Zero Interest Rates & The pumping of cash into the system creates BUBBLES

Marc Faber : “continuous government interventions in the free markets through mostly monetary and fiscal policies have actually, instead of smoothing out the business cycle, led to more economic and total financial volatility, and have numerous unintended and unfavorable consequences." “When you drop the dollar bills into the system you don’t know where they go, and this time around they went to the housing market. The destructive nature of dropping dollar bills is you create bubbles in one sector of the economy.” - in Edmonton journal

Ben Bernanke Press Conference - 25 Jan 2012

Federal Reserve Chair Ben Bernanke Press Conference . The Fed expects modest pace of economic growth in coming quarters, says Fed Chairman Ben Bernanke. The housing sector is still depressed, "as indicated in the statement released earlier this afternoon to support a stronger economic recovery and to help ensure that inflation over time is at levels consistent with our statutory mandate, the committee expects to maintain a highly accommodative stance for monetary policy. in particular, the committee decided to keep the target range for the federal funds rate at zero to .25% and currently anticipates that economic conditions are likely to warrant exceptionally low levels for the federal fund's rate at least until late 2014" says Ben Bernanke

Marc Faber on the derivatives bubble

Marc Faber was asked about the risk of seeing another flash crash in the market : " Well I do not think it is regulated , my concern is no so much about the stock market going down one day by 500 points , the real crash would be like on October 1987 when the market dropped by 21 percent in one day , my concern is more , we have essentially an economic system where the financial sector has grown disproportionally large than the real economy so in other words the economy may be a square mile and on top of that you pile up derivatives and all kind of instruments that are thousands of square miles and one day this whole derivatives bubble will burst - in This Week in Money
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High Frequency Trading behind the very high Market Volatility

Marc Faber : I suppose that 99 percent of high frequency programs are essentially momentum players in other words when times will start to move up in an asset class or in a stock or in a sector or the stock market the computer model says BUY then they all buy and it pushes up prices and then when for one reason or another the market turns and the models say sell they'll all sell basically at the same time that's why we have a very high volatility that's why - in This Week in Money
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A lot of government bonds will default

Marc Faber : Relative to government bonds, equities are attractive. If you really think it through and you are bearish as I am and you think the whole financial system will one day collapse, maybe three years or five years or 10 years, one day there'll be a reset and everything will be essentially started anew. Then you are better off in equities than in government bonds because a lot of government bonds will either default or they will have to print so much money that the purchasing power of money will depreciate very rapidly. in Bloomberg Television

Equities are attractive relative to Government Bonds

Marc Faber : " I wouldn't say that they are (the stocks) particularly attractive , look i am in Switzerland at the moment the ten years government bond yield is 0.7 percent and you can buy quality companies like Nestle Novartis and so forth and they have a dividend yield of say 3 percent , so relative to government bonds equities are attractive , and if you really think it through and you are as bearish as I am , and you think the whole financial system will eventually collapse we do not know in three years or five years or ten years but one day there will be a reset and everything will essentially be started anew then you're better off in equities than in government bonds because a lot of government bonds will either default or they will have to print so much money that the purchasing power of money will depreciate very rapidly "

The Gold Correction is not over yet

Marc Faber : Well I like it (Gold) yes , but I think the correction is not over yet , we had a big correction from the peak on September 6th when gold hit 1929 dollars we went down to around 1522 dollars at the end of December now we've rebounded over 1600 , I think we can have another leg down
if I were an investor or a saver I would buy (Gold) every month a little bit and not everything at the same time - in Fox Business News
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Expect More Quantitative Easings in Europe and the US

Marc Faber : well I think that eventually you want to be positioned more in equities than say government bonds and you want to own some precious metals as well - in Fox Business News
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Marc Faber Bloomberg TV Interview - 20 January 2012

Dr. Marc Faber Interviewed by Bloomberg TV - 20 January 2012 : " I wouldn't say that they are (the stocks) particularly attractive , look i am in Switzerland at the moment the ten years government bond yield is 0.7 percent and you can buy quality companies like Nestle Novartis and so forth and they have a dividend yield of say 3 percent , so relative to government bonds equities are attractive , and if you really think it through and you are as bearish as I am , and you think the whole financial system will eventually collapse we do not know in three years or five years or ten years but one day there will be a reset and everything will essentially be started anew then you're better off in equities than in government bonds because a lot of government bonds will either default or they will have to print so much money that the purchasing power of money will depreciate very rapidly "

The Euro Downgrade already discounted by the Bonds Markets

Marc Faber : in general I would say the news follows events in other words the downgrades were already discounted by the bonds markets in Europe and when the news came out it had no impact actually the market was kind of relieved , it's like when a war break out if prior to the war the market has already discounted it went down strongly then on the war news the market then shoots up , on the other hand if some event happened completely unexpectedly the market can sell off , but in general I think now in Europe the bad news has been now largely discounted and the market participants they think that the problems cannot be resolved but they can be postponed , which involves essentially money printing either directly or through backdoor measures ....- in Fox Business News
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Strong Asset Markets

Marc Faber : "You could have strong asset markets. Commodities or metal prices could go up. In my view I think that equity markets have to a large extent already discounted some very bad news," - in CNBC

Marc Faber Negative about the outlook for the world

Marc Faber : "I`m negative about the outlook for the world because we are trying to solve the crisis created by excessive debt growth and excessive leverage with even more credit and leverage, which will just postpone the problem,- in CNBC

Interest Rates hike will impact the Cost of Financing

Marc Faber : "The day interest rates go up for whatever reason, the cost of financing will also become burdensome," - in CNBC

The Expansion of the Debt will continue

Marc Faber : "If we look at US government debt, it reached USD 1 trillion in 1980 and in the year 2000 we were at USD 5 trillion. So between 2000 and 2011 we've grown three times and the expansion of the debt will continue," - in CNBC

The Fed will come in with QE3 and QE4 guaranteed

Marc Faber : "My view is simply: relax. I don't think that equities will collapse. I think we have major support going back to August 2010 when the S&P was at 1010,"
"We have a lot of support around 1100, and if the S&P drops 200 points, I guarantee you the Fed will come in with QE3 and QE4 and so forth,"

Marc Faber Whats Next For The Markets ?

Marc Faber interviewed by This Week in Money on What's next for markets? "my view is they can postpone the problems and the market may rally for a while , I doubt it will make any new highs , and I doubt that it will really benefit the typical household and the lower income group recipient but it will do some good for stock prices and they'll overshoot again and then there will be another decline " "we are in extremely volatile times " says Marc Faber

James Rickards on The Currency Wars

Jim Rickards gives valuable insight into the current economic conditions and talks about the role he thinks the IMF and its global SDR will play in the years to come, and if the latest bailout 600 billion euro Italian bailout rumor may be just the opportunity for the IMF to step up as a player in the global currency war.James G. Rickards is the author of the book : Currency Wars. The making of the next global crisis.James Rickards advocates for a return to the gold standard in his book "currency wars," Jim Rickards compares the current economic climate to that of the 1930's and he briefly mentioned the Weimar republic and how their stock market had an initial strong rally due to the money printing.

John Williams: Hyperinflation By 2014 - 1/20/2012

John Williams from Shadow Government Statistics : No Way Out–Hyperinflation by 2014 . John sees no way to avoid hyperinflation, as some of the warning signs are getting worse: rising real inflation rates, massive Fed monetization, foreign nations dumping dollars, and the US losing its triple A credit rating.

John Williams is author of “Shadow Government Statistics,” an electronic newsletter service that exposes and analyzes flaws in current U.S. government economic data and reporting, as well as in certain private-sector numbers, and provides an assessment of underlying economic and financial conditions, net of financial-market and political hype. john williams shadowstatscom Mining Stock Talk Interviews John Williams of ShadowStats.com ."John Williams’ Shadow Government Statistics" is an electronic newsletter service that exposes and analyzes flaws in current U.S. government economic data and reporting, as well as in certain private-sector numbers, and provides an assessment of underlying economic and financial conditions, net of financial-market and political hype. In this powerful interview, John shares his research realities on unemployment, the staggering growth in the U.S. Monetary Base, a coming “hyperinflation” , gold, and what he’s doing to prepare and protect his family going forward. Williams believes that the printing of trillions of dollars to fight the depression will lead to a "hyperinflationary depression". John Williams aka Walter J. "John" Williams was born in 1949. He received an A.B. in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth's Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies. John Williams' Shadow Government Statistics is a monthly electronic newsletter that exposes and analyzes the flaws in current U.S. government data and reporting, as well as in certain private-sector numbers.. It also looks at the financial markets free of the hype so often put forth in the popular financial media. Generally published on the second Wednesday of the month, the newsletter is supplemented by Flash Updates and occasional Alerts that highlight unusual developments. Williams is advising people to stock up on gold and booze to bargain with once the hyperinflation makes dollars worthless: “Three or four years into the future I think we could be in a hyperinflation, within the current year you’re going to see much higher inflation than most people are looking at,” Williams told MarketWatch. Williams said that his definition of hyperinflation would be a situation in which a $100 dollar bill would become more functional as a piece of toilet paper than a store of value. “This is a time when you want to preserve your wealth and assets because inflation will knock the value out of it,” he added, advising that people buy physical gold and assets other than the U.S. dollar. “Then when the hyperinflation hits you’ll see disruption of normal commerce, you won’t have enough $100 dollar bills to buy what you want,” said Williams, adding that items to barter with, such as a bottle of scotch, would be more valuable than actual cash, even in large quantities.

The equity markets have to a large extent already discounted some very bad new

Marc Faber : "You could have strong asset markets. Commodities or metal prices could go up. In my view I think that equity markets have to a large extent already discounted some very bad news," - in CNBC

I am negative about the outlook for the world

Marc Faber : "I`m negative about the outlook for the world because we are trying to solve the crisis created by excessive debt growth and excessive leverage with even more credit and leverage, which will just postpone the problem," - in CNBC

Marc Faber - CNBC Interview - 19 Jan 2012

Marc Faber : "If we look at U.S. government debt, it reached $1 trillion in 1980 and in the year 2000 we were at $5 trillion. So between 2000 and 2011 we’ve grown three times and the expansion of the debt will continue,"

Relax , The Stocks Will Not Collapse

Marc Faber : "My view is simply: relax. I don’t think that equities will collapse. I think we have major support going back to August 2010 when the S&P was at 1010,"
in CNBC interview 19 January 2012

Marc Faber - U.S. T Bonds Should be Rated Junk

Marc Faber : .....I think what's happened through back door actions the ECB is already monetizing.Because if the ECB wasn't already monetizing, then the euro would be strong. they have increased their balance sheet and so forth. so I think that much of any downgrade is already priced in. the question is whether the downgrades will be sufficient. In my opinion, most of the European countries should be CCCs. and the U.S. should not be a AAA minus, but a BBB or a junk fund when you realize the unfunded liabilities that are coming to you in the future. - in CNBC

Marc Faber: WW3 within 5 years

Marc Faber : “World War III will occur in the next five years. That means the Middle East will blow up. New regimes there will be less Western-friendly. The West has also figured out it can't contain China, which is rising rapidly and will have more military and naval power in Southeast Asia. The only way for the West to contain China is to control the oil tap in the Middle East”
“It (the war) is very positive for stocks and negative for bonds, because debt will grow dramatically”, - In a recent interview with The Barron's financial magazine

we have Excessive Credit Growth in China

Marc Faber : "I question any number that is published by governments, not just in China, everywhere in the world,"
"We have huge excesses, we have excessive credit growth in China and the excesses and the misallocation of capital — in my opinion — will become only worse," - in CNBC

Marc Faber: Expect More Quantitative Easing in Europe, U.S.

Dr .Marc Faber : of the Gloom Boom and Doom report believes there will be a QE3 in America and more Quantitative Easing in Europe too , "in general I would say the news follow events in other words the downgrades were already discounted by the bonds markets in Europe and when the news came out it had no impact actually the market was kind of relieved says Marc Faber ....

Marc Faber recommends Novartis Nestle & Total

Marc Faber : well, i think companies like Novartis Nestle Total are reasonably good value. i mean, they're not compelling values, but you understand with zero interest rate, it's very difficult to value anything. and anything that has a dividend yield of 3% compared to 0% interest rate is relatively attractive. and i believe in the world the central banks will keep interest rates below the rate of inflation. in other words, what you will have is negative real interest rates for essentially as far as the eye can see. and in that environment you want to be in real estate and equities and you want to be in precious metals. - in CNBC

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In 2012 The US Stock Market will not outperform the other Markets

Marc Faber : Well basically European stock markets last year were down between 15% and 30% depending on the market. and European stocks grossly underperformed the u.s. -- I mean the whole world grossly underperformed the u.s., which actually in 2011 performed reasonably well. the u.s. was flat on the year. and the utilities index was up. but the other markets in the world, emerging markets and European markets were very weak. now, I believe that sometimes in 2012 the outperformance of the u.s. of the other markets will cease , and you have to move back into quality companies in Europe and into emerging economies. - in CNBC

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Marc Faber's Black Swan Scenario for Europe

Marc Faber : I think what might move the market if some countries say we had enough. we exit the Euro. and if Greece starts that, it's not going to be a disaster. but if Greece, Portugal, Spain and Italy do it, then it will have a huge impact. but don't ask me exactly what the impact will be because if at the end of the day only strong countries are in the euro zone, maybe the euro will sink them. but huge problems will arise in the derivative market and obviously the countries that will be in the euro zone they will default - in CNBC

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The Euro Downgrade not necessarily good for Europe

Marc Faber : yes, i suppose so. but at the same time the European corporate sector has of course a lot of u.s. dollar debt. and that makes it more expensive to service these debts. - in CNBC

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The Euro is in a down trend

Marc Faber : I don't think it will matter much (the S&P downgrades ). it will matter to the value of the euro. and i think the euro is basically in a down trend. having said that, the short positions in euros are very large. and you could countertrend rally maybe we're now around 126.50. uh-huh. maybe we can rebound to around 130 against the u.s. dollar. but i think the trend for the euro is down - in CNBC

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Continuing correction in Gold prices in 2012

Marc Faber : The worse the news gets, the more the U.S. and the European Central Bank and China will print money. In the past 10 years gold and silver have performed superbly. The gold price overshot on the upside when it reached $1,921 an ounce on Sept. 6. Now it is in a correction phase and could fall another $200. It is not that the gold price will go up. It is that the value of paper money will go down. Diversification is important, and people should put 15% to 25% of their assets in gold.

I wouldnt buy any Government Bonds as a long-term investment

Marc Faber : in my opinion, it's insufficient. but, you know, different people have different view. I wouldn't buy any french government bonds. and I wouldn't buy u.s. government bonds here either. but I admit that last year to the surprise of most fund managers 30-year u.s. treasury bonds gave you a return of 30% per annum . so you have a huge move in treasury yields on the downside. and so you had a tremendous capital appreciation on the bonds. and the 10-years appreciated by more than 10%. and I was kind of wrong about this. but I admit I just wouldn't buy them as a long-term investment.

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Sovereign Bonds

Marc Faber : well, I personally ... I am not interested in Sovereign Bonds except as a trade, but i think longer term you're going to lose money on sovereign bonds.

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Marc Faber : The EU countries should be rated CCC and the US junk fund

Marc Faber : .....I think what's happened through back door actions the ECB is already monetizing.Because if the ECB wasn't already monetizing, then the euro would be strong. they have increased their balance sheet and so forth. so I think that much of any downgrade is already priced in. the question is whether the downgrades will be sufficient. In my opinion, most of the European countries should be CCCs. and the U.S. should not be a AAA minus, but a BBB or a junk fund when you realize the unfunded liabilities that are coming to you in the future. - in CNBC

Marc Faber on The S&P downgrade of France and other EU countries

Legendary Investor Marc Faber, editor and publisher of the Gloom, Boom & Doom Report, discusses the S&P downgrade of France and other European countries. He believes they should be downgraded even further. Marc Faber : "...yes. because the market has already downgraded some of the sovereign issues. and I think when the news will come out it will be old news. so it won't have an impact on the market. but having said that, the market has had a huge rally from the October 4th low when the S&P was at 1,074. and it's now over bought and the volume figures were very poor the advanced decline line wasn't particularly good. every day we have some stocks that are breaking down. this is not typical of an emerging bull market. it's rather typical of a rebound within a bear market"

Marc Faber: Most banks are insolvent (10/01/2012)

In This interview with the German TV DAF dated 10 January 2012 (in German ) Dr. Marc Faber says that most banks are basically insolvent.That he likes stocks over bonds, thinks that the March lows won't be hit again, dislikes technology stocks and sees some 10% down potential. 2012 is going to be very volatile. When stocks fall, central banks will print money.

Real Estate is Cheap in America Now

Marc Faber : .....Now when I tell people in America that real estate is now relatively inexpensive, relatively compared to other asset classes, they look at me as if I am coming from the moon. But four years ago they were buying real estate like crazy and if you told them that real estate is in a bubble, they would not have believed it. I think now that time is coming to allocate some money to real estate and with the 25% cash you just wait until there is a great big break either in stock or in gold. And then you add to positions. And I am also recommending to have allocations to income producing investments in the sense that if you have dividend paying stocks and in the U.S. stocks do not have a high yield, but say in Asia, I can still provide you a portfolio that have equities that will yield between 5% and 7%. But with that kind of a yield, you have a cash flow and you can reinvest your dividends. So in the long run you should be okay. But then again, not only about gold do I have a concern, I also have a concern, generally speaking, about our capitalistic system. For sure, people with assets, they will be taxed more heavily, that is for sure.

The World Economic Forum Global Risks 2012 report

Global Risks Report 2012 - Launch of the World Economic Forum Global Risks 2012 report on 11 January 2012 in London.Economic imbalances and social inequality risk reversing the gains of globalization, warns the World Economic Forum in its report Global Risks 2012.

El-Erian : Joseph Stiglitz is right on Europe

Mohamed El-Erian : He (Joseph Stiglitz) is right in the sense that the muddled middle which is where Europe has been is no longer sustainable. The crisis that started in the outer periphery - Greece - not only has shifted to the inner periphery and the outer core - Spain and Italy - but it has also impacted FRANCE. Which is the inner core. Europe has to make a choice if it wants to save the euro. One choice is full fiscal union and the other is a smaller Eurozone. That is a political decision Germany must take.

Mohamed El-Erian : Chairman Bernanke has said there are benefits and costs and risks. That balance is shifting from benefits to potential costs and risks. If they did QE3 there would get some benefits but also quite a few distortions and collateral damage put into the system that could take us years to overcome. You will see pressure on the currency and the functioning of the markets. More and more non-commercial forces will be determining market outcomes [Amazing]

The best is not to intervene into a Free Market

Marc Faber: China, coming back to China, I am not saying that it is necessarily his fault that this has happened but then you should not claim that with monetary policies, you can influence economic expansions and avoid recessions. In other words, what’s the case he’s always maintained: through our interventions, we can smoothen out the business cycle. But actually if you look at the record, you have higher booms and busts and you have higher financial volatility. This year we never, ever had before a year when you had so many nine to one advance days and nine to one decline days. In other words, volatility has been incredibly high the end result is that the S&P is basically unchanged. I mean I just argue the best is not to intervene into a free market. One intervention leads to another one. And at the end, you have a socially communist system like we had in the Soviet Union and in China. And we all know what the economic results were of those experiences.

Buying opportunity

Marc Faber : ... what we had in 2008 was the outperformance of the US and emerging economies’ stock markets and commodity markets got hit very hard but it lead to a major low in emerging stock markets that bottomed out between October 2008 and March 2009 and after that emerging stock markets outperformed the US until say the end of 2010. So I think we may get a similar picture. That’s why when I read all the strategies that say - I think we should invest in the US, I say maybe that’s correct for the next three months or so but I would rather be looking at an entry point in emerging markets over the next six to nine months... - in MoneyControl

US vs. Emerging Markets

Marc Faber : We have to clarify ... how bad it was for equities worldwide because the US market was flat and it significantly outperformed most other markets in the world in particular emerging economies stock markets. This resembles the underperformance we had in 2008 that made the major buying opportunity. What we will have in 2012 is initially maybe some maybe further weakness in emerging economies against the US market and then a major low in emerging stock markets, including, India... we are getting there slowly. - in Moneycontrol

If the S&P drops another 10% more QE

Marc Faber : If the S&P drops another 10% you can be sure that there will be more QE in the US. So the markets would be supported by additional liquidity injections. - in Moneycontrol

Marc Faber : The Government could confiscate your gold

Marc Faber : I have one concern about gold, I was recently in Taiwan and South Korea at two large conferences. Nobody owns any gold. Gold is owned by a minority, even in the U.S. Most people in the U.S. have no clue what an ounce of gold is or looks like in the vault. The same in Europe. And in a democracy, it is very popular to take away from a minority. Like in Switzerland we now have a new state law that is being voted about in a few months that anyone who has assets of over $2,000,000, who dies and passes on these assets to his children, he will have an estate duty of 20%. Now most people in Switzerland, they do not have assets of $2,000,000 or $2,000,000 Swiss Francs, so they say yeah, good idea, we tax the rich. Then next year, I can come and introduce the referendum that says, everyone who has assets of say over $50,000,000 we tax him 50%. I know people who will say who has $50,000,000 dollars in assets, very few, the people will accept and vote for it. Now next year I can come back and have another referendum, everybody who has assets of over $900,000,000, we tax them 90%. And this is what the tyranny of the masses can do. You can make it appetizing to the masses, by just taking away from a few people. But I am worried most about, in the case of gold—not the price, that I am not worried—but I am about government taking it away.

If America attacks Iran , China will take counter measures

Marc Faber : Well who knows and it is very difficult to invest according to world conflict, but the fact is simply that the Middle East is going up in flames, that tensions have increased very substantially as well as in the states. And I think the Chinese must have scratched their heads when they stalled the invasion of Libya. And they would not be as stupid as to believe that if the Western World controls the Middle East, it would be very helpful to them, because if the Western World including the U.S. and Britain, France, Germany controlled the Middle East, then the Western World can switch on the tap of oil or switch it off. And this must really be very unsettling for the Chinese. And therefore, I think instead the Western World attacked Iran today, I think some counter measures would be taken and believe me, the recent trip of Hillary Clinton to Asia, to essentially reassert the American influence in the Pacific, would be viewed by the Chinese as a hostile move. There is no question about this. Like if the Chinese went to the Caribbean and essentially tried to reassert their power over the Caribbean or establish bases in Mexico or in Canada or in Venezuela, it would be looked upon as an aggression by the U.S. and you have to look at the world from different perspectives: from the perspective of the U.S., the perspective of Western Europe, from Russia, China, and of course also from Latin America.

No Deflation in the system at the present time

Marc Faber : Yes, I am aware of that because they focus say on one sector of the economy, which is the housing market or so, or they focus on the debt deflation that we have at the present time to some extent because the household sector has been reducing its debt on credit cards, and we have also some de-leveraging in other sectors of the economy. But that is offset by the government fiscal deficit and at the same time also by monetization on a massive scale. So I do not really see any deflation in the system at the present time.

Joseph Stiglitz : Of the 1%, by the 1%, for the 1%

Joseph Stiglitz : "Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret." Joseph Stiglitz wrote in an article in Vanity Fair , what's interesting is the timing of the piece, as the issue of Obama's complete incompetence on economic matters has driven his approval numbers to the lowest levels which could be a sign that Obama may not be re-elected for a second term

El-Erian on The Market Reaction to the Jobs Report

The Market Reaction to Jobs Report was Muted , The jobs report was good, but we need better data than we are getting right now, says Mohamed El-Erian Pimco CEO, co-CIO: "it's interesting to see the market reaction. the numbers are good not only in terms of overall numbers but in terms of hours and the action is very muted and i think the three underlying that we are benefiting from household savings and it's not clear how long that is going to continue. two, Europe. things are getting worse in Europe. David earlier spoke about it Spanish deficit. we have factory numbers out of Germany today. and then there is general deleveraging. we continue to see the demand curve for European securities in particular shift inward. so it's not enough to get a good number. we need a really good number and we didn't get that today." Mohamed El-Erian said

I do not really see any Deflation in the system at the present time

Marc Faber : Yes, ... because they focus say on one sector of the economy, which is the housing market or so, or they focus on the debt deflation that we have at the present time to some extent because the household sector has been reducing its debt on credit cards, and we have also some de-leveraging in other sectors of the economy. But that is offset by the government fiscal deficit and at the same time also by monetization on a massive scale. So I do not really see any deflation in the system at the present time. - in FSN

Gold : the correction phase is not completely over

Marc Faber : ....In the case of gold, as you know we had a ten-year bull market and we peaked out in dollar terms on September 6 at $1,921 per ounce, at which stage the gold price had somewhat overshot on the upside and we are in a correction phase. I happen to think that the correction phase is not completely over, but recently sentiment on both silver and gold have turned very negative. We may have a trading rebound rally, and then some further weakness into possibly February or March, and then probably a major low. Then the question will be whether the precious metals rally again, and will they exceed the peak of 2011 or not. - in CNBC TV 18

It is not all bad in America

Marc Faber: ...... And it’s very important to laugh a lot in life. And I have to say, in Southern California, I was with a few friends and we just giggled the whole time. We had a great time. And this is also the good, you know, in America you can’t say all is bad. The good part of America, some people are very nice. Whenever I go, I was recently actually is very funny. I was in America, I had to take four flights. All the four flights were delayed and as a result, I missed two connections. I had to sleep at the airport in Chicago, to sleep to the airport in Kennedy, in Jamaica. There you go. And these are places that airlines, they give you a hotel — of course, not the luxurious Four Seasons type of hotel. But then you go to these local bars and to where it’s very funny. You meet a lot of people and you see the true America. All the people are very friendly and conversant. It has many, many good sides, America. It’s the government that is horrible and, in particular, the present one. - in FSN

Marc Faber on the US vs. The BRIC

Marc Faber : You right way but what we had in 2008 was the outperformance of the US and emerging economies’ stock markets and commodity markets got hit very hard but it lead to a major low in emerging stock markets that bottomed out between October 2008 and March 2009 and after that emerging stock markets outperformed the US until say the end of 2010.
So I think we may get a similar picture. That’s why when I read all the strategies that say - I think we should invest in the US, I say maybe that’s correct for the next three months or so but I would rather be looking at an entry point in markets like India over the next six to nine months. - in CNBC TV 18

The fundamental problems of the Western world is an over indebted society

Marc Faber :......essentially what you could get in the world is worsening geopolitical and economic conditions. Let’s say Israel attacks Iran. It’s a negative event basically but it could be counted by monetisation everywhere in the world in other words liquidity injections. So stocks could go up while conditions worsen. This usually happens when you massively inflate the quantity of money but from the mentally sound market in my opinion will only come about when the system has been cleaned and moved down after the financial crises of 2008 is essentially just painting the building with fresh paint but we haven’t addressed the fundamental problems of the Western world which is an over indebted society. - in CNBC TV18

The Correction phase in Gold is not completely over

Marc Faber : We have to distinguish between precious metals and industrial commodities. My concern is that the Chinese economy is going to be weaker than is expected and that the demand for industrial commodities will probably disappoint. So I am not particularly keen on buying industrial commodities at this stage. In the case of gold, as you know we had a 10-year bull market and we peaked out in dollar terms on September 6. 2011 at USD 1,921 per ounce at which stage the gold price had somewhat overshot on the upside and we are in a correction phase. I happen to think that the correction phase is not completely over but recently sentiment on both silver and gold have turned very negative. We may have a trading rebound year -trading rally and then some further weakness into possibly February-March and then probably a major low. Then the question will be whether the precious metals rally again and will they exceed the peak of 2011 or not - in CNBC TV18

Interest Rates and Fiscal Policies determine the price of money

Marc Faber : To make forecasts about free markets is very difficult. The free market and that perfectly functioning market is a market where no market participant has dominated the market but today you have a manipulated market. It is the governments which intervene continuously to influence the price of money in other words interest rates and fiscal policies so to make any predictions of political issues we can know exactly how far the ECB in Europe will monetize and at what stage QE3 will come about in the US but if the S&P drops another 10% you can be sure that there will be more QE in the US. So the markets would be supported by additional liquidity injections. - in CNBC-TV18

Marc Faber - CNBC TV 18 Interview - 02 Jan 2012

Marc Faber : We have to clarify the statement about how bad it was for equities worldwide because the US market was flat and it significantly outperformed most other markets in the world in particular emerging economies stock markets. This resembles the underperformance we had in 2008 that made the major buying opportunity. What we will have in 2012 is initially maybe some maybe further weakness in emerging economies against the US market and then a major low in emerging stock markets, including, India. I was looking for India to bottom out the Sensex between 12,000 and 15,000 and we are getting there slowly.

Do not buy Gold on leverage, buy it as an insurance

Marc Faber : Let me put it this way, of course it is a concern to me, if an asset class like gold and silver has been the best asset class over the last ten years, maybe copper was even better or a Warhol Painting and so forth. That concerns me. But I can turn around and say look, if I consider the price of gold, an average price in the mid 1980’s, say we take $400 or $450 or whatever it is, and we take the monetary base at that time, we take the international reserve. We take into consideration that China has not really in earnest begun to open up, and we happen to have the wealth expansion in emerging economies and so forth and so on. I can maintain, well actually the gold prices is not up, it is just a price of money or the value of money that has declined so much against the stable anchor. And so I do not think that we are in a bubble stage. But I mean I tell everyone, unless you buy gold it can easily go down 20% - 30%. This is not a prediction of mine, I am just telling people do not buy it on leverage, buy it as an insurance. If have health insurance, you also hope not to get sick, but just in case you get sick you have something. In the case of gold, as I said, my only concern with the gold insurance is the government will take it away. That is my only concern. I am not concerned about the price. - in FSN

The US, and Europe have become police state

Marc Faber : Well, first of all, I grew up in the fifties and sixties. I was born in ’46 so in the late fifties, I was, say, twelve to fourteen years old. And I have to say, in general, we were much more free than we are today. We had much more freedom to do things and to do stupid things. Today, everything is controlled — not only in the US, but also in Europe — they have become police state where everything is controlled and checked upon either by the police or the IRS or by the PSA or whatever it is. But you are restricted in every movement you make, basically. Secondly, at the time I grew up, we still had fixed exchange rates. We had Bretton Woods — in other words, a quasi gold standard, which no longer exists today. And the ability to print money today and to run huge trade and current account deficits is much higher today than it was at that time. In ’71 under President Nixon on August 26th, the US went off the gold standard and that led then to the inflation of the seventies and the gold price rising from thirty dollars to eight hundred fifty dollars- in FSN

Marc Faber : Big business is dirty

Marc Faber : ......And by the way, I think the inflation in the US is already much higher than what is being published by the media. And we know now about the media since Mr. Murdock is the largest media machinate. And since he, for sure, because I know some people who used to be in leading positions at News Corp in Asia — he calls them every day. He checks everything that they do. He knew about the hacking in Britain for sure. And he sanctioned it. But this big business. Big business is dirty. But why is it dirty? Because it’s been made dirty by the government. - in FSN

The supply of Gold is actually contracting

Marc Faber : ....I was at the Resource Conference. This is one of the largest Resource Conferences run by Standard Charter Bank in Hong Kong. All the miners are there and all the bigshots in the commodity space. And investors that are interested in commodities are there. Ask the audience and you would think that these people have an exposure to gold. Only about five people in an audience of like four hundred had more than five percent of their assets in gold. I find this amazing. I was already at two hedge fund conferences. These are relatively intelligent people. You’d think, but none of them had any exposure to gold personally. I said to them, “You’re all intelligent people. How can you not have any gold at all? Don’t you see what is happening with the money printing in the world?” Where people, they look at gold, okay, it was two hundred fifty two dollars in 1999. It’s not fifteen eighty. They think it’s expensive at this level. What they don’t consider is by how much credit has increased over the last ten years, by how much the world’s population has increased over the last ten years, by how much the supply of gold has increased. It’s not increasing, it’s actually contracting. In the next five to ten years, the total gold supply in the world will go up by three times at three point eight percent. No more. You know, you mine something, it’s gone. It’s no longer there. And so the supplies that is no longer there is like oil. You burn it, it’s no longer there. So every oil well around is dry over time.- in FSN

Gold is the best asset class for wealth preservation

Marc Faber : Well, basically, I mean, I would say we look at different asset classes. So we have cash, we have government bonds, we have corporate bonds, we have real estate, we have equities and we have commodities and precious metals. And so the question is, you know, where do you put your money if you and I go away to an island or to jail for ten years and we can’t make any transactions and we come back in ten years’ time? I think if the objective is the maintenance of purchasing power, in other words, you just don’t want to wake up in ten years’ time when you come out of jail and what you have is worthless, then I would say that probably gold is the best alternative. If the question is how do you maximize profit, probably there may be more profit in equities because, you know, we have abysmal performance of equities in the last ten years. And particularly in the US, as a result of the decline in the value of the US dollar, equities would seem to me to be not particularly expensive. I think what would be dangerous for you and me would be to put all our money in US dollar cash and in US government bonds for ten years and then come back and maybe find out that we can buy with a hundred thousand dollars just a cup of coffee — or not even that. - in FSN

Marc Faber : Always Follow what the Jews are doing

Marc Faber : ..... in the course of my life, I think that if I followed what the Jews are doing, you’re usually on the side of the winners in terms of money. They’re very smart at making money. And I have numerous Jewish friends that have either like eighty or a hundred percent of their money in gold, silver, or gold/silver mines and so forth. And I have other Jewish friends that have between thirty and fifty percent of their money in gold and silver. So I personally have less. I have like now maybe twenty percent of my money in gold and silver and in mining stock. But on any meaningful decline, say if gold, and we can’t rule that out and I’m saying that in every newsletter I write — a correction can occur that is meaningful. Like gold started its bull market in 1971. And it reached a peak in ’74 of a hundred ninety seven dollars an ounce. And then between December ’74 and August ’76, at the time the Dow Jones went up very strongly because Dow Jones bottomed out in the bear market of ’73, ’74, in December ’74. But during that time of stocks going up, ’74 to ’76, gold went down by more than forty percent — from hundred ninety seven dollars an ounce to hundred four dollars an ounce. There’s a big, big correction. But then gold went up eight times. And I’m saying, you know, you buy gold today — I don’t know, maybe it goes down a hundred dollars. Maybe it goes down two hundred dollars. But looking at all the factors we discussed, I don’t believe that we are in a bubble stage. Because I lived through the last bubble in the late seventies. I can tell you, the whole world followed the gold market day and night and traded gold twenty four hours a day like the whole world traded NASDAQ stock twenty four hours a day in ’99 and 2000. That hasn’t happened yet. We don’t have a heavy waiting. We don’t have a heavy kind of euphoria about gold at all. I know so many people, they bought gold, they paid three, four hundred dollars. Where was that thousand, they sold it? They sold it at twelve hundred. And that price has never really corrected, it never goes back. It never goes back. They’re sitting there empty. All I can say, the risk today as an investor is not to own gold, but it’s not to own any gold. If you have no gold at all, I think you’re taking a risk. And my advice is simply every month you put some money aside and you buy a little bit of gold. Depending if you’re very rich, you buy every month a ton. If you’re very poor, you buy every month an ounce or whatever it is, or a gram. But every month, you accumulate. You don’t worry about the price. Look to it and you just buy every month a little bit. And your grandchildren will be very happy about that unless the US government takes it away. That is a possibility with Mr. Bernanke. You just look at him. He’s basically not a particularly honest character. - in FSN

Easy Monetary policies create greed and bubbles

Marc Faber : Well, basically, easy monetary policies create greed and bubbles. And one of the symptoms of bubbles and investment manias is always the proliferation of fraud, embezzlement and dishonest practices. And we had also, in the US, I mean, basically, I would say Fannie Mae and Freddie Mac were a complete fraud. But of course, the government will never admit that. I think the US government is a complete fraud, with the exception of some decent people. But by and large, it’s a fraud. It’s a Ponzi scheme. And in China, obviously, we have a country that is growing very rapidly. And it’s caught the attention of the world and of relatively unsophisticated people — dentists, doctors, whatever it is, professional. They think we have to buy some Chinese companies because China is growing very rapidly. And so where there is demand, the supply comes in. A lot of fraud companies are listed in the US and elsewhere. And then they basically are revealed as being fraudulent. This is only natural. But I would say when people discuss China — is a bubble or not a bubble — the fact that there are so many fraud companies in China would point out to me or show me that there is a bubble, very clearly. Latest money printing by Bernanke has basically produced not necessarily a bubble in the US, but it’s produced a weak US dollar, which is a symptom of inflation. And it’s produced bubbles elsewhere in the world. - in FSN

In America I still can criticize the Leaders , not in Asia

Marc Faber: Well, I mean, we have in the East not true democracies. But for some funny reason, we have a lot of economic freedom. It’s just that you have to be careful not to step on the government’s toes in terms of criticizing them too much. I mean, the way I criticize Mr. Bernanke and the way I criticize Mr. Obama, for sure, I couldn’t do in China. For sure. And it would be viewed very negatively. Say I live in Thailand and I’m not here frequently. Or if I went really after the government here, I think I would have to be somewhat careful. This is still a great quality of the US. No matter what you say against American leaders, whether it was Mr. Bush or Mr. Obama, criticism is still accepted. - in FSN

Southern California is a gold mine

Marc Faber : [Southern California] It’s a gold mine. The girls are very friendly. In general, people are very friendly. I mean, everybody talks to each other. And I have to say, this is still a great quality of the US. If you go to the Midwest or you go to the South or you go to Southern California, people talk to each other in a pub and they enjoy each other’s company and it’s a very nice atmosphere. And that you don’t find in many other countries to the same extent. - in FSN