John Hathaway, CFA, is chairman of Tocqueville Management Corporation, the general partner of Tocqueville Management L.P. Mr. Hathaway joined Tocqueville in 1997. He co-manages the Tocqueville Gold Fund (TGLDX). In addition, he manages separate accounts with a gold-equity mandate including the Falcon Gold Fund, the Falcon Gold UCITS Fund, Tocqueville Gold Amerique (FCP), a sovereign wealth fund, and various separate accounts for family offices and government entities.
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Prior to joining Tocqueville, Mr. Hathaway co-founded and managed Hudson Capital Advisors followed by seven years with Oak Hall Advisors as the chief investment officer in 1986. Before that, he joined the investment advisory firm David J. Greene and Company, where he became a partner. Mr. Hathaway began his investment career in 1970 as a research analyst with Spencer Trask & Co. Mr. Hathaway graduated from Harvard College in 1963 (B.A.) and from the University of Virginia Business School in 1967 (M.B.A). He also holds the CFA designation.
I spoke with John on December 9.
How does one value an asset that produces no income?
You could ask the same thing about a dollar bill. Gold is a form of purchasing power and optionality. Think about it like a euro, a dollar bill or a yen. It can be used however the holder wants to use it; think of it in terms of purchasing power. It offers complete flexibility. You can sell gold 24 hours a day, seven days a week, anywhere in the world. It’s a form of currency.
How do you value one currency versus another?
What makes gold different than any other currency is that it hasn’t lost purchasing power over centuries and centuries. That may not sound particularly exciting because nobody thinks that way. But if you’re a wealthy family, if you’re an endowment, if you’re a pension fund, gold has a role just as a way to protect capital and purchasing power over long periods of time.
Forget the day-to-day fluctuations. If you look at what gold has done since 2000, for example, it has outperformed every other asset class, whether it’s bonds or stocks. The unifying thread throughout those years, going back to 2000, is bad, radical monetary policy.
The appeal to maybe your readership is that gold represents reserved purchasing power and a form of financial wealth insurance.
Which precious metal is most attractive to you now, and why?
They all have their attributes. But we’re only talking about four: gold, silver, platinum and palladium. Platinum and palladium are heavily influenced by the automotive cycle because of their use in that industry. Silver has a lot of industrial usage, so its analysis is obviously going to be affected by its use in many different industries. But it also has a precious metals component. It’s accepted as money in most parts of the world.
Gold is the king of the hill as far as precious metals. It is the one where the influence of industrial usage has the least impact, and it is mainly a store value all over the world. You can’t talk about the appeal of any of the others without first taking into account gold.
If you could own just one mining asset, what would it be?
Hypothetically, it would be a long-lived, mine producing gold or gold and silver at very competitive costs. I can’t identify specific companies that have all of those attributes, but there are single mines that have that.
Do any in particular come to mind?
The Detour Lake mine in Canada has a 23-year mine life; that’s very important because that means you’re going to capture price in different parts of the cycles. Detour doesn’t quite fit the definition of being low-cost. It’s a higher-cost mine, but it’s not a marginal mine. It’s just not the lowest-cost mine that would come to mind, but it does have all the other aspects that one would look for.
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