Marc Faber makes bullish comments on Bloomberg
Marc Faber is a definite bull right now, despite his title as Dr. Doom. In the video below he makes his case for gold miners and for a general equity rally through to the end of April (Hat tip Chris Martenson).
His main points are:
- Many miners are facing a cash crunch. So, this is bullish for gold mining companies that can put cash to exploration.
- But gold itself is at a record high compared to the CRB index. Faber likes industrial commodities more.
- Global GDP ex. government has already contracted 10% in his view.
- Money printing and deficits will make it difficult to rein in inflation in future.
- Markets have tumbled 50% so he believes you will make money in stocks over a ten-year horizon if you start buying here. He sees few scenarios where this is not true.
- Markets will go higher due to money expansion. “Don’t underestimate the power of printing money.” That is surely the money quote here.
- The dollar will weaken and this will be a sign that liquidity is flowing into the market.
- Extreme negative sentiment is a contrarian indicator.
Again, Faber is not the only bull here: Buffett, Grantham, Fleckenstein and Leuthold are all bulls.
I like Faber’s analysis and commentary generally speaking. If I recall correctly he was one among a chorus of small voices warning of the current collapse (which included Roubini, Schiff, and even Jim Rogers). His view of the coming dollar collpase and resulting boom in gold is similar to Peter Schiff’s.
What I don’t see in gold in the current market is it trading like a currency alternative. I do remember the days it did so back when it topped $850 during the 1980’s recession. But back then we were less than a decade past the Nixon shock. Prior to this gold was, in theory at least, a currency itself.
Could the current gold ceiling of $1,000 USD and the fact it doesn’t seem to trade in inverse correlation to the dollar in the last few months mean that gold is no longer percieved as a currency substitute? At least not perceived asa currency by a majority of traders? If so, this would explain the apparent recent miss by Faber and Schiff on gold’s rise and their parallel miss on dollar strength (or lack of it).
AITrade,
I like Faber too. I missed the dollar rally and am dollar bearish but not in a risky over-leveraged way as Peter Schiff has been.
https://pro.creditwritedowns.com/2009/01/wall-street-journal-right-forecast-by-schiff-wrong-plan.html
You probably saw the Schiff-Mish smackdown a few weeks back.
I see people realizing that governments are monetizing their debt. Look at the Swiss and their competitive currency devaluation. And they are clearly printing money already. All of this means that sooner or later fiat money will devalue vis-a-vis gold. It’s only a matter of time.
I agree. I was pleasantly surprised by the dollar strength and did not expect. With the mountain of debt the Treasury needs to float, even against the bigger mountain the Europeans are floating, gold *should* have been the natural safe-haven. Schiff and Faber’s call for a dollar collapse and resulting gold rise should have been relatively obvious. The fact it did not happen made me rethink the dollar versus gold as safe haven. I’m still on the fence, but at least for the near term the market is saying it prefers the dollar.
There is a lot of talk recently whether the dollar has double topped or double bottomed against the Pound, Euro, and Yen. A case can be made for either. Due to the current behavior of gold (denominated in dollars obviously), I am inclined to lean in faver of a double top rather than bottom, meaning we are likely to see further dollar strength rather than weakness IMO.