked up a 11.3% stake in the Johannesburg-based company for $1.3 billion back in 2009 from erstwhile parent Anglo American (LON: AAL).

With today's market cap standing at $9.4 billion – down 36% from a year ago – Paulson has not exactly made money from his investment.

Which helps to explain why he has been calling for the break-up of the company.

It's not just outside investors that think smaller is better.

Bloomberg quotes Mark Bristow, chief executive officer of Africa-focused Randgold Resources (LON:RRS) as saying "the next fad is going to be the unbundling of the majors," adding that he believes the optimal number of mines is “four or five, six at a push."

Randgold Resources with 800,000 ounces of annual gold output has fared better than its peers – remarkable given the fact that the bulk of its output is from Mali where an insurgent war has been raging for months.

The Channel Islands-based company's shares are down 13% from this time last year, compared to a 44% collapse at African Barrick, similar declines at Harmony Gold (NYSE:HMY) Gold Fields (NYSE:GFI) which has already started a process of unbundling and a 24% drop at Kinross (TSX:K) thanks mainly due to its problems in Mauritania.

Bristow's comments were echoed by Gerald Panneton, a former Barrick executive who is now in charge of Canada's Detour Gold.

"The global gold-miner 'is not a model that is sustainable,'" he told the business news provider in an earlier interview.