London, 23 September 2010

The same investor nervousness that has led to record gold prices, could just as quickly bring about the demise of the bullion bulls, the head of the world's largest gold mining company said on Wednesday.

Aaron Regent, president and chief executive of Barrick Gold Corp, painted a rosy scenario for continued strong gold prices, but would not be drawn on how high they might go.

When asked what might change the bullish atmosphere in global markets, he replied: "Clearly sentiment.. If it changes, gold, like any other commodity, will... experience volatility.

"Part of the psychology is that people think gold has had a nice run, so there's probably a bit more anxiousness about where gold goes, than when it was down around $1,000," Regent told Reuters on the sidelines of the Denver Gold Forum industry gathering. Nervousness about the global economy had contributed to the run-up of the gold price, which has soared 25 percent in the last year and hit a record high of $1,298 per ounce on Wednesday.

"The gold story is intact and is a reflection of what's going on the world economy," said Regent. "The necessary government reponse -- monetary policy, deflationary efforts whatever tools they use."

He said the increased liquidity in the system tracked very closely to the gold price. "That, combined with just nervousness -- there's a lot of uncertainty, certainly about sovereign debt, government deficits, trade imbalances. That enhances the attractiveness of gold as an asset that should retain its value, if not continue to grow, relative to other currencies." He said gold is increasingly viewed as a currency and, as such, has a number of positives.

"The trend we're seeing right now is the performance of gold is viewed as insurance in the portfolio; it diversifies against other asset classes.

"The appeal of gold has been heightened so if you see increased allocation of funds into gold, clearly that's going to be a positive for pricing."

Regent said it was irrelevant whether the price rose 10, 25 or 50 percent. "What's interesting is that gold has not gone and tripled in price or something like that. It's just slowly increased year after year.

"When oil went up there was a bit of sticker shock but as time prgresses you get more accustomed to the new pricing levels."

Asked what gold price Barrick assumed in its forward planning, Regent said only that the company tends to take the spot price and then "a big discount.

"For our purposes it's best to be conservative." Asked if $1,300 would be a reasonable figure for next year, he said he did not know. "We haven't made that decision yet."

"I don't worry so much about the gold price because it's the nature of our business. It's going to go up, it's going to go down and we get used to adapting to a change of circumstances. "There's no doubt the wind's at our back which makes things a lot easier and fortunately for us our cost profile is pretty stable. So with this gold price, we're seeing significant margins."

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