John Hathaway, manager of the Tocqueville Gold Fund, which has over $1.4 billion in assets answers questions about the state of gold. Hathaway's fund (TGLDX) is up 49% in 2010 which is more than twice the Morningstar precious metals category. Hathaway has predicted gold prices rise starting back in 2007 do to widening of credit spreads and lower asset valuations.
According to Hathaway there is a debate to whether it is inflation or deflation that is effecting gold prices. He answer is that right now we "have both at the same time. We have market forces that are deflationary and policy response that is inflationary. The deflationary market forces brought down the housing bubble. And the policy response to that was inflationary."
Questions: what is the bipolar aspect of goldHathaway: "When the gold price is expressed in dollars, let's say, it is simply a ratio of the number of dollars it takes to buy an ounce of gold, and if you measure it in euros, it would be a different number. If any observer says the price of gold has gone too high, what a high rate of change in gold could reflect is the money creation that is driving it -- either current or anticipated."
Hathaway goes on to talk about gold in a bubble which are the claims by some in the media. He thinks it is funny that the same media who never told people to
buy gold are now saying not to get into it. He continues to add that gold prices are compared to the dollars it would take to buy an ounce. So you have to look at the driving forces that are effecting the dollar when comparing the price of gold. When you compare gold prices in euros you get a much different number than with the US dollar.