Shhh… Gold is in a bull market
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By: Gareth Tredway
Posted: '07-NOV-04 12:00' GMT © Mineweb 1997-2004
JOHANNESBURG (Mineweb.com) -- John Hathaway, of Tocqueville Asset Management says gold’s bull run is only in its early stages and until many more people catch on it still has a long way to go.
“I think we are very early in this whole thing,” The fund manager told Mineweb Radio, “Most people would not even know that we were in a bull market for gold, and most of the people in the financial markets are essentially clueless about this. Until many, many more people are aware of it, I do not think we are in much danger of it petering out.”
Since early 2000, when it was trading around $260/oz, gold has gained over 66 percent, and is currently at over 16-year highs. On Friday the dollar gold price closed at $433.55/oz, its highest close since August 1988. But Hathaway says it has got more to go.
One of Hathaway’s theories on why gold is set to go higher, is a comparison of the current dollar gold price to that of 1980 when gold peaked over $800/oz. He says that in 1980 terms the price is only at $200 currently, while the $800/oz price of that time is about $1,600/oz in today’s terms. “So for gold to be just where it was on an average price basis for the 1980s, we should be well north of $500 or $600,” says Hathaway.
“Gold is simply tagging along in the slipstream of oil, copper and nickel,” says a note by Hathaway on Tocqueville’s website.
He goes on to say that the dollar has run its course as the global reserve currency and for this reason gold will go up. “The transition to a new basis for international credit will be lengthy and difficult. The repercussions of a transition are not reflected in the financial markets. For this reason, gold is inadequately priced,” says the note.
Therefore, Hathaway says the best strategy, under these circumstances, is to own as much physical gold as possible. He says gold mining shares will also perform along the way as well as derivatives, or paper gold.
Hathaway says proof that the market has not caught on to the early stages of a multi-year decline in the dollar and financial assets is in the dollar gold price. “If it were otherwise, the dollar price of gold would not be $400,” says the note, “It would have at least three zeros before the decimal point.”
The “stealth mode” that the gold market is currently in, will break as more and more recognition of this bull run takes place, says Hathaway. “The first step would be a recognition, on the part of the financial media, that a bull market has been in place for some time,” says the note, “The second step would be for the same providers of financial misinformation to predict more of the same and explain why.”
But he says that an end to the bull run seems a while a away. “The essential component of a secular top for gold would be an equivalent low in financial assets,” says the note, “The peak in the current gold bull market will coincide with the end of the road for elitist social engineering, the government wish machine, and the hoax of unlimited dollar issuance.”
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