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Occupy DC and the Fed
Marc Faber Says Americans Need To Tighten Their Belts, Save More and Work More for Lower Salaries
Marc Faber the Swiss fund manager and Gloom Boom & Doom editor spoke Tuesday about the Occupy Wall Street protests, blaming lobbyist and Washington for the current economic stagnation and characterizing Wall Street as a “minority” that is only “using the system.”
He suggested protesters should instead go after the real culprits in Washington and “also occupy the Federal Reserve on the way.”
Speaking in an interview with CNBC from Montreal, Faber blamed “Keynesians and US Democrats for their interventionist policies.
“There has been too much intervention in the Western World where the share of the total economy that goes to the government and is government sponsored has grown,” he said.
“That essentially makes it very difficult for the Western World to grow substantially…I don’t see how the Western World, including the US, Japan, and Western Europe can actually grow. They’re going to stagnate,” Faber predicted.
Stagnation, in turn, leads “people to ask questions and to go after minorities,” he said.
“Wall Street is a minority, anyone else would have done the same, they use the system but they didn’t create the system. The system was created by the lobbyists and by Washington. So they [the protesters] should actually go to Washington and also occupy the Federal Reserve on the way,” Faber suggested.
The protesters say the Wall Street bank bailouts in 2008 left banks enjoying huge profits while average Americans suffered under high unemployment and job insecurity with little help from Washington. They contend that the richest 1% of Americans have amassed vast fortunes while being taxed at a lower rate than most people.
What America needs
Faber blamed an excessive regulatory environment in the US for curtailing initiatives by businesses, leading to a drop in net investments.
Businesses no longer employ and invest capital in the US, he said, preferring instead to invest in china or somewhere else in the world where the regulatory environment is more favorable.
“If you look at net investments in the US, it has gone down for the last 20 years, and it’s now negative. In other words, basically the capital stock of America is not being replenished…althought it’s being replenished somewhere else in the world. At the same time, the policies of the Keynesians have always encouraged spending,” the renowned investor noted.
“We’re not going to get out of a recession by saying spend, spend, spend. That is wrong!”
“The lack of saving is the problem of the United States.”
In one of his most memorable recent rants, Faber then went to explain what the US [really] needs to do: “I tell you what the US needs. The US needs Lee Kwan Yew [Singapore’s first Prime Minister] who stands in front of the US and tells them: Listen you lazy buggers, you have to tighten your belts, you have to save more, work more for lower salaries and only through that will we get out of the current dilemma, that essentially prevents the economy from growing.”
Markets and the Dollar
Faber, who predicted the stock market crash in 1987, turned bearish shortly before the 2007-2009 bear market and called the March 2009 level a major low which is not going to be broken any time soon, expects market volatility to continue for a long period of time and sees global liquidity tightening.
He is quite positive about the Dollar because whenever global liquidity is tightening “it’s bad for asset prices but good for the US Dollar as was the case in 2008.”
Tyranny of the masses
In an interview with Tom Keene and Ken Prewitt on Bloomberg Surveillance on Thursday, Faber was asked about one of the themes in the current issue of the Gloom Boom & Doom Report regarding alleged widespread corruption in many US institutions, including the political and corporate systems.
The gold price yo-yo: from $1,500 to $10,000, anything is possible
Year-to-date, the yellow metal is up 30% despite taking a $100 per ounce hit over past week
If there is one asset class that has analysts and market-makers’ opinion split wide open, it’s got to be gold. The price of the yellow metal has defied gravity and has gone up 555 per cent in 10 years, from an average $283 per ounce in September 2001 to $1,854 per ounce in September 2011.
The last couple of years, during which a large proportion of the world’s investing population seems to have grown a liking for the bullion, the price of the metal has doubled, from about $930/oz in September 2009 to the current $1,830 an ounce.
The yellow metal seemed unaware that ‘experts’ were calling it a bubble since the beginning of the year, and made numerous lifetime highs in 2011 – the most recent on September 6, when it touched $1,920.30 per ounce.
“There is a slow-motion train wreck going on in Europe at the moment,”
Nick Trevethan, senior commodities strategist at ANZ, told Reuters. That means gold, which is seen as a safe haven alternative to investing in slow-moving/crashing economies of the West, or the overheating Asian economies of China and India, is perhaps going to gain further.
But as with a vehicle that is cruising at close to its top speed, the ride has begun to get bumpy. The yellow metal declined about $50 an ounce, or 2.6 per cent, yesterday to close at about $1,810 per ounce, and after having gained some momentum this morning, is range-bound between $1,820 and $1,830/oz.
“Gold prices are stuck in a sideways channel and need to decide on the direction,” said Phil Streible, Senior Market Strategist, MF Global. “If we break through the upside on $1,875/oz, then we could see the lifetime highs threated once again,” he said, but warned that, in the very short term, there is more of a downside risk than upside.
Year-to-date, the safe haven metal is up 30 per cent, despite taking a $100 per ounce hit over the past week or so, and analysts are still gunning for $2,000 per ounce by the end of the year. However, the move from $1,800 to $2,000 could be a circuitous one for the bullion bandwagon, with many experts not ruling out a drop to even $1,650 an ounce in the interim.
“It’s quite fascinating to note that gold made another lifetime high last week,” Jeffrey Rhodes, CEO and Global Head of Precious Metals, INTL Commodities DMCC, said on Dubai Eye radio this morning. “While forecasts for $2,000 an ounce by the end of the year are still in place, it could fall to $1,700 or even $1,650 per ounce before that,” he warned.
On the other hand, there are those like Marc Faber, publisher of the Gloom Boom and Doom report, who said last week that “according to some statistics, the gold price today should be worth between $6,000 per ounce and $10,000 per ounce.” Now that’s a level that the metal cannot reach without an unprecedented level of speculation, some of which may actually be on the way.
“Despite a fall in prices over the past week, the speculative market for gold and silver is starting to look more positive than it has in recent weeks,” Marc Ground, analyst at Standard Bank, said yesterday in remarks sent to ‘Emirates24|7′.
“Looking at equity markets, risk-off is definitely the order of the day.
The question is: will investors continue to seek the relative safety of the dollar and shun precious metals? Given that uncertainty concerning the health of the US economy persists, we expect investors to return to the safe-haven of gold,” he said.
Citigroup, the global banking giant, said recently that gold has a one-in-four chance of spiking to $2,500 per ounce. The investment bank had previously considered that gold had a 5 per cent probability of achieving the $2,500/oz target, but in a note published last week, it said it had increased its gold price estimates in order to accommodate the impact that global financial tension is having on the metal.
“However, we expect those tensions and concerns to dissipate over time and do not believe that (price sensitive) jewellery demand will be able to make up for the loss of investment demand once sovereign financial tensions ease,” the banks’ analysts said. – Source: emirates247.com/
Marc Faber: Gold and Silver will drop again, prepare for volatility
FinancialSurvivalRadio.com Economist Marc Faber tells http://www.FinancialSurvivalRadio.com why he believes precious metals investors will endure more volatile swings in the short term, but he’s still holding his gold and silver as central banks continue to debase currencies. This interview was recorded on July 11, 2011.
MARC FABER: The Debt Fight Is Meaningless, As Governments March Toward Hyperinflation
Marc Faber expects a debt agreement, but nothing that helps in the long run. He tells King World News:
“Yes, I’m sure there will be an agreement, but it doesn’t solve the fundamental problem of excessive debt and of further, very substantial deficits. They’ll iron out something with lots of compromises and with spending cuts that are backloaded, in other words they won’t happen immediately. As we go along say in three or five years’ time when these spending cuts should occur and when the tax increases should occur, nothing will happen in my opinion.”
America will keep piling on debt and printing money, as will Europe, leading to war and the collapse of governments:
“Well when the reset comes it will be, say, a hundred dollar bill will be exchanged for a one dollar bill or something like this. Before we have the Great Reset, the government, they will increase the war effort under whatever excuse that will be, but I think that is the likely course of action…The wealth destruction will be interesting because…the people that suffer the most before the reset happens are actually the cash holders.”
As for gold:
…I just calculated if we take an average gold price of, say, around $350 in the 1980s and then we compare that to the average monetary base in the 1980s, and to the average US government debt in the 1980s…but if I compare this to the price of gold to these government debts and monetary base, then gold hasn’t gone up at all. It’s gone, actually, against these monetary aggregates, and against debt, it has actually gone down. So I could make the case that probably gold is today very inexpensive….
Citigroup Has A Word For The Debt Crises: Insanity
A U.S. debt default triggered by a failure to raise the Federal debt ceiling would be an act of “collective insanity”, Citigroup(C_)economists said in a report Thursday.
Descriptions of a default as a calamity, Armageddon, suicide or insanity is not mere hyperbole, Willem Buiter and Ebrahim Rahbari argue in their note.
“The damage would be so severe, because a default due to a failure to raise the Federal debt ceiling is neither a conventional ‘can’t pay’ default (the country does not have the resources to service the Federal debt in full) nor a conventional ‘won’t pay’ default (when a solvent united government and country “cocks a snook” at its external creditors), but a needless default – we have the resources to honor the debt, we really did not want to default, but we were so busy fighting among ourselves that the deadline passed,” the economists wrote in a note.
While most economists still believe a default is unlikely, the probability of the event happening is no longer “negligible”, the report said. And even if Congress does raise the debt ceiling, a modest downgrade to AA appears likely at this point.
The consequences of a downgrade to AA won’t be as severe as a default, according to the economists, but they would be substantial. The direct response to such a downgrade would result in forced selling by investors with requirements to solely invest in AAA rated securities and an automatic downgrade of assets linked to the US sovereign rating.
Indirectly, it would increase sovereign and private funding costs, heighten risk aversion and reduce faith in the U.S. dollar and Treasuries as safe-havens.
“It is hard to see how the US can overcome the unavoidable fiscal challenges without either experiencing a sovereign debt and US dollar crisis or a recession caused by significant fiscal tightening, or both,” they said.
This story originally appeared on The Street.
1,000 Pictures Are Worth One Word
by Jeff Clark
BIG GOLD
In spite of constant headlines about debts and deficits, most Americans don?t really believe the U.S. dollar will collapse. From knowledgeable investors who study the markets to those seemingly too busy to worry about such things, most dismiss the idea of the dollar actually going to zero.
History has a message for us: No fiat currency has lasted forever. Eventually, they all fail.
BMG BullionBars recently published a poster featuring pictures of numerous currencies that have gone bust. Some got there quickly, while others took a century or more. Regardless of how long it took, though, the seductive temptations allowed under a fiat monetary system eventually caught up with these governments, and their currencies went poof!
You might suspect this happened only to third world countries. You?d be wrong. There was no discrimination as to the size or perceived stability of a nation?s economy; if the leaders abused their currency, the country paid the price.
As you scroll through the currencies below, you?ll see some long-ago casualties. What?s shocking, though, is how many have occurred in our lifetime. You might count how many currencies have failed since you?ve been born.
So what?s the one word for the ?thousand pictures? below? Worthless.
Yugoslavia ? 10 billion dinar, 1993
Zaire ? 5 million zaires, 1992
Venezuela ? 10,000 bol?vares, 2002
Ukraine ? 10,000 karbovantsiv, 1995
Turkey ? 5 million lira, 1997
Russia ? 10,000 rubles, 1992
Romania ? 50,000 lei, 2001
Central Bank of China ? 10,000 CGU, 1947
Peru ? 100,000 intis, 1989
Nicaragua ? 10 million c?rdobas, 1990
Hungary ? 10 million pengo, 1945
Greece ? 25,000 drachmas, 1943
Germany ? 1 billion mark, 1923
Georgia ? 1 million laris, 1994
France ? 5 livres, 1793
Chile ? 10,000 pesos, 1975
Brazil ? 500 cruzeiros reais, 1993
Bosnia ? 100 million dinar, 1993
Bolivia ? 5 million pesos bolivianos, 1985
Belarus ? 100,000 rubles, 1996
Argentina ? 10,000 pesos argentinos, 1985
Angola ? 500,000 kwanzas reajustados, 1995
Zimbabwe ? 100 trillion dollars, 2006
So, will a similar fate befall the U.S. dollar? The common denominator that led to the downfall of each currency above was the two big Ds: Debts and Deficits.
With that in mind, consider the following:
Morgan Stanley reported in 2009 that there?s ?no historical precedent? for an economy that exceeds a 250% debt-to-GDP ratio without experiencing some sort of financial crisis or high inflation. Our total debt now exceeds GDP by roughly 400%.
Investment legend Marc Faber reports that once a country?s payments on debt exceed 30% of tax revenue, the currency is ?done for.? On our current path, analyst Michael Murphy projects we?ll hit that figure by October.
Peter Bernholz, the leading expert on hyperinflation, states unequivocally that ?hyperinflation is caused by government budget deficits.? This year?s U.S. budget deficit will end up being $1.5 trillion, an amount never before seen in history.
Since the Federal Reserve?s creation in 1913, the dollar has lost 95% of its purchasing power. Our government leaders clearly don?t know how ? or don?t wish ? to keep the currency strong.
Whether the dollar goes to zero or merely becomes a second-class currency in the global arena, the possibility of the greenback being added to the above list grows every day. And this will lead to serious and painful consequences in our standard of living. While money is only one of many problems we?ll have to deal with, you can protect your assets with the one currency that can?t be debased, devalued, or destroyed by irresponsible leaders.
Don?t be the investor who dismisses this message from history. Use gold (and silver) as your savings vehicle. Any excuse you have now will be meaningless and irrelevant when we enter that fateful period. Make sure you own enough precious metals to make a difference in your portfolio.
Because when it comes to money, worthless is not a fun word.
Owning physical gold is good protection from the sinking value of the U.S. dollar; investing in the right gold miners can yield even higher returns. BIG GOLD focuses on the larger miners that have strong profit potential, and will help you build your wealth. Give it a ninety-day risk-free trial. Details here.
July 23, 2011Jeff Clark is editor of BIG GOLD in Casey’s Daily Dispatch.Copyright ? 2011 Casey and AssociatesGold, Silver, Deflation, the US Economy and Government
Marc Faber was interviewed on the Financial Sense Newshour. It’s a long one, but it’s definitely worth a listen. As usual, we’ve included a summary below for our readers who don’t have the time to sit through the entire video.
In the deflationist scenario, you don’t want to be in US govt. bonds & cash. In that scenario, the fiscal deficit would deteriorate greatly. If the Dow went below 1000, we would be in a total economic collapse where tax revenues would fall off a cliff. So even in the deflationist scenario you don’t want to be in the long end of the government bond market.In the 50s and 60s, people were more free. Now, we have police states in the West, where restrictions are rather onerous. Also, back in the 50s & 60s, the Bretton Woods System restricted the potential for severe inflation.‘What is money?’ is a big question. Generally speaking, it’s a medium of exchange, a store of value and a unit of account. Gold is a much better store of value than the dollar. As a unit of account, the dollar is poor. Has the US really been growing at 3% per annum?The standard of living for the average US household has gone down over the past 20 years. Relative to the rest of the World, the peak of US prosperity occurred in the 1950s. It’s very difficult to measure economic growth and prosperity.The Emerging Markets used to be way behind the US. Now, the infrastructure in the Emerging Markets is way better than in the US. The US have grossly underinvested in infrastructure.The US has survived on the continued expansion of borrowing to offset declining income in real terms. Now the power to borrow is gone. Europeans & Americans are generally complaining about onerous regulations.On the one hand you have money printing & expansionary fiscal policies. On the other, you have more and more regulation. The small businessman, who can’t employ an army of lawyers and accountants have no appetite to hire. They say that the more tax they pay, the more the government will harass them!In Asia, there exists the opposite scenario: There is relative economic freedom insofar as you don’t criticise the government. A great quality of the US is that you can pretty much say what you want.The likelihood of a hyperinflation has increased. If you go back to Jan 2011, would you have thought that the Middle East would blow up as it has? Would you have thought that the NATO countries would go to war against an idiot in Libya? He’s just one of many idiots, if you go after a country like Libya, you may as well go against 180 countries in the world!The Western press is focussed on how to ‘contain’ China. One way is to control oil in the middle east; for then they can switch on the tap, or close it. The Allies have gone to the Middle East to attempt to gain control of the Oil. But this costs a lot! They’re not in a position to finance the war unless they print money. So we’re likely to see higher inflation
Marc Faber: Why I am bullish on gold
LONDON (Commodity Online): Noted global economic analyst and investor Marc Faber says gold is the best investment among commodities and there is no harm in investors amassing the yellow metal even at these high prices.
In his latest June outlook on the global economy, Faber asked investors to stay away from industrial commodities. “Global growth is slowing, which means weaker demand and lower prices for industrial commodities,” he said.
Faber who publishes the widely circulated Gloom, Boom, and Doom Report said that he still likes gold and recommends a gradual accumulation despite market fluctuations.
He said that longer-term gold can only go higher because of negative real interest rates. Even a deflationary collapse is unlikely to hurt gold because the Fed will simply debase the dollar to get nominal prices higher.
“If the Fed gets it right and successfully re-inflates asset prices, then inflation will be in the double-digits, which would be bullish for gold,” Faber pointed out.
Faber predicted the top in the equity markets in Nov 2007 and caught the bottom in March 2009, making his subscribers a lot of money.
On the global stock market, Faber is still cautious on equities, believing that a more significant market correction is around the corner.
However, shorts should beware because they are fighting the Federal Reserve. If you have to be in the market, stick to consumer staples like MO, JNJ, KO, PG, etc. For the ultimate contrarian investor, take a look at some select housing stocks (TOL,LEN, KBH), but only if you have a high risk tolerance.
On bonds, Faber said he likes treasuries for a trade. He said taht 10 year yields could fall to 2.5% during a stock market correction. Longer-term Faber hates Treasuries and dismisses Albert Edwards call for sub 2% yields for the 10 year.
Faber said that it is very hard in this environment to predict what will happen in the markets. The Fed’s manipulation of asset prices has caused large distortions. However, one thing is clear: the Fed will not let the markets fall too much.
This is why Faber thinks the stock market will trend higher (in nominal terms) or at least trade sideways for the forseeable future.
Top Economic and Market Forecasters Predict: QE3 Is Coming
Over the weekend some of the biggest economic and market prognosticators met to discuss the US and global economies according to the Wall Street Journal.
Amongst those who met on Lake Winnipesaukee in New Hampshire were
David Blanchflower, formerly of the Monetary Policy Committee of the Bank of England; Marc Faber, Swiss born, Mr. Doom and Gloom; Fred Hickey, Editor of the High-Tech strategist newsletter; Stephen Roach, Morgan Stanley Exec; and economic forecasters David Rosenberg, Nouriel Roubini, and Gary Shilling.
Their conclusion was QE3 is going to happen.
They forecast that QE3 will lift stocks and commodities prices but in a lesser magnitude compared to QE2.
Ed Yardeni, who was there, had this to say:
“The conversations were spirited with lots of debates. The consensus was quite pessimistic about the outlook for the US and global economies. Everyone seemed to agree that the FED would most likely leave the federal funds rate at zero for a long time and that a third round of quantitative easing is likely later this year. David Blanchflower, who is a former member of the MPC of the BOE, is in favor of QE-3.0. The rest of us were against it. Most agreed that it would probably boost stock and commodity prices again, though not as much as QE-2.0.”
Dallas Federal Reserve President Richard Fisher said today that there is no need for QE3, Fed’s Fisher: No need for QE3, US Dollar Implications.
Can Doctor Doom call the ups as well as the downs?
The high profile investment analyst and economist Marc Faber earned the ‘Doctor Doom’ soubriquet after being one of the few investors to foresee the financial crisis and the extent of the ensuing fallout.
The Swiss national is a long-standing and regular commentator in the media having initially rose to prominence back in 1987 when he told his clients to sell out of equities a week before October crash.
Although he is sanguine about the difficulty of timing the market- he branded his call that year ‘accidental’- he has cemented his reputation over the last decade by also accurately calling the rise of Asia, the decline of the dollar and the commodity boom. Here we put the recent predictions of the founder of Marc Faber Ltd and author of the Gloom, Boom & Doom Report newletter to the test.
Retail spending to drop off a cliff
‘Short retailers except Walmart, perhaps using the consumer discretionary SPDR ETF- [expect a 10% correction by the year end].’
Verdict: In keeping with his negative overall view on the economy, Faber expected non-essential consumer spending to plummet as the housing market dive gathered momentum and equity markets started to roll over. The consumer discretionary ETF was close to an all-time high when he made his call and it subsequently fell from $40.17 to $30.84 by the year end, far higher than his anticipated 10% correction and troughed at $17.53 the following February. Walmart meanwhile fell by 10% over the following two months before ending the year just under 5% down and rallying by over 40% overall in the 12 months following his call.
Sell risk assets and beware inflation
‘In the next few months we could get a severe correction in all asset markets. In a selling panic you should buy, but in the buying mania that we have now the wisest course of action is to liquidate. I am not a great buyer of assets now. We might be in a situation where consumer price inflation comes back and will have a negative impact on the valuation of assets.’
Verdict: The S&P actually rose by a further 8% over the next two months, but then began the precipitous slide that saw the market more than halve from 1,561.8 to 683.38 the following March. Although interest rates began their downward spiral, investors backing Faber’s calls would have preserved capital well as the financial crisis began to take hold.
Back silver, gold and other hard assets
‘You want to be in gold, silver, platinum and also oil. If you believe in a recovery of asset prices as a result of money printing, you should be in hard assets, particularly precious metals. If you want to own shares, I would own some resource companies- I would also own some Asian shares.’
Beware the False Breakout in Stocks
Marc Faber?s May Outlook: Beware the False Breakout in Stocks
by Nathaniel CrawfordWall Street Pit
Swiss investor Marc Faber has just released his latest issue of the Gloom, Boom, and Doom Report where he discussed his outlook for the stock market, gold, emerging markets, and other financial topics. Here are a few highlights from the report:1. Equity Markets – The markets may be giddy about stocks hitting new highs, but contrarian investor Marc Faber is having nothing of this. He is concerned that stocks will fall sharply in May and that the recent breakout in stocks will prove to be trap for the bulls. The markets are due for a correction and the technicals point to a weak market. In particular, Faber points to the decline in new 52 week highs as evidence of an unhealthy internal market. Right now, Faber would stay away from cyclicals, tech stocks, and banks. If you have to own stocks make sure it is something safe like consumer staples (MO, JNJ, PEP, KO, etc).2. Gold & Silver – Still likes gold as a long-term investment and recommends dollar cost averaging every month regardless of the price. However, when it comes to silver, Faber is more cautious, noting the recent run-up in the price. He expects a 20%+ correction in the metals complex because the inflation trade has become too crowded.
Read the rest of the articleMay 5, 2011© 2011 Beacon EquityDr. Marc Faber [send him mail] lives in Chiangmai, Thailand and is the author of Tomorrow’s Gold.The Best of Marc FaberFaber: Bulls to Get Slaughtered as Stocks Plunge
Contrarian investor Marc Faber says stocks will fall sharply in May, turning the recent breakout in stocks into a trap for the bulls.
The markets are due for a correction and the technicals point to a weak market, Faber tells Wall Street Pit. In particular, he points to the decline in new 52-week highs as evidence of an unhealthy internal market.
Right now, Faber advises investors determined to buy stocks to stay away from cyclicals, tech stocks, and banks, sticking with safer plays such as consumer staples.
He’s more cautious when it comes to silver because of its recent runup in the price, and expects a 20-percent-plus correction in the metals complex because the inflation trade has become too crowded.
Faber says copper and the S&P 500 are highly correlated, and finds he fact that the stock index reached a new high while the metal didn’t is another signal that stocks could follow commodities lower in the short-term.
Faber says the U.S. housing market has another 10 percent to fall, but valuations are now attractive and housing hasn’t been this cheap since the early 1980s. In a serious inflation environment, Faber would rather own housing than paper dollars.
Faber also expects the United States will run trillion-dollar budget deficits for the next 10 years and the Federal Reserve will have to at least partially monetize this debt to keep interest rates low.
But not everyone agrees with Faber. Another notorious equities bear now says he’s bullish. David Rosenberg, senior strategist and economist at Gluskin Sheff in Toronto, is telling clients that the stock market isn’t headed for a crash.
The market has been rallying since March 2009, yet Rosenberg has been wary of the trend, defending bonds against “inflationistas” and warning that deflation remains the far greater danger, CNBC reports.
Skies seem bluer. “This is not about throwing in the towel,” Rosenberg writes in a letter to clients.
“It is an acknowledgment of what the market internals are flashing at the current time from a purely tactical and technical standpoint.”
© Moneynews. All rights reserved.
Buy Some Gold and Silver Every Month
The Best Currency Is Gold and Silver, Says Marc Faber
Business Intelligence Middle East
Marc Faber the Swiss fund manager and Gloom Boom & Doom editor predicted the value of the dollar in the long term will be zero and advised investors to become “their own central banks and gradually accumulate gold reserves as a currency”.
Speaking early on Monday to CNBC Asia, Faber said: “We are in a contest for the ugliest currency”.
Most investors have at least 70%-80% of their money in US Dollars, he said, adding that occasionally the money speculators may be heavily into the euro and negative about the dollar but “there is a huge overhang of US Dollars globally. If people could sell their dollars and move into something they believed in, they would do it”.
“I still believe the best currency is gold and silver, and this is not the perception of most people. They believe gold and silver are speculative investments,” Faber added.
In a reply to a question from a viewer, Faber said investors “should be their own central banks and gradually accumulate gold reserves as a currency”, rather than speculating in gold.
He recommended holding physical bullion over other gold assets and advised against holding gold assets in the US because of the risk of “expropriation” by US authorities, as they did in the early 1930s.
The price of spot gold jumped closer to US$1500 today, reaching a new all-time high of US$1497 per ounce.
Fear of inflation…the high oil price…extreme financial difficulties [for some] Eurozone nations…the US debt-crisis…problems in the Arab world…and the situation in Japan…There are more than sufficient reasons why the gold price further extended its gains to a new all-time high,” writes Wolfgang Wrzesniok-Rossbach in his latest Precious Metals Weekly at German refining group Heraeus.
“The moderate interest-rate hike in Europe has not had the ability to change the trend, nor has the relatively restrained demand for bars and coins, observed not only in Germany but also in Asia.”
Read the rest of the articleApril 19, 2011Dr. Marc Faber [send him mail] lives in Chiangmai, Thailand and is the author of Tomorrow’s Gold.Copyright ? 2011 Business Intelligence Middle EastThe Best of Marc FaberMarc Faber: DJI Lost 80% In 10 Years In Gold Term… So What?
Zarathustra W. is the Independent Finance and Economics Writer of Also Sprach Analyst
“In Gold or Silver terms, the Dow Jones over the last 10 years has already lost over 80% of its value”, said Marc Faber.
Just as I pointed out for Hong Kong real estate, prices have dropped by some 80% since 1997 if you price homes in gold despite recent rise in prices. But I rather struggle to say if that means anything in particular. It could well mean that gold is overpriced, no?
That is the problem: while the Federal Reserve is increasing the monetary base, everyone seems to assume that the Fed is debasing the currency, such that must go higher, and hard assets will be good investments. But we are not in a gold standard, why are we still thinking in a gold standard era way?
I will have more thought on gold later.
Interestingly, he also mentioned this rather crazy idea of class warfare, which is actually… not wrong, although not so much a conspiracy as what he was saying, I suppose.
This article originally appeared here: Marc Faber: DJI Lost 80% In 10 Years In Gold Term… So What?
Also sprach Analyst – World & China Economy, Global Finance, Real Estate
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Marc Faber: QE Is How The Elites Are Getting Their Revenge On Illiterate Kids Born Out Wedlock
Give Marc Faber credit: Among the doomers, he sure does have a way with ideas and rhetoric.
“Dr. Doom” made an appearance on Squawk Box this morning, and he explained what QE is really all about.
See, in a democracy, everyone has one vote. If you’re rich and industrious and hard working, you have one vote. And if you’re illiterate and were born out of wedlock and are living on welfare, you have the same, one vote?
In Faber’s view, the elites are getting revenge.
By printing money, the earnings power of the proletariat is diminishing, while the assets held by the wealthy are going up. And at the same time, the wealthy are outsourcing more and more production to China, to further rob the masses.
So in otherwords, all we’re seeing is wealthy-on-poor class warfare.
Click here to see the video >
Mohamed El-Erian Says QE3 Not Likely
The markets will be fine when there are no billions of QE to pump into the market. Dont worry the markets will be back to normal. Yeah Right !
Pimco’s Mohamed ElErian inform us of what he expects from the Federal Reserve Ben Bernanke in the near term. Then go an review Marc Faber comments in the links below. The question is from now on, when ever there is a 30% drop in the markets will be Wall Street bankers scream for more QE to bring back their portfolio profits (unadjusted for US Dollar valuations)
Remember the QE1 and QE2 quantitative easing is the USA was back to back, unlike Japan were they took a break between QEs (review the links below to see what happened).
Reference:
Market analysis with cycles
Cycle Review, dont tell the retail investor, but..
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Buy gold if price falls further: Marc Faber
Last Updated : 29 March 2011 at 15:35 IST
LONDON (Commodity Online): Marc Faber who publishes the widely-read monthly investment newsletter The Gloom Boom & Doom Report says that any fall in the prices of precious metals should not frighten people, and it is the right opportunity for investors to accumulate gold if its price dips further.
In an interview to Fox Business Network, Faber said that what is happening in the Middle East is friendly for gold, friendly for oil, and other commodities.
“The mess in the Middle East will only increase over time, nothing has been solved; in Libya we have a civil war, it is not necessarily about democracy….. All these things are indicating, including the earthquake in Japan, that central banks will continue to pursue expansionary monetary policy to keep interest rates artificially low and that boosts equities and commodities,” Faber stated.
Dwelling deep on the impact of Japanese earthquake and tsunami on the global economy, Faber said: “The key to the performance of Japanese shares is that the Japanese bond market becomes unattractive and that the Yen over time weakens”.
“I think as a result of the reconstruction work that may cost up to US$300 billion, that obviously the government will need to monetize, and Japanese bonds in the long-term will become terribly unattractive, and that will push money into equities.”
“So, I think Japanese shares are worthwhile to accumulate.”
On where precious metals are heading, Faber said that they are not acting all that well and he doesn’t expect new highs for now.
“We live in very volatile times; a correction could be 10%, 20%. I would on any weakness accumulate gold. The long-term outlook for gold is favorable,” Faber commented.
Marc Faber, who is a Swiss fund manager, said that a correction in assets prices has begun but the long-term outlook for gold remains favorable and recommends accumulating the precious metal on any weakness.
He also recommended accumulating Japanese shares as he feels that reconstruction work will push money into equities.
Marc Faber: The Dollar’s Value In The Future Will Be Zero
Dr. Marc Faber spoke with CNBC this morning about currency markets, notably the recent movements in the euro, global long-term position in the dollar, and the rise of gold and silver.
Earlier, Faber spoke about his view of the U.S. deficit situation. He expects the U.S. government to raise the debt ceiling, but doesn’t seem Republicans and Democrats building a budget plan in which taxes are raised and spending cut, the real recipe for deficit reduction.
Faber also encouraged individuals, in a separate conversation, to be their own central bank and buy gold. He warns, however, not to hold it in the U.S., as the government might buy it like they did in the early 1900s.
2:30 We’re in a contest for the ugliest currency; I don’t think people are heavily position in euros. Most people still have 70-80% of their money in USD. Huge overhang of U.S. dollars globally. If people could sell their dollars and move into something they would believe in, they would. Gold and silver are the best currencies.5:10 Right now, the U.S. dollar may rebound. The U.S. dollar will be in the future precisely its intrinsic value, namely zero.Don’t miss: Niall Ferguson’s presentation on the decline of the West >
Gold is very cheap in comparison to the money and credit that has been created, says Marc Faber
INTERNATIONAL. Marc Faber the Swiss fund manager and Gloom Boom & Doom editor says it is a big error to print money because it rarely flows into the assets central banks aim to boost. He says more people have already sold their gold than have increased their positions and he doesn’t think gold is in a bubble.
Speaking from Mexico City to Matt Miller and Carol Massar on Bloomberg Television’s “Street Smart” on Wednesday ahead of a speech titled “When everything else fails, policy makers can always be sure of immortality by making spectacular errors” Faber said: “A big error is to print money. I think it doesn’t help in the long run. It can give a temporary boost to economic activity but it doesn’t lead to sustained economic growth.”
“In fact it creates a mispricing of assets and goods & services and has negative implications on the pricing mechanism,” he added
Printing money is the easy part of it, knowing where it will flow to is trickier he noted, adding that money printing in the US hasn’t flown into the assets the Federal Reserve wants to boost, namely housing. Instead it created other bubbles overseas and in commodities.
Does he expect further easing?
“For sure there will be QE3, but not right away”, Faber said, suggesting the Fed would like to see a correction of up to 20% in equities and then” to have an excuse for QE3″.
“My view is there will be QE3, QE4, QE5, QE6……until QE26, until the whole system breaks down,” he said
Faber, who turned bearish shortly before the 2007-2009 bear market, says QE2 is fully discounted in the markets. He expects some seasonal strength in April, perhaps a new high, but then we will have a more “significant setback in May, June”.
What would be the impact of the Fed stopping QE2 today on the market?
The market will go down, however “the market is designed to go up and down. That is the purpose of having a market economy,” he said.
He went on noting that the marginal impact of printing money diminishes, “so every times you need to print more money to push the markets higher”.
Faber said the US economy is already out of control and he sees a need for every interest group in the US to make sacrifices.
In the latest edition of the Gloom Boom & Doom report he writes: A level-headed, knowledgeable, and intelligent American friend of mine (she has been buying gold for years) recently observed that, “Only when the American people insist that sound business practices and moral standards be brought back will we be able to give the people of this country a future.” Unfortunately, I believe that the ongoing moral decay among US politicians and the business elite, the irresponsible fiscal and monetary policies, the decline in educational standards and infrastructure, the trade and current account deficit, the weak US dollar, and the heavy- handed and ambiguous meddling in foreign affairs by US officials, are all pieces in a puzzle, which when assembled reads: Failed State.
Where would he suggest investors put their money at this point?
In general terms, Faber recommends real estate, equities, commodities and precious metals.
“An investor should have at least 25%-30% in precious metals,” he suggested as he doesn’t think the Fed will increase rates to a positive real rate.
Faber also warned precious metals could correct but remain poised to go much higher in the long run and suggested buying the dips.
“I think they [Precious Metals] could also correct,” because the breakout in gold above the November-January high is not convincing, “but in the long run with Bernanke at the Fed and Mr. Obama maybe another six years at the White House, gold will go substantially higher,” he said.
The price of spot gold for immediate delivery ended March at a new monthly-close record of US$1,439 per ounce at the London Fix.
Thursday saw the Spot Gold Price in Dollars complete its 9th quarterly gain in succession – the longest run since 1979 according to Bloomberg data.
Faber said the number of people owning gold is much lower than many believe.
“Calm down about everybody being long precious metals” he told the Bloomberg anchors. More people have already sold their gold than have increased their position.
“I don’t think gold is in a bubble,” he stressed.
In fact, “gold is very cheap in comparison to the money and the credit that has been created and in comparison to the size of financial assets in the world,” Faber added.
The price of gold slumped 1.4% lunchtime Friday in London, falling back from its highest-ever monthly close as the Dollar jumped on news of stronger-than-expected US jobs hiring in March.
“What we have to see now is how gold fares in an environment of rising interest rates, where holding a non-yielding asset goes against you,” reckons RBS commodity strategist Nick Moore, speaking to Reuters.
Note: Dr Marc Faber was born in Zurich, Switzerland. He went to school in Geneva and Zurich and finished high school with the Matura. He studied Economics at the University of Zurich and, at the age of 24, obtained a PhD in Economics. Between 1970 and 1978, Dr Faber worked for White Weld & Co in New York, Zurich and Hong Kong.
Since 1973, he has lived in Asia. From 1978 to February 1990, he was the Managing Director of Drexel Burnham Lambert (HK). In June 1990, he set up his own business which acts as an investment advisor and fund manager.
In 2000 Faber decided to spend more time writing his newsletters as well as growing his advisory business. He moved back to his home in Chiang Mai, Thailand, maintaining only a small administrative office in Hong Kong.
Dr Faber publishes a widely read monthly investment newsletter ‘The Gloom Boom & Doom Report’ which highlights unusual investment opportunities, and is the author of several books.
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INTERNATIONAL. Marc Faber predicted the value of the dollar in the long term will be zero and advised investors to become “their own central banks and gradually accumulate gold reserves as a currency”.
Think You Missed the Gold and Silver Rally?
Think You?ve Missed the Gold and Silver Rally? Think Again, Says Marc Faber
Each time the two monetary metals reach new highs, calls for the end of the bull market in gold and silver come quickly and frequently.At $500, $850, and ever since gold first cracked $1,000 per Troy ounce in March 2008, the gold price remained the focus of those paid to report a popular view among those firmly entrenched in a fiat paper system that’s rewarded them handsomely for two generations.
Those unencumbered by a financial system – a system that pays its employees “more than four times the average salary in the rest of the economy,” economist Paul Krugman wrote in 2008 – make a living by developing a reputation for accurately appraising the current state of the vilified gold and silver market. Otherwise, these unleashed analysts and money managers will no longer retain their flocks and fortunes.
One such tell-it-like-it-is investment manager is the publisher and editor of the Gloom Boom Doom Report, Marc Faber – who, as a side matter, says that the choice for the name of his report, Gloom Boom Doom, came about from his observations of changing investor sentiment during complete market cycles.
So, is it Gloom, Boom or Doom for the precious metals? Faber rejects the notion of a precious metals market soon entering a “Doom” stage.
“If it [gold] were a bubble a lot of people would have gold. The whole world would be trading gold 24 hours a day,” he told CNBC’s Joe Kernen. “But I don’t think it’s really a bubble. I think gold is maybe cheaper today than it was in 1999, when it was $252.”
US money printing policy pushing up gold price: Marc Faber
Last Updated : 11 April 2011 at 15:45 IST
LONDON (Commodity Online): Despite the rising price of gold, investment bankers and commodities analysts are giving a thumps up for putting your money into the yellow metal.
Marc Faber, who is a Swiss fund manager and publisher and editor of the famous Gloom Boom & Doom report said that gold has turned out to be the best and most attractive commodity investment asset world over thanks to the money-printing policies of the Federal Reserve of the United States.
Saying that gold is not an asset bubble, Faber told CNBC: “If it were a bubble a lot of people would have gold. The whole world would be trading gold 24 hours a day. But I don’t think it’s really a bubble. I think gold is maybe cheaper today than it was in 1999, when it was $252.”
Faber said what makes gold such an attractive investment is due in part to the Fed’s move to keep the US dollar cheap as a way to boost asset prices and stimulate a recovery.
He said gold is denominated in US dollars, so a decline in the greenback makes the metal—along with most other commodities—cheaper to buy on the global markets.
Investments in hard assets will be good buys in the future as Chairman Ben Bernanke and the rest of the Fed continue the liquidity-friendly policies, Faber said.
Faber said that any fall in the prices of precious metals should not frighten people, and it is the right opportunity for investors to accumulate gold if its price dips further.
Recently, in an interview to Fox Business Network, Faber said that what is happening in the Middle East is friendly for gold, friendly for oil, and other commodities.
“The mess in the Middle East will only increase over time, nothing has been solved; in Libya we have a civil war, it is not necessarily about democracy….. All these things are indicating, including the earthquake in Japan, that central banks will continue to pursue expansionary monetary policy to keep interest rates artificially low and that boosts equities and commodities,” Faber stated.
On where precious metals are heading, Faber said that they are not acting all that well and he doesn’t expect new highs for now.
“We live in very volatile times; a correction could be 10%, 20%. I would on any weakness accumulate gold. The long-term outlook for gold is favorable,” Faber commented.
Marc Faber, who is a Swiss fund manager, said that a correction in assets prices has begun but the long-term outlook for gold remains favorable and recommends accumulating the precious metal on any weakness.
blog- Stock Markets and Dollar update
Profits Review! Plus, dollar update …
by Larry Edelson on May 18, 2009 at 8:30 AM
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In my April 6 column, just six short weeks ago, I told you a “Big Asia Rally” was coming. And I suggested ways to play it by staking out positions in …
iShares FTSE/Xinhua China 25 (FXI), an ETF that tracks China’s Shanghai stock market
U.S. Global Investors China Region Fund (USCOX)
And in six Asian powerhouse stocks, including: PetroChina Co. Ltd. (PTR) … CNOOC Ltd. (CEO) … Aluminum Corp. of China Ltd. (ACH) … Posco (PKX) … Korea Electric Power Corp. (KEP) … and Huaneng Power International (HNP).
Let’s take a look at how they’re doing. Assuming you acted on my suggestions in a timely manner, you’d be sitting on open gains of up to …
13.3 percent in FXI
10 percent in USCOX
At the same time, all six Asian stocks are up as well …
PTR, up 22.7 percent
CEO, up 17.9 percent
ACH, up 34.3 percent
PKX, up 20.2 percent
KEP, up 21.4 percent
And HNP, up a mere 2.9 percent
Again, not bad for just six weeks!
So what now? Should you grab your profits or hold for more gains?
My view: Hold! More gains are coming in these positions.
Chief reason: China’s economy! Despite all the naysayers out there, it’s starting to cook again …
1. Chinese banks are injecting huge amounts of liquidity into the economy, extending $757.9 million worth of new loans in the first four months of 2009. That’s more than all the loans issued last year.
2. Investment in urban fixed assets is rocketing higher, up 30.5 percent in the first four months of this year.
3. Exports, while down from previous years, are still robust, allowing China to rack up a $13.1 billion trade surplus in April — $10.6 billion of which came from the United States.
4. Other indicators, including auto sales, residential property sales and retail sales, are also booming.
5. Importantly, Beijing is now taking the next step in stimulating domestic consumption. It recently passed new laws that not only permit the creation of consumer finance firms, but also lets foreign consumer finance firms into China.
The new rules allow these previously non-existent finance companies to make loans in amounts of up to five times a borrower’s monthly income.
This is crucial for China going forward, as private consumption accounts for only 35 percent of China’s GDP, about half the level of the United States.
And last, but not least …
6. All of my technical indicators point higher, especially my cycle projections. Take a look at this chart of the Hong Kong market, which I sometimes use as a proxy for China.
Notice how the rally has nicely followed the projection and how the cycles point to a continued, but choppy rally into late June.
Bottom line: I believe there’s at least another 10 percent on the upside for China. So if you own any of the positions I suggested, I recommend you hold them.
But to help manage risk, place protective sell stops at one or two dollars above your entry price. If stopped out, you should come out of the trade covering your investment plus any broker commissions.
Now, an Update on the Dollar …
As many of you already know, I am very bearish on the dollar. And in just the past 10 trading days, the benchmark U.S. Dollar Index (DXY) has swooned more than three points — almost 7 percent — and is now hovering a mere 13 percent above its all-time record low.
My reasons for being so bearish on the dollar have not changed …
A. There’s simply no way the world will recover from the financial crisis without a weaker dollar. A weaker dollar will eventually attract capital inflows into the United States … it will boost inflation … stimulate our exports … and inflate away many of our debt problems.
Bernanke knows this. So no matter what he says in public about supporting a strong dollar, take it with a grain of salt. The truth is he wants the dollar to decline in value. Period.
B. The theory that the dollar is one of the world’s safest havens in a financial crisis is dead wrong for today’s economic environment.
It was true years ago when the United States was a creditor to the world. But that’s no longer the case. It’s now the world’s largest debtor and is going deeper into debt every day.
There’s simply no way the United States can be the world’s largest debtor nation and at the same time have the world’s strongest currencies.
C. The dollar is in the process of being replaced as the world’s reserve currency. In past issues I’ve showed you how that’s going to happen. And the process is already under way.
China, the biggest lender to the United States, has taken a leading role. It has already entered into $95 billion of its first ever currency swap agreements with other Southeast Asian countries — moving the yuan a step closer to becoming a currency with international clout, forcing a worldwide monetary change.
China has also increased its gold reserves by 454 metric tonnes, a 75.6 percent increase in the last seven years, and will likely continue to buy enormous amounts of gold. Gold is China’s hedge against a weaker dollar.
Moreover, China is aggressively at work lobbying for a new global reserve currency and leading the effort to establish an Asian currency reserve fund.
D. All of my technical studies point lower for the buck. Here’s an updated cycles chart of the U.S. Dollar Index (DXY). We should see a temporary low in late May, followed by a short-term rally, then another decline. Longer term, I expect the dollar to lose as much as another 30 percent of its value.
That’s also good news for gold, which remains poised to blast off to new record highs soon.
Bottom line: Hold all positions I’ve suggested, which include the aforementioned Asian positions, as well as the previously suggested Dow Jones Diamonds (DIA) … Energy Select Sector SPDR (XLE) … PowerShares DB U.S. Dollar Bearish Fund (UDN) … and ProShares UltraShort 20+ Year Treasury (TBT).
Best wishes,
Larry
Gold still bullish
Gold has been weakening on lower volume in the past week. So even though the decline recently is probably just a pull back.
The only concern I have is, the upside volume has not been explosive as in 2008.
Jim Rogers has recently but also in the past said that he is a buyer of gold and he buys gold everytime whether it falls down or rises.
The fundamentals of the US economy is weak, the worlds currencies are all being debased which should all be bullish to gold.
Click on image below to Zoom
Gold has been a ripping bull
I hope you gold bulls are still holding on as Gold shows no signs on stopping.
Buy on dips with stop loss at 885
Gerald Celente dire economic forecast for the US
Gerald Celente’s shocking comments on Fox Business news on Nov 10, 2008.
Stocks, Forex and Gold 