EDITORIAL PAGE — Gold and the better life

The prerogatives of age and of being a founder — that’s how Peter Munk prefaced a few philosophical remarks he made during Barrick Gold’s recent annual meeting, held in Toronto.

His words took the form of a personal account of Barrick’s step-by-step growth from operating a single gold mine in Ontario to producing, on an international scale, more than 3 million ounces of the yellow metal per year.

Munk talked about vision, leadership and the importance of having a realistic foundation. The difference between a visionary leader and a broken-down dreamer, he told his audience, is a thin line . . . and that line is “reality.”

Having walked that line in careers gone by, Munk knows that self-imposed reality-checks will be even more important as Barrick strives to become the foremost gold mining company in the world. He told shareholders that efforts will have to be doubled and then tripled, as Lady Luck can not be counted on to hand-deliver acquisitions as opportune as Lac Minerals with its Chilean assets.

It was a refreshing address, particularly as few people today stress the necessity of leadership and vision. Genuine leadership derives from sound judgement and fearlessness — qualities that are rare among today’s business leaders and even rarer among politicians, most of whom act in order to appease this or that collective rather than in the common good. Terms such as “work ethic” and “free enterprise” also have lost their meaning over time, and are rarely used by the media, who, despite the failure of communism and its socialist offshoots, still appear to perceive the world through a Marxist fog.

But, as Munk pointed out, those words have not lost their power to the many millions who are struggling to find a better life in underdeveloped nations.

And it is those builders and entrepreneurs of tommorrow who will affect gold markets in the years ahead.

Gold was a refuge for many past generations of Europeans, particularly in times of war, depression, revolution and political change. It held real meaning for those who remembered having to push wheelbarrows full of money to buy a loaf of bread, or those whose homes, farms and businesses were appropriated by revolutionary thugs. During those troubled times, few had faith in financial institutions and the fairness of governments, or in any financial instrument except gold.

Today, most Western Europeans share much the same level of peace and prosperity as is enjoyed by North Americans. As a result, there is less urgency and incentive to own gold. But we often forget that economic and political stability is still not entrenched in most parts of the developing world. Inflation may be under control here, but it still threatens the savings of citizens in many parts of the world.

Over the next decade, as many of these underdeveloped nations grow and prosper, a new generation of property owners and entrepreneurs will emerge, whose sheer numbers will dwarf the wealth and spending power of Europe. Gold will become an important storehouse of personal wealth in places such as China and Southeast Asia, as well as the former Soviet Union, Africa and Latin America — at least until the financial and political institutions in those regions become stable and prove themselves as worthy of trust as gold.

All this bodes well for gold and shows that lessons learned from the past can be applied to the future.