Romney win biggest risk to gold bulls, says AAA-rated star

A Republican victory in the race for the White House is the biggest threat to gold prices, according to Tocqueville Asset Management’s Euro Stars AAA-rated John Hathaway.

Gold prices this week dipped to a nine-month low ahead of the US presidential election, which is set to determine the outcome of monetary and fiscal politics of the world’s largest economy.

‘What would be a real surprise is if Romney wins the election with more of a mandate than the close polls suggest. This could then signal that people really want to get something decisively done and then we could see gold fall further,' Hathaway, who runs the Falcon Gold fund previously run by Eurostars AA-rated Joe Foster, told our sister publication Citywire Global.

Crisis not saved by the election

However the veteran gold manager, who has previously called the end of the Bretton Woods system, said he still expects gold to reach record highs in the next twelve months despite short-term moves in price.

‘The recurring issues from 2008 still haven’t been resolved and we are past the point of no return in a dollar-based system. Obama says he inherited a mess, whoever inherits now, inherits even more of a mess.’

Hathaway, whose fund has an annual stock turnover of 10%, said he has not been trading around speculative US election outcomes but has rather selectively been adding to smaller mining companies.

‘It will be stocks that will benefit the most from higher prices. You can say that where you see a 10% increase in gold price, you’d see a 25% rise in stock price.’

‘We’ve been rather trying to add small and mid-cap companies with more prospects of growth and where there is increased M&A activity.’

Hathaway's stands in contrast to BlackRock's Evy Hambro who, in an investor note speaking about the mining industry more broadly, wrote that miners risked 'killing the industry' due to increased supply-side competition.

The Tocqueville Gold fund has returned 71.36% over the past three years. This compares to its Citywire benchmark, the MSCI World TR USD, which has risen 43.41% over the same period.