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Market at 'risk of collapse' if war persists - CEO of Barrick, world's second largest gold miner

Kitco News

The crisis in Ukraine remains precarious, with no clear path to resolve the conflict, but what is clear is that protracting the war will be highly detrimental to financial markets, said Mark Bristow, CEO of Barrick Gold.

Barrick is the world’s second largest gold producer, operating mines in five continents.

Speaking to Michelle Makori, editor-in-chief of Kitco News at the BMO Global Metals and Mining Conference, Bristow said that even though the conflict is so far only contained within Ukraine, the economic ramifications are global.

“If you look at this crisis, there’s a whole lot of potential of unintended consequences. We’ve got very hot markets, and we are now going to really stress the global economy out. Everyone’s going to be impacted. If this goes on for much longer…the threat of that is it could collapse the market,” Bristow said.

After a series of sanctions imposed by Western nations, Russia’s central bank raised its key interest rate on Monday to 20% from 9.5% in an emergency move in a bid to stop capital outflow from the country.

The Russian ruble has tumbled to record lows, last trading at 108.51 rubles to the dollar.

“And remember, we’re in the longest bull run, ever, and markets don’t go up forever. So, the whole thing is turned into, like, running in the dark right now,” Bristow said.

Headwinds for risk assets are in fact, tailwinds for safe haven assets like gold, Bristow said.

“For a while now, I’ve been saying that the risk is on the upside for the gold price. Everyone’s saying it’s not working that well, it should be higher. Gold price is crises behave strangely because people use it, that’s what it’s for. A lot of people sell the gold at that point in a crisis. We’ve seen the markets all over the place, we’ve seen them show that nervousness earlier in December of last year, and it’s gotten worse,” he said.

Plans by the Federal Reserve to raise interest rates won’t be enough to push real interest rates into positive territory, Bristow added, which is also positive for gold.

The probability of a 50 to 75 basis point hike in the U.S. by March has dropped to 2.7%, as given by the CME FedWatch tool. Markets are still pricing in a 97.3% probability of a 25 to 50 basis point hike at the March 16 Fed meeting.

For more information on Barrick’s expansion plans and environmental, social and corporate governance plans, watch the video above.

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