Barrick says record gold price is sustainable

By Ben Hirschler

DAVOS, Switzerland (Reuters) - Record gold prices, which scaled a new peak on Friday, are sustainable and could easily go higher, according to the chairman of the world's No. 1 gold producer, Barrick Gold Corp (ABX.TO: Quote, Profile, Research).

Peter Munk said he was no "gold bug" but told Reuters the outlook for the yellow metal was more positive today than at any time in the past decade.

"With increased demand and constrained supply, I'm more convinced that it (the price) is not only sustainable but may even reach the highs reached in the 1980s," he said at the World Economic Forum.

Gold hit a high of $923.40 an ounce on Friday after a power crisis shut South African mines. The price is the highest ever in nominal terms but is still not equivalent in real terms to the peak of $850 reached in 1980.

"Today's adjusted price would be in the $2,000 bracket," Munk said.

It is not all good news for the Canadian group, however. Munk said Barrick's costs had risen by at least 20 to 30 percent over the last two years, reflecting intense competition for miners and mining engineers, which has pushed up wage costs.

Equipment costs have also increased sharply.

The mining industry has seen a wave of acquisitions recently and Munk predicted more to come, describing further consolidation as "inevitable".