David Galland and gold fund manager John Hathaway discuss the disparity between gold stocks and bullion.

David Galland: A quick chat with John Hathaway, one of the top-performing gold fund managers in the world. Let’s just have a little, quick conversation about gold stocks. And, so I guess the first question – I’ve written some thoughts down here – is gold stocks really sort of underperformed bullion over the last little while or a few years.

John Hathaway: A couple of years.

DAVID: Why was that?

John: I think it’s the worries about a bear market and the fact that gold stocks are stocks and tend to perform with stocks and not bullion. They are riskier because they have business risk. The gold ETF has made gold very accessible, so the need to own – so the gold mining stocks don’t have a monopoly on people who are concerned about monetary debasement and I think that’s been a big factor.

David: The spread between cash cost and the price of gold these days – watching how far gold has run – has got to be advantageous to the balance sheets of these gold companies.