Gold’s latest rise is ‘sad’ statement, mining firm exec says
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Some disturbing commentary on the latest rally in gold, which has lifted the price above $900 an ounce this week, comes from -- of all people -- Peter Munk, the chairman of mining firm Barrick Gold Corp.
Barrick Gold Chairman Peter Munk said an ‘unpleasant and frightening’ trend of investors buying gold as protection against uncertainty in world markets may help push the metal over $1,000 an ounce. Munk, founder of Toronto-based Barrick, the world’s largest gold producer, said he has received an increasing number of calls from wealthy investors looking for ways to buy bullion. While that is positive for the metal market, it is a ‘sad part of a civilized society,’ Munk said. ‘That’s not where you want to be, it’s alarming,’ he said in an interview from Davos, Switzerland, where he is attending the World Economic Forum.
Gold closed at $905.61 an ounce in New York on Thursday, up $16.90 for the day. The price has rallied from a recent low of $705 in mid-November, although it’s still below the record closing high of $1,004 last March, when commodities in general were zooming.
The metal’s gains in recent months have been stoked in part by traders’ flight from some paper currencies, including the British pound and the Russian ruble.
From Bloomberg:
Gold is ‘the obvious counterweight’ to currencies, Munk said. The metal has reached record levels in Indian rupees and Russian rubles, among others, as investors outside the U.S. demonstrate a greater affinity to buy the metal as a hedge against currency declines, he said. ‘Americans were brought up to believe in the dollar, with some justification, and it is the Germans and Russians and Indians that never trusted their currency,’ Munk said. ‘Today, it’s a situation where people also have concerns about the dollar paper currency.’
Still the greenback has mostly been strengthening since mid-December. Usually, the dollar and gold move in opposite directions.
Some analysts have speculated that gold is anticipating a plunge in the dollar that could be triggered by investors’ loss of faith in the Obama administration’s plans to bolster the economy.
-- Tom Petruno