Even at a Grand, Munk Likes Gold's Legs

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Peter Munk, the 80-year-old chairman of Barrick Gold Corp., believes we are in a "commodities supercycle" and said the current run in gold prices is "fundamentally" different than when gold surged to more than $850 in January of 1980...While geopolitical tensions and soaring oil prices have also played a role in the latest rise, Mr. Munk said gold's gains have been much more "sustainable and credible" this time.

Let's get one thing straight: Even at $1,000 (U.S.) an ounce, Peter Munk is still no gold bug.

The 80-year-old chairman of Barrick Gold Corp., who over the past quarter century has built his mining firm into the world's largest producer of the precious metal, says simply betting on a higher commodity price is no way to run a company.

"A gold bug keeps dreaming," Mr. Munk said in telephone interview from business meetings in Cannes. "Gold bug companies disappear when the price goes down. If you only hitch your wagon to the rising gold price then you are telling investors to just buy gold," he said. Of course, Mr. Munk has had plenty of reason to cheer bullion's record run, which saw gold futures top $1,000 an ounce for the first time yesterday. Toronto-based Barrick produces roughly eight million ounces of gold a year at its 27 mines around the world...

Mr. Munk believes we are in a "commodities supercycle" and said the current run in gold prices is "fundamentally" different than when gold surged to more than $850 in January of 1980. That spike, driven by soaring inflation, the Soviet invasion of Afghanistan and the Iran hostage crisis was a mere "blip," he said. While geopolitical tensions and soaring oil prices have also played a role in the latest rise, Mr. Munk said gold's gains have been much more "sustainable and credible" this time.

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