Former manager John Collins is delighted to see Hibernian sitting second in the Scottish Premier League.
However, he does not believe the Edinburgh side are ready to mount a sustained challenge to the Old Firm.
"In one-off games, Hibs and Dundee United are always going to give the Old Firm tough games," said Collins.
"But over the course of the season Celtic or Rangers will prevail. They have bigger squads and bigger crowds pushing them on home and away."
Under Collins, Hibs briefly topped the league in October 2007, having beaten both Celtic and Rangers in early season encounters.
But the Easter Road side then suffered an immediate slump in form and Collins resigned just two months later, ending his 14-month reign, which included winning the League Cup.
At the time, he cited frustration at the lack of funds available for players, having seen the club recoup substantial fees for Kevin Thomson, Scott Brown, Ivan Sproule and Steven Whittaker.
There is no doubt the gap has narrowed
John Collins
Current Hibs boss John Hughes had to contend with the sales of Scotland striker Steven Fletcher and skipper Rob Jones in the summer.
But he has operated shrewdly in the free transfer market and his budget was capable of recruiting former Sunderland duo Anthony Stokes and Liam Miller.
"I played with Yogi and he's a good friend of mine," said Collins, who spent six years at Hibs before moving on to play for Celtic, Monaco, Everton and Fulham.
"He's doing a fantastic job and I'm delighted he's had some funds available, which the fans wanted and the team needed.
"The players seem to have clicked. Confidence is high, they are playing football the right way and they have picked up some good results."
Hibs lost out at home to Celtic in August but managed a 1-1 draw away to Rangers last month, which impressed Collins.
"I was at Ibrox when Hibs were there and it was a very even match," he said. "I watched Dundee United on Sunday and they were close to Rangers as well, so there is no doubt the gap has narrowed.
"Where it becomes tough is away games. Celtic and Rangers always take big crowds, pushing them forward. Hibs and Dundee United don't have that and I think it makes a difference over the season.
"The Old Firm also have bigger squads."
The first Edinburgh derby of the season is on Saturday and Hibs travel to Tynecastle 11 points clear of their city rivals, who sit eighth in the table after a disappointing start to the campaign.
"I always enjoyed the derby games and Tynecastle is a fantastic tight stadium, the atmosphere is wonderful," explained Collins, capped 58 times for Scotland.
"The home team are always slight favourites but I think this one will be very close.
"I thought Hearts would have made a better start to the season and they have got better players than their league position shows, so I would expect them to climb up the table."
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