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.
Monday, January 2, 2012
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
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