Barrick CEO Explains Why Gold Price Has Gone Up During the COVID-19 Pandemic

Siamak Masnavi
  • 10 May 2020

Recently, Mark Bristow, the President and CEO of Barrick Gold Corporation (NYSE: GOLD) (TSX: ABX), which is the world's largest gold mining company by annual production, said that his firm is giving their investors "an opportunity to have a self-funded insurance policy against a global financial crisis."

Barrick "has gold and copper mining operations and projects in 13 countries in North and South America, Africa, Papua New Guinea and Saudi Arabia." Barrick's shares "trade on the New York Stock Exchange under the symbol GOLD, and on the Toronto Stock Exchange under the symbol ABX."

Bristow made this comment during an interview with CNBC’s “Squawk Box” last Wednesday (May 6), the day on which Barrick reported its Q1 2020 financial results.

According to Barrick's press release, "operating cash flow increased to $889 million and free cash flow1 to $438 million from Q4" and "net earnings per share was 22 cents; adjusted net earnings per share2 was 16 cents." 

The Barrick CEO told Andrew Ross Sorkin (who is a co-anchor of the "Squawk Box"):

"With the response to Covid, as you point out, we’ve taken that quantitative easing to a different level, and of course that puts pressure on paper money, and you measure that with the price of gold... and you've seen the price of gold go up in all currencies across the globe in recent times."

He later added:

"This situation is what we're all about, giving our investors an opportunity to have a self-funded insurance policy against a global financial crisis."

It is worth noting that at the time of this interview, the price of gold was around $1,700 an ounce.

Also on this day, Mark Tepper, President and CEO of Strategic Wealth Partners, said during an interview on CNBC's "Trading Nation" that he preferred SPDR Gold Shares (GLD), which is the largest ETF that is backed by physical gold, over the VanEck Vectors Gold Miners ETF (GDX):

“GLD is your pure play.

"Gold does very well as a calamity hedge, and I think we would all agree that this is definitely a calamity right now.

"It also does well during periods of inflation but also deflation, and there’s absolutely no question about it, there has been a ton of money created over the last few weeks.

"And when you look at the stock market over the last few weeks, the stock market’s gotten cocky.”

Tepper also added:

"The stock market does not reflect what’s happening in the economy.

"I do think double-digit unemployment is going to be the norm for quite a while, unfortunately, much longer than consensus thinks.

"And because of that, I think the safety trade is going to be valid over the course of the next several months.

"It’s going to be good news for GLD holders.”

According to data from GoldPrice.org, so far in 2020, the price of gold has gone up 8.9% against the U.S. dollar.