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Barrick predicts surge of buying gold if bailout is approved

The chairman of Barrick Gold Corp claimed yesterday (September 24th) that the US government's proposed bailout to support the banking sector will boost gold prices.

Congress is currently considering a $700 billion rescue plan put forward by treasury secretary Henry Paulson to ease the effects of the collapse of Lehman Brothers.

However, Peter Munk, head of the world's largest gold producer, has explained in an interview in New York that if the proposals are approved it will benefit gold investment in the longer term.

He said: "That impact on holders of US dollars in China or Russia or Abu Dhabi or Kuwait is that they're going to say, 'What is that going to mean for the US dollar, and what alternative are we going to have?'

"So gold is going to have very powerful support.''

The plan looks likely to go through after Mr Paulson and Federal Reserve chairman Ben Bernanke told lawmakers this week that the economy would be in grave danger otherwise.

Gold prices could benefit either way, as they would be buoyed by a weaker dollar if the Paulson strategy is implemented and by banks failing if it is not approved by Congress.

Barrick chief financial officer Jamie Sokalsky also added his weight to the view, claming that the price could surpass the $1,033.90 recorded in March and that the bailout plan is another "big" reason to buy gold.

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