"We have seen what QE does to the gold price in the past," she said. "At the end of February we expect the ECB to put a trillion dollars into the system to fund bond purchases."
"The Fed has said it will keep interest rates at close to zero until 2012 – this is excellent for precious metals, and means high gold prices are here to stay. The previous peak, back in the 1980s, would have been $2,500 in today’s money, but we could soon surpass that."
"Although good jobs data just came out from the US, this is a temporary lift only and nothing has changed. Governments are deferring action and trying to print their way out of trouble."
Markova also believes growing interest from emerging markets will help to sustain the precious metal’s valuation.
"In India, many women take a dowry of gold with them when they get married, so it is growing in popularity there," she continued. "India is also getting ready to pay Iran in gold for oil, but it only has two years of reserves, so it is going to have to go to the market."
"China produced 361 tonnes of gold last year but it is hoarding lots of it as many rich people don’t want to put money into bricks and mortar as they are worried about a bubble in the housing market."
The Smith & Williamson Global Gold & Resources fund holds around 130 stocks, most of which are micro caps.
Markova says this is because the majority of exploration for gold mines is now carried out by micro caps, while the large caps monitor their research, ready to pay a premium for companies once they think a rich seam of the precious metal has been located.
The manager is aware of the high risks involved with micro caps, however, and so thoroughly researches them before committing any money. She once even rejected an investment on the basis of what she had seen down a mine.
"It was really old and unstable and you had to hike for 20 minutes once you were underground so the miners would have needed double pay to go down there," she explained. "Then when I was underground they almost lost me – I just thought to myself 'What kind of people are you?'"
"Another time we were invited by Kinross, which we were shareholders in, to go into the desert, which we were hugely excited by. But when we asked how much it would cost to begin extracting gold we were told $1.8m, when we knew it should cost around three times as much. Then we were told they had to write off $1.8bn off reserves and had to set up a pipeline to the ocean. It didn’t feel right so when we came back we sold the shares and we were proved right – the stock went down on an up-cycle."
Performance of funds since May 2010
Source: FE Analytics
According to FE Analytics, Smith & Williamson Global Gold & Resources has returned 17.76 per cent since Markova joined in May 2010, compared with 27.75 per cent from a similar fund, SF t1ps Smaller Companies Gold.