Barrick Sees `Large-Scale’ Gold Buying on Bailout

September 24, 2008 by · Leave a Comment
Filed under: Economic News 

No surprise that when we decide to increase our debt by $700 billion dollars or more and you are a holder of the dollar as a safe haven, we would see wealth take flight into the proven holder of wealth for the last 6,000 years…. GOLD BULLION. I would call gold a money in times of economic uncertainly, fiat money (unbacked) works great in times where it is properly regulated and not over issued. But in time like now when we are issuing our currency without any meaningful limits, you are losing value by currency inflation alone especially when growth in not keeping up.

Bloomberg Article:

Barrick Gold Corp. Chairman Peter Munk said bullion prices will go higher, driven by large-scale buying by “major, major” holders of dollars who fear the effects of the U.S. government’s bailout plan on the currency.

Central banks or sovereign wealth funds are among those likely to buy gold to diversify their investments and hedge against the risk of a weaker dollar, given the government’s $700 billion plan to support the banking system, Munk said today.

“That impact on holders of U.S. dollars in China or Russia or Abu Dhabi or Kuwait is that they’re going to say, `What is that going to mean for the U.S. dollar, and what alternative are we going to have?’ ” Munk said in an interview in New York. “So gold is going to have very powerful support.” Munk, 80, founded Toronto-based Barrick in 1983 and made it the world’s largest gold producer.

Gold has surged about 20 percent since Sept. 11 as investors shifted assets into precious metals as a haven after the bankruptcy of Lehman Brothers Holdings Inc. Treasury Secretary Henry Paulson plans a rescue fund to allow banks to dispose of devalued assets such as mortgage-backed securities.

Paulson and Federal Reserve Chairman Ben S. Bernanke told lawmakers this week that failure to approve the plan would threaten markets and the U.S. economy. Gold may be set to benefit both from the weaker dollar if the plan is approved by Congress, or from the potential failure of the banking system if it isn’t.

Rescue Package

“I, like anybody else, hope the package will go through because we do not want the system to collapse,” Munk said. “From a gold point of view, a bailout package just means a further devaluation” of the dollar, he said.

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