The former Wales boss believes his compatriot will prove a huge success at the Santiago Bernabeu and says the winger should not be castigated for his high price tag.
The Welshman has struggled with injuries this season following his world record move from Tottenham during the summer, leaving question marks over the club's decision to break the transfer fee record in order to seal his signature.
Toshack, however, insists his compatriot cannot be blamed for the price tag and has backed him to hit top form this season.
"I don't want to go into the ins and outs of what he is worth, but what I do know is that Bale is not very far from Cristiano Ronaldo and Messi’s level," Toshack told La Xarxa. "The player is not to blame for the 100 million euro fee. If clubs and presidents have reached that point, it's their fault.
"He's had bad luck not to train during the summer, caused by the drama between Tottenham and
Real Madrid, but Bale is a fantastic player. There's no need to have any doubts about Gareth Bale, I can assure you of that."
Bale's arrival capped a summer of heavy spending in the Spanish capital, with the likes of Asier Illarramendi, Isco and Dani Carvajal also joining the club.
Toshack, who currently coaches Khazar Lankaran in Azerbaijan, feels some of the new signings and Castilla graduates face a tough task to break into the side this season due to the need for Carlo Ancelotti to keep pace with Barcelona and Atletico Madrid at the top of La Liga.
"For people like Illarramendi, Isco or the young players from El Castilla, if they look at Ancelotti and [assistant coach Zinedine] Zidane’s bench then it is imposing," Toshack said. "At the moment, it is a difficult time for them because Barca’s going well, with Madrid behind them in the table, but they need to be given time."