Gold to hit over $1,900 says Tocqueville's Hathaway

By on

The gold price is likely to beat previous 2011 records which will result in a strong upwards trends for gold mining equities, according to Tocqueville's Euro Stars AAA-rated gold manager John Hathaway.

Last year the value of gold bullion rose for the twelfth consecutive year whilst gold related equities continued to lag.

'This bearish sentiment for gold and gold mining stocks are at levels that in the past have led to strong rallies,' said Hathaway, who runs the Tocqueville Gold and the Falcon Gold Equity fund, in an investor call.

'I think the market will hit $1,900 this year and then we can see a bull market trend start to reassert itself for equities. From here, I think we can see a lot of new money coming into the stocks.'

At the time of  writing, the price of gold $1,656/per ounce.

Hathaway holds only 7.8% of gold in the $2.1 billion Tocqueville Gold fund. This compares to the 90.3% he holds in gold equities.

Optimists' worst nightmare

Gold price last went above $1900 per ounce in the late summer of 2011. Depreciating currencies, low growth and low interest rates are considered to see gold remain as a strongly-valued asset by investors who fear an erosion in asset values.

'We are now have the worst nightmare for optimists. What we are now seeing in the US is that fiscal conservatives are in full retreat mode and we have a new administration with a clean energy agenda but that is doing very little to target growth,' said Hathaway.

In the latest sign of a scramble to secure gold holdings, the German central bank last week announced it would repatriate a sizeable portion of its gold bullion reserves held in France and the United States.

'This shows the amount of concern over counter-party risk has extended to central banks and is only going to mobilise the demand for gold far more,' said Hathaway.

In the last three years Hathaway's Tocqueville Gold fund returned 20.7%. Its benchmark, the FTSE AW/Mining TR index lost 35% in the same period.