Hathaway Confirms Gold to Trade in the Five Digits

JOHN C. HATHAWAY, CFA – Senior Managing Director & Portfolio Manager, Tocqueville Funds

John Hathaway, Senior Managing Director, is a Portfolio Manager and a member of the Investment Committee at Tocqueville Asset Management L.P. He is also a Director of Tocqueville Management Corp., the General Partner of Tocqueville Asset Management.

Mr. Hathaway, who has 39 years of investment experience, manages the Tocqueville Gold Fund, Tocqueville Gold Partners and separate accounts for individual and institutional clients following a gold strategy.
Prior to joining Tocqueville in 1998, Mr. Hathaway began his career in 1970 as an Equity Analyst with Spencer Trask & Co. In 1976 he joined the investment advisory firm David J. Greene and Company, where he became a Partner. In 1986 he founded and managed Hudson Capital Advisors followed by seven years with Oak Hall Advisors as the Chief Investment Officer.
Mr. Hathaway has a B.A. degree from Harvard College, an M.B.A. from the University of Virginia and is a CFA charter holder.

The Toqueville Gold Fund is a $2.7 billion USD fund.

From King World News:
With a continuation of gold and silver volatility, today King World News interviewed one of the great ones, 40 year veteran John Hathaway of the Tocqueville Gold Fund.  When asked about the volatility in both gold and silver Hathaway had this to say, “We’re in a shakeout now and frankly it isn’t as scary as the one in 2008, but I think there’s no foundation whatsoever for solid, robust economic growth and that’s the realization the markets are coming to.  I think we’re past the point of no return.”

Hathaway continues:

“I’m sure the vast majority of investors think that somehow we can restore fiscal sanity to the federal budgeting process, that it can be done democratically, but I kind of doubt that.  When you go to somebody and say we’re going to have to go on an austerity regime…that’s socially contentious…they don’t want to hear that.  That’s why you’re seeing rioting in Greece and that’s why you’re going to see the same sort of thing here (in the US) if we go the austerity route.”

Hathaway presented a Dow/Gold ratio in his latest piece and believes we are headed ultimately to a one to one ratio which would put gold today at over $12,000.  When asked if $12,000 gold was achievable Hathaway replied, “Sure, because that would reflect more damage to the integrity of the currency.  The number that they (Dow & Gold) cross at is going to probably be in the high 4 digits or low 5 digits, if it happens in the next couple of years.

…You know here’s the problem, we have negative interest rates today, negative real rates of around two percent, two and a half percent…If we did have a Volcker moment when you had somebody at the head of the Fed who said, ‘We are going to restore integrity to the currency’, you would have to raise real rates to something like three percent to make it easy.  So negative three (percent) to positive three means six percent nominal times $14 trillion in debt which is $700 or $800 billion, on top of the federal deficit that is already $1.6 trillion.  I mean those are the numbers that tell you that we’re basically bankrupt.  That’s why I say…that we’re past the point of no return.”

When asked what the price of gold would have to be to get back on a gold standard Hathaway stated, “It would have to be much higher.  I mean basically you have to make paper preferable to gold, and in this climate that means in a way you have to sort of bid for all of the gold, get people to trade in their gold for paper.

The market says you can’t get it at $1,500.  Maybe they’ll try $2,000 or $3,000, but the reality is unless that bid for gold is backed by credible measures to restore integrity to government finances, the real number is going to be what we talked about earlier, something in the five digits.”

Jim Sinclair stated the price of gold would have to clear $12,500 to balance the foreign debt of the United States.  When asked about Sinclair’s $12,500 number Hathaway said, “Yeah, that ($12,500 for gold) is really what it would have to be.”

Just like the Jim Sinclair interview, here you have one of the great ones, John Hathaway, talking about the end game, essentially the end of the currency system as we know it.  This is probably Hathaway’s most compelling interview on King World News for that reason.  There is so much more information in John’s segment than the small portions above, so be sure to return to hear the complete interview.