Money the "Real Bubble, Not Gold"

THE "REAL BUBBLE" investors should beware is in money creation, not the gold market, a leading gold-stock fund manager said this week.

"I love it when the media, which never told you to get into gold in the first place, is now telling you to get out. It is just classic," John Hathaway of Tocqueville Asset Management told Barron's magazine in an interview published Saturday.

"Gold is a bubble only for those who maintain faith in the ability of politicians and financial authorities to swim against the tide of deflation."

Asked how that deflation plays for Gold Prices, "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.

"I can't even keep track of the trillions anymore."

This view from Hathaway, whose  $1.4 billion Tocqueville Gold Fund has gained 49% over the last 12 months according to Barron's, contrasts with comments from Federal Reserve chairman Ben Bernanke. He told a House of Representatives committee on Wednesday that "The signal gold is sending [on inflation] is in some ways very different from what other asset prices are sending.

"For example, the spread between nominal and inflation-indexed bonds, the break even, remains quite low, suggesting that markets expect about 2 percent inflation over the next 10 years," the former Princeton economics professor said.

"I don't fully understand the movements in the Gold Price," Bernanke conceded, "but I do think that there's a great deal of uncertainty and anxiety in financial markets right now."

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