The way fund manager John Hathaway sees it, gold may be only halfway through its bull run.

The metal is likely to remain supported by worries that government policies will continue to devalue paper currencies, he said Monday during the two-day inaugural Internet-based Kitco Metals eConference.

Hathaway manages the Tocqueville Gold Focus Fund, Tocqueville Gold Fund, Tocqueville Gold Offshore Fund and Tocqueville Gold Partners. New-York based Tocqueville Asset Management manages some $8.5 billion in assets, of which $2.2 billion is gold-related.

“We view gold as being in a secular bull market,” Hathaway said. “The biggest issue out there is paper assets and the lack of trustworthiness of governments both on this side of the Atlantic and elsewhere. At some point, it seems to us, there will be serious devaluation of all paper currencies.”

Thus, he said, investors are increasingly turning to gold. “We don’t see this changing any time soon,” he said.

In fact, during his presentation, Hathaway displayed a graphic showing the four stages of a bull market. And, he said, gold is currently at the midpoint between Stages 2 and 3.

“We’re right in the middle,” he said. “We’ve gone through Stage 2 where gold has finally made it to the front pages (of newspapers). And that, of course, has attracted money flows. We’re now set for a much more rapid increase both in the gold price and in the appreciation of gold shares as momentum investors get into the space.”

The initial stage of a bull market is interest from value investors or contrarian investors when the price is at a bottom. In fact, Hathaway said, Tocqueville’s interest in gold began in 1998 when the metal was “the Rodney Dangerfield of investment ideas.” He was referring to the comedian whose punchline is that he gets no respect.

The second stage of a bull run comes when growth investors enter the market and there is an inflow of funds as the price of gold continues to rise, his graphic said.

The third, and next stage to come, of the bull market will be interest from momentum-based investors, Hathaway said.

The fourth and final stage will occur when investors are buying gold and mining shares at such a frenzied pace that “irrational exuberance” is the result, his graphic said. Hathaway described this scenario as a “silly season when everybody and his brother is talking about their favorite gold stocks, just as they were talking about Internet stocks back in 2000” before a bubble burst in the technology sector.

“Frankly, we have a long way to go before we see that kind of craziness,” Hathaway said.

Levels of public debt are accelerating, Hathaway said, and this will continue if the economy does not “miraculously” grow solidly for three to five years.

Meanwhile, the countries that supply goods to the U.S. economy have a small exposure to gold in their reserves. “There is no doubt in my mind that they view this as a problem and they will be gradually adding to their gold holdings, whether it’s in the form of official holdings or unofficial,” Hathaway said.

Overall, the supply/demand picture for gold remains favorable, he said.

“The big change in the supply/demand picture is the investment demand has become more and more powerful at the same time that mine supply is stagnant or even declining,” Hathaway said.

Meanwhile, there are negative real interest rates in the U.S., in which rates are below the level of inflation.

“So there is really no penalty for anyone to have gold,” Hathaway said. “They’re not missing out on any sort of return for holding liquid assets.”

Gold in particular has more upside potential since it is a relatively small market, with total capitalization of mining companies only $300 billion or so, a speck compared to total worldwide equity assets in the trillions, the fund manager said.

“Physical gold is equally small,” perhaps $2 trillion, Hathaway said. “So it doesn’t take a big movement of financial assets into gold to have a dynamic impact on the gold price. We think that the upside potential from here is substantial and it’s not too late to make an allocation to gold and gold shares.”