John Hathaway, portfolio manager of the Tocqueville Gold Fund, has exactly the right attitude towards investing in gold. From the Globe and Mail…
To say gold doesn’t have a role in a diversified portfolio today requires people to conclude that the politicians really know what they’re doing and have the deteriorating fiscal situation well under control, argues John Hathaway, portfolio manager of the Tocqueville Gold Fund since its inception a dozen years ago.
Needless to say, Mr. Hathaway has no such confidence in anyone who has to face an electorate any time soon. Austerity may play well in sound bites, but actually imposing deep, lasting cuts is another matter.
“It seems to me you reach a point where more of the electorate has a stake in government support of some kind or another,” he said the other day from his summer residence in Vail, Col. “There’s no way to get scientific about it, but you reach a point where unwinding all of that – or at least stabilizing it – becomes very difficult and potentially very contentious … Meaningful austerity is almost unthinkable in the Catch-22 of this macro moment.”
Think of the price of gold as a market referendum on government policy. I have no faith that governments will get economic policy right. They always revert to doing what they do best. And that’s spending. Yes, so the argument goes, they don’t have the money to spend. But since when did that stop governments from doling it out?
