Barrick Gold CEO: The upward risk of gold prices is far greater than the downward risk
Barrick Gold's CEO predicts that the upward risk of future gold prices is greater than the downward risk, believing that the market has underestimated the damage caused by Western central bank tightening to the economy. He states that the United States lacks fiscal discipline and people have become accustomed to free money. He believes that the main reason for the continuous rise in gold prices over the past five years is the impact of currency depreciation. He expects the demand for gold to continue to rise, providing support for gold prices. Barrick Gold also needs to find more gold. Currently, the spot gold price is falling, and US economic data is supporting the rebound of the US dollar.
Zhitong App learned that after the price of gold recently reached a historic high, Barrick Gold (GOLD.US), the world's second-largest gold miner, predicts that the upside risk of future gold prices is far greater than the downside risk. Mark Bristow, CEO of Barrick Gold, said on Monday that the market underestimated the damage caused by the tightening cycle of Western central banks to their respective economies.
Bristow said that in the case of the United States, there is no fiscal discipline at all. He said, "People have become accustomed to free money. It is difficult to tighten policies."
Bristow said, "I have great confidence in the U.S. economy, but now I see both the Republican and Democratic parties taking some very undisciplined approaches to managing fiscal policies."
Bristow believes that over the past decade, people have been living on free money, including printing money during the COVID-19 pandemic, and people are now weighing the impact of currency depreciation. He said that this is the main reason for the continuous rise in gold prices over the past five years.
He said, "When you print money, it's like printing shares of a company. If you print shares of a company without adding more value, then the value of the shares will decline. Therefore, when you print a large amount of money and the economy does not grow, the value of this money becomes risky."
Or in other words, gold becomes more valuable and less risky. "You buy it to protect your wealth because you don't trust the (economy), which is why there are signs that cryptocurrencies will rebound, although I don't believe it. But if you look at 2023, gold outperforms all other asset classes," Bristow said.
Therefore, Bristow believes that the demand for gold will continue to rise, providing support for gold prices.
"In addition, the gold mining industry has not replaced the gold we have mined. We have been using the rising gold prices to mine low-grade gold reserves, but in the past two and a half years, due to unchanged fees and then inflation, we have seen the profits of the mining industry shrink."
"That's why we need to find more gold."
On Monday, Eastern Time, spot gold fell 1.1% to $1,981.63 per ounce, supported by strong U.S. economic data, which led to a rebound in the U.S. dollar. U.S. gold futures fell 0.8% to $1,997.60 per ounce.