TORONTO (miningweekly.com) – 30th November 2010 - Barrick Gold, the world's top producer of the yellow metal, insists the gold price is not in a bubble and sees “lots of room” for further price increases, CEO Aaron Regent said on Tuesday.
Gold, which touched a high above $1 400/oz in the first week of November, was trading at around $1 383 on Tuesday afternoon.
“When you look at bubbles, what is a bubble often characterised by? Well, it's characterised by assets that have extreme volatility,” he said in a presentation at a Toronto conference hosted by Scotia Capital.
“The volatility in gold right now is very modest.
"A bubble is when an asset is over-owned. And I don't think you can suggest that gold is over-owned,” Regent continued.
“If you take the value of the gold exchange traded funds (ETFs) as a percentage of US money markets, gold ETF [holding] is probably about one percent.”
Gold has also maintained its value relative to other commodities like oil, he said, commenting that one ounce of gold will still buy about 15 barrels of oil today - around the same amount of the fuel that it did four decades ago, he argued.
With what he sees as strong fundamentals, Regent expects that the gold price will continue to move higher.
“We think that there's still lots of room for gold to increase in price from here.”
The macroeconomic environment, including reflationary efforts by governments, concerns over sovereign debt, trade imbalances and talk about currency wars, is overall “very price supportive” for gold, he said.
Central banks are increasing their gold holdings, and investment demand is rising amid concern over the future of Fiat currencies, he said.
Regent also noted recent comments by World Bank president Robert Zoellick about gold's role in as a reference point for currencies.
Gold is no longer on the sidelines, “it is now becoming front and centre in terms of of discussion by monetary authorities around the world”, he said.
“And in many respects I would suggest that gold is reasserting its historical role in global financial affairs.”
Toronto-based Barrick expects to produce between 7,6-million and 7,85-million ounces of gold this year and is targeting output of nine-million ounces in five years' time.
Edited by: Liezel Hill
Gold, which touched a high above $1 400/oz in the first week of November, was trading at around $1 383 on Tuesday afternoon.
“When you look at bubbles, what is a bubble often characterised by? Well, it's characterised by assets that have extreme volatility,” he said in a presentation at a Toronto conference hosted by Scotia Capital.
“The volatility in gold right now is very modest.
"A bubble is when an asset is over-owned. And I don't think you can suggest that gold is over-owned,” Regent continued.
“If you take the value of the gold exchange traded funds (ETFs) as a percentage of US money markets, gold ETF [holding] is probably about one percent.”
Gold has also maintained its value relative to other commodities like oil, he said, commenting that one ounce of gold will still buy about 15 barrels of oil today - around the same amount of the fuel that it did four decades ago, he argued.
With what he sees as strong fundamentals, Regent expects that the gold price will continue to move higher.
“We think that there's still lots of room for gold to increase in price from here.”
The macroeconomic environment, including reflationary efforts by governments, concerns over sovereign debt, trade imbalances and talk about currency wars, is overall “very price supportive” for gold, he said.
Central banks are increasing their gold holdings, and investment demand is rising amid concern over the future of Fiat currencies, he said.
Regent also noted recent comments by World Bank president Robert Zoellick about gold's role in as a reference point for currencies.
Gold is no longer on the sidelines, “it is now becoming front and centre in terms of of discussion by monetary authorities around the world”, he said.
“And in many respects I would suggest that gold is reasserting its historical role in global financial affairs.”
Toronto-based Barrick expects to produce between 7,6-million and 7,85-million ounces of gold this year and is targeting output of nine-million ounces in five years' time.
Edited by: Liezel Hill
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