Barrick Gold chief sees no slowdown in U.S. demand

NEW YORK (Reuters) - The head of the world's largest gold mining company said on Tuesday that despite the potential for a U.S. recession, there was no sign of it yet in the market for gold jewelry.

"There has been no slowdown in gold jewelry demand in the U.S. that we've seen to date," said Greg Wilkins, president and chief executive officer of Barrick Gold Corp (ABX.N) (ABX.TO).

He said his principal concern was what is going to happen to the general U.S. economy. "We've seen a slowdown in housing and a potential for recession and that affects people's purchases of luxury goods, and jewelry is a luxury good.

"So there could be some softening of demand, but we don't see it more than perhaps any analyst on the street."

Appearing on cable television's CNBC, on which he denied a market rumor that Canada's Barrick was interested in acquiring U.S. rival Newmont Mining Corp (NEM.N), Wilkins was asked what impact inflation might have on the price of gold, which was selling for about $668 per ounce on Tuesday.

"When people talk about inflation and deflation, they're really talking about investor motivation for owning gold," he said. "Investor motivation is only one component of gold ownership."

He noted about 80 percent of the gold produced is consumed through jewelry making and some industrial applications.

"Investment demand, for whatever reason, be it deflation, inflation, flight to quality safe haven, they're just investor motivations. I think the bulk of the market is actually very strong."

In the second quarter, World Gold Council statistics show jewelry demand was up 37 percent, with some $14.5 billion in sales, he said. "On the supply side, it is challenging. Supply is declining, so the supply-demand imbalance is very positive for the gold price."

Asked about the state of the industry, Wilkins noted Barrick became the world's biggest gold producer, leapfrogging Newmont, through its acquisition of Placer Dome in 2005.

"(But) The industry has really struggled from a lack of investment," he said. "It's fine to talk about great gold prices for the last couple of years, but the Bank of England tried to put the gold mining industry out of business back in 1999 and there was very little adjustment for many years."

He was referring to the British central bank's restructuring of reserves through auctions of gold between July 1999 and March 2002, in which about 395 tons were sold.

"It takes a long time to discover new opportunities and there's just not a lot out there of particular interest," Wilkins said, when asked if Barrick was looking at other acquisitions.