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Inflation and geopolitical conflict 'good for gold,' Barrick Gold CEO says

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Barrick Gold CEO Mark Bristow joins Yahoo Finance Live to discuss the company's earnings amid inflation, gold prices, supply chain concerns, and the outlook for commodities.

Video Transcript

[MUSIC PLAYING]

BRIAN SOZZI: The luster is back for the gold sector. Gold prices are breaking out as investors fret about the outlook for inflation. And that is sending shares of producers such as Barrick Gold higher. Let's check in with Barrick Gold CEO, Mark Bristow. Mark good to see you here this morning. I was joking with the team this morning that you've probably seen a good number of cycles, a real veteran of this industry. What does it feel like right now just given all of these high levels of inflation we are, in fact, seeing which tends to be good for gold prices.

MARK BRISTOW: Yeah, Sozzi, thanks for having me. Of course, you know, one of the things about these big corrections in the markets and that's what-- where gold does really well is you only see them when they are upon you. And we're certainly-- if you go back to the end of last year, everyone was really bullish and it was always get all going to be fine and things were transitory and suddenly things are reality. And, you know, we've got hot markets inflation, a lot of conflict around the world, and a global economy that's not in sync. So that's always good for gold.

JULIE HYMAN: And so one of the other things that has been affecting you guys, just like it's been affecting anyone, is not only do you have to get your product out of the ground, you have to get it to where it needs to be. And I know that you all have been very focused on supply chains. So talk to us about the latest and sort of give us a status report on that front.

MARK BRISTOW: So, Julie, that's true. I think, you know-- I grew up in North-- Northern Africa and I understand supply chains. And so, you know, the sort of sophisticated developed world has been caught flat-footed on supply chains, has been caught flat-footed on many things related to COVID. And so, you know, the importance of being agile and being able to manage supply chains is absolutely critical, particularly in the mining industry because we rely on it. You know, we move a lot of stuff to the mines to mine the ore and then move it all back out again. So it is a challenge, but it's absolutely manageable. And, you know, that's going to be the separator. And I think it's going to be the separator on many industries, those who can manage the supply chain and those who can't.

BRIAN SOZZI: Mark, I don't have tell you this, but these are tough jobs, working out in gold mines-- not like putting on makeup and going over-- going on TV here. I mean, no offense to what me and Julie do, but, you know, mining for gold is a tough gig. Are you having trouble finding the next generation of workers in this tight market to get in those mines and work them?

MARK BRISTOW: You know, Sozzi, the important thing is, we pay well. And the big challenge-- and when we did the merger with Randgold, the big focus there was let's focus on the best assets and more importantly, the best people because mining is always sort of in back of-- in the back of the queue when it comes to, you know, quality people and we can offer fantastic careers. And that's what we've done and we feel that, you know, there's a huge opportunity to access young people and give them a real career in mining.

JULIE HYMAN: And the opportunity that you guys are seeing, not just that you're offering to people, but that you're seeing for the company prompted you guys to announce a share buyback program as well. Do you think that, as we start to see gold prices recover, that Barrick is going to be rewarded as well? I mean, how do you think you convince investors to see the value like you see the value in the company?

MARK BRISTOW: You know, Julie, we come from-- we did a big merger in 2019-- a couple of deals. In Nevada, we consolidated Newmont and Barrick's assets. We took out a problem child company in Africa called Acacia. We merged with Randgold. And my ambition is to build a modern mining company acceptable to future generations. And we've been underperforming the market, particularly recently. It couldn't have been a better time.

You know, we focused on delivering high quality assets with the best people, delivering quality and financial results. And we were lagging in the market and so we came out with a revised dividend policy. We indicated that we got approval to do a big $1 billion share buyback because we felt that our share price was undervalued. And it couldn't have come at a better time. Get everyone focused on the stock and now everyone is focused on gold because of the situation globally.

BRIAN SOZZI: I liked what you said on the earnings call the other day, Mark. You said, quote, "Competition for M&A at the moment is competition to survive." Now, this industry has a long history of boom and bust cycles as it pertains to M&A. I-- do feel heat to make a big deal here.

MARK BRISTOW: You know, we looked at all those, and one thing-- I think one thing that sort of kept me in this industry is the things that I didn't do rather than the things that I did. And it's so easy to do big deals at premier-- at the top of the market. It's much more difficult to exercise that discipline. And you're right, Sozzi, we have a great history of-- or tradition of buying in the top and going bust in the troughs. And we have that discipline.

And also mining is a consumptive industry. So it's very important that you invest in your future all the time, not only when the going is good. And, you know, that's what we in Barrick have done. And we were one of the few companies this year in our results to point out that we've replaced all the gold that we mine last year. That's a significant step forward. And it's a stand out performance in an industry that's always battling to keep its asset base intact as it mines it away.

- I'll ask you real quick, Mark. Somebody who wants to get into the gold market, just given-- if they have concerns about inflation, how do you recommend they do it, other than buying shares of Barrick Gold. How should they go about it?

MARK BRISTOW: So the ETFs are probably the easiest way to get it. And you can buy equity ETFs and you can also buy the physical gold. And, you know, the physical gold is a very safe bet, but you don't get the premium that you get in a good equity. At the same time, in a bad equity, you're exposed to the risk-- operational risks and you don't sometimes get the full benefit of what gold brings to a portfolio.

And, you know, over time, and I'm talking, you know, the last 50, 60 years, gold has always been a stable-- stabilizer in a portfolio and you should have around 5% of your portfolio in some sort of gold package. And that really helps you through difficult times.

- Spoken like a true veteran of the industry. Barrick Gold CEO, Mark Bristow. good to see you. Good luck this quarter. We'll talk to you soon.