Marc Faber Bloomberg Interview 10 May 2012

May 10 (Bloomberg) - Marc Faber on U.S. Equities, Economy, Euro Zone - Marc Faber, publisher of the Gloom, Boom & Doom report, talks about U.S. stocks and economy. Faber, speaking with Betty Liu on Bloomberg Television's "In the Loop," also discusses his view on the euro and the euro zone. (Source: Bloomberg)

Marc Faber : Another Crisis is coming

Marc Faber : Yes. I think that another crisis is coming, whether it’s against Greece or Spain or Portugal or Italy — across the board — yes, I think another crisis is coming. But as an investor, you have to ask yourself: what are the investment implications? And I think it’s nice to be an academic and say the crisis is coming for this and that reason, but the investment implications are clearly that they will print more money. But I’d like to make one observation; you know, this money printing business succeeds up to a point. It doesn't succeed forever. And money printing is essentially inflation; you increase the quantity of money in the system and you try to increase the quantity of debt. In other words, you try to avoid the deleveraging process, which actually would be important to happen; that they try to prevent. And the difficulty is when you create monetary inflation, it doesn't touch everything at the same time. At certain times it may go into wages or it could go into commodities or it can go into consumer prices or it can go into real estate or it can go into equities or commodities or it can go into precious metals or art prices and so forth and so on — but not at the same time. And the Fed basically since 2008 has expanded its balance sheet with the intention to stabilize the housing market and boost housing prices, but that is precisely the asset that hasn’t gone up. To some extent they stabilized it in some areas where real estate, you know, is no longer declining, but basically it isn’t rising in value, except — and this is the anomaly we have in the marketplace — except in Aspen and from Madison Avenue and Park Avenue and so forth. In prestigious locations around the world, real estate has continued to go up in value. - in Financial Sense NewsHour

Marc Faber : The Indian Rupee will weaken further

Marc Faber : I think that over time the rupee will weaken further. That would be my view now. Whether the weakness comes right away or with some delay, but I think there is a real chance that the rupee will be weak and possibly weaker than investors anticipate. A very weak rupee would be mildly positive for equities. I think they would adjust on the upside because equities are kind of a hedged against the currency devaluation. But in general as I mentioned I think that equity markets are trending lower at the present time. - in Money control

Marc Faber : Equity Markets could decline by 20%

Marc Faber : I think that from the recovery highs, in early May, we could easily see a 20% decline. - in Money Control

The Markets for the next one-two months will go lower.

Marc Faber : I think this doesn’t have a large impact on the stock market. Infact it could be actually be mildly positive. But I think the markets position in the world, in other words, stock markets position is not very favourable at the present time. We have many markets that are rolling over. We have had essentially the S&P making a new high in early April at 1,422. But most of the other markets in the world didn’t exceed the May 2011 highs. So, if you would build an advance/decline line of all stock markets in the world, it would be in a downtrend. And I think that the markets for the next one-two months will be going lower. - in Money Control

Gold could fall to $1400, Stocks could plunge 20% says Marc Faber

Marc Faber : “Gold may not perform very well in the near future,” He said, explaining that the price “probably overshot” when it topped $1,900 last August.
“The gold market has performed so well,” Faber said, “we could have some setback.” U.S. stocks, may correct more than what people expect.” Faber said, .“Someone very bullish about stocks should be very concerned,” he said. - in MarketWatch

Marc Faber : Gold may not perform very well in the near future

Marc Faber : Gold may not perform very well in the near future. The gold market has performed so well, we could have some setback - in citywire

Where does Marc Faber Invest his Money ?

Marc Faber : Well, I’d put 25 percent in equities, 25 percent in physical precious metals, 25 percent in Asian properties and 25 percent in corporate bonds, mostly emerging economies. - in Seeking Alpha

Marc Faber : You have to be diversified in Your Assets

Marc Faber : I tell everyone that you have to be diversified in your assets. The risk of gold is that it doesn’t generate a cash flow. So assuming you had all of your money in physical gold, and it goes down, it’s going to be difficult to save your position. If you have a diversified portfolio and you have some physical gold and you have some fixed-interest securities and high-dividend shares and some real estate properties that provide you with some income, then if assets go down, you have at least have cash flow for reinvestment purposes. I am a cash-flow person and I have a large, physical-gold position. I keep on buying a little bit of gold every month. I want to increase my allocation to gold. But I think there is a chance that before gold really takes off towards the upside again, that we have one more move on the downside. I wouldn’t rule it out. - in Seeking Alpha

Marc Faber : The Technical Position of the Market has deteriorated very badly

Marc Faber : It is easy to say that the correction would happen. More interesting is the thought that the early-April highs of 1422 on the S&P could be a longer-term high that we will not revisit for some time. The fact is simply that the technical position of the market has deteriorated very badly as the rally progressed from the Oct. 4 lows of last year, when the S&P went down to 1074. The market is vulnerable. Many stocks sell off on news that is not really bad, but not just as good as expected. So I am of the view that maybe we have something more serious here. Don’t forget that the S&P is, in essence, one of the very few indexes in the world that has beaten their highs in 2011. All the European markets have not made new highs and most emerging markets — with exceptions like the Philippines, Indonesia and also I think Malaysia — have not bettered 2011 highs. - in Seeking Alpha

Marc Faber : China has a Credit Bubble

Marc Faber : It’s very difficult to know exactly what is happening in China. However, because I think China has a credit bubble, I am leaning towards a meaningful slowdown. They have a lot of bad loans that will have to be written off. There is a glut of property. And the Chinese economy is essentially a capital-spending-driven economy, which has, of course, a much larger cyclicality than a consumption-driven economy. And so we could have a more meaningful slowdown. I am not so interested in Chinese stocks, because I think there is a lot of fraud among Chinese companies. I don’t have the time or the analysts at my disposal to analyze these Chinese companies thoroughly. - in Seeking Alpha

India and China will continue to Buy Iranian Oil

Marc Faber : India and China will continue to buy Iranian oil. You know what the Chinese say and what they do are two different stories. And I think that yes, the world could probably live without the Iranian oil. But obviously, if it came to a confrontation and the sea lanes were interrupted, then obviously, there could be a spike in prices. in Seeking Alpha

The aim of Iran is to have nuclear weapons

Marc Faber : Time is on their side. I’ve seen it with the Japanese negotiations in the ’70s. The Americans always went to Japan and wanted to force Japan to essentially let the yen appreciate strongly. And the Japanese always said, “Yes, yes; we do.” And then nothing happened. But they bought time. And if you talk to the Chinese, they also bide time. Politicians are very good at postponing important decisions. And so the Iranians will always comply a little bit and continue their programs. In my view, it is crystal clear that the aim of Iran is to have nuclear weapons. Now we may argue, “Well, should they have or shouldn’t they have?” Pakistan and India and France and Britain and the U.S. and Israel have nuclear weapons. Why should other countries not have? I think Switzerland should have nuclear weapons. - in Seeking Alpha

A Breakup of the Eurozone not a Disaster

Marc Faber : It’s very interesting that you bring this up, because I think the public is being brainwashed by governments and the media that interventions by the government are desirable, and that more stimulus is required, and more government spending on all kinds of programs is needed. And they argue if the banks hadn’t been bailed out, you would have a catastrophe. This is the same way that the people in Europe, the media and the government and the interventionists at the Financial Times, will tell you a breakup of the eurozone would be a disaster. But so far, nobody has been able to explain to me, in simple terms, why a breakup of the eurozone would be a disaster. I don’t see it as a disaster. On the contrary, I think countries like Spain and Italy and Greece and Portugal should be out. - in Seeking Alpha

Marc Faber outlook for the Treasury Market

Marc Faber : There are two schools of thought. I am sure that, in the long run, Treasurys are an outstanding short. But there is also the shorter term. If you said to me, “You can buy a 10-year Treasury for less than 2 percent.” I would say to you, playing the devil’s advocate, “It’s unattractive.” And you say, “Why is it unattractive?” And I respond to you with, “It’s unattractive because in America, the rate of inflation is increasing between 5 and 10 percent.” Different people have different inflation. But non-government statistics show that the cost of living is increasing by 5 to 10 percent per annum, including health care, insurance premiums, fees to the government, educational costs, and so forth. So at 2 percent, basically you have a negative real return, inflation adjusted. But then, I can also argue, “I know that inflation is, say, 5 to 10 percent. And I only get 2 percent on Treasurys, but what about the stock market? Maybe I’ll lose even more.” So there is a lot of money flowing into Treasury notes and bonds and bills because people know that, for sure, they will be repaid since the government can print money. It is not a question that they will not be repaid, but at what value of the U.S. dollar? That is the issue. Some of my friends argue that the 10-year yields could drop to 1 percent, which is a possibility. But I think, before we drop to 1 percent on the notes and, say, 1.5 to 2 percent on the 30-year bonds, there will be so much money printing that the fiscal deficits would be so astronomical. Say you assume a 1 percent yield on a 10-year note yield. You would have to assume that we have deflation in the system. You would have to assume that we have gone back into kind of a depression stage. In a depression stage, the tax revenues would collapse. And the expenditures of the government, especially of the Democratic administration, would go up very substantially. And so instead of the deficit being, say, $1.5 trillion, it would be $2.5 trillion. I think, at some point, the market will start to question owning government debt in the U.S. - in Seeking Alpha

Physical Gold Better than Gold Miner Stocks

Marc Faber : I have been arguing that you are better off in physical gold than in gold miner stocks, for a variety of reasons. And when looking at gold stocks, we need to distinguish between exploration companies and producing companies. The problem with the exploration companies is that a lot of them will have financing difficulties and they will have to cut down on exploration. They may not get financing at all. If you have 100 exploration companies, 80 to 90 of them could easily be out of business. - in Seeking Alpha

Central Banks Becoming Net Buyers of Gold

Marc Faber : We have international reserves growing from $1 trillion in 1996 to $10 trillion now, which is a symptom of monetary inflation. And these international reserves accumulate principally at the hands of Asian central banks and central banks in emerging economies. For instance, Thailand sits on foreign exchange reserves of $150 billion, which, on a per-capita basis, is larger than the Chinese central bank reserves. The Russians also have large reserves, as well as the Brazilians and others. These central bank reserves, until now, were principally U.S. dollars. Then they diversified somewhat into euros. Even a central banker, with his just-below-average intelligence, will one day notice that maybe it’s not that desirable to be in the U.S. dollar or Treasury bills that have essentially no yield. In other words, you have a negative-real-interest rate on these dollars. So they move money into gold. They should have done it a long time ago. But don’t expect too much from a central banker. - in Seeking Alpha

The Price of Gold & Silver will move up in the long run

Marc Faber : We had the big move. The gold price overshot when it went to $1,921 on Sept. 6 last year. And then we oversold on Dec. 29, when gold went down very quickly to $1,522. I suppose around this level, gold’s price is moving sideways. I wouldn’t mortgage my house expecting prices to go up. They could still go down more and we would still be in a bull market even if gold prices dropped to $1,200/oz, although that’s not in my forecast. I’m telling every investor, in the long run, that central banks all over the world are going to print money because they know nothing else. The purchasing power of currencies will continue to go down. In other words, the price of gold and silver will move up in the long run. - in Seeking Alpha

Gold Prices vs. U.S. Federal Debt

Marc Faber : People say the price of gold is in a bubble stage and it is up substantially from the lows in 1999, which was, at the time, around $252 per ounce. But at the same time, we had an explosion of debt, not just government debt, but private sector debt, and an explosion of unfunded liabilities such as in the pension fund industry, and not just with Medicare, Social Security and Medicaid. So now, 12 years after the gold’s low, we are essentially in a situation where maybe the price of gold should be much higher because the economic and financial conditions are worse than they were 12 years ago. I go to lots of conferences and I usually ask the audience, “How many of you own gold?” Normally, hardly anyone owns it. I’ve been to conferences with thousands of people attending, and nobody owned any physical gold. I doubt we are in a bubble stage. When you went to an investment conference in 1989, everybody owned Japanese stocks. And in 2000, everybody owned tech stocks. That is the bubble, when the majority of market participants own an asset. I think there are more people that own Apple stock than gold. - in Seeking Alpha

Marc Faber : The markets for the next one-two months will be going lower

Q: Would you say the second half is going to be more challenging?
Marc Faber : I think this doesn’t have a large impact on the stock market. Infact it could be actually be mildly positive. But I think the markets position in the world, in other words, stock markets position is not very favourable at the present time. We have many markets that are rolling over.
We have had essentially the S&P making a new high in early April at 1,422. But most of the other markets in the world didn’t exceed the May 2011 highs. So, if you would build an advance/decline line of all stock markets in the world, it would be in a downtrend. And I think that the markets for the next one-two months will be going lower.- in CNBC-TV18 interview 24 Apr 2012

Marc Faber : The Equity Markets could drop by 20%

Marc Faber : I think that from the recovery highs, in early May, we could easily see a 20% decline. - in CNBC-TV18 interview 24 Apr 2012

Marc Faber : The Indian Rupee will weaken further

Marc Faber : I think that over time the rupee will weaken further. That would be my view now. Whether the weakness comes right away or with some delay, but I think there is a real chance that the rupee will be weak and possibly weaker than investors anticipate. A very weak rupee would be mildly positive for equities. I think they would adjust on the upside because equities are kind of a hedged against the currency devaluation. But in general as I mentioned I think that equity markets are trending lower at the present time. - in CNBC-TV18 interview 24 Apr 2012

Marc Faber on The situation in India

Marc Faber : The situation in India is a situation where the fiscal deficit is essentially very high and obviously the government debt is increasing. The rating agencies do their ratings. I don’t pay much attention to that. But obviously although they have a time lag, they probably are in the right direction in terms of downgrading India. - in MoneyControl

Marc Faber : I would be careful to be heavily Short Stocks

Marc Faber : Yes. My view was that last October, November and December that sentiment was very negative, there were large short positions outstanding and most people were actually predicting a meltdown in markets because of Greece and the opposite happened. Because of Greece the market rallied, because of Greece they printed money. And in a money printing environment it’s just tough to be very short because in real terms asset prices may go down, but they go up in nominal terms and so I still feel that the risk is fairly high by being short the entire market. Now, if we talk about being short individual situations where there is deterioration in the business of one sector or one company, then yes. I mean there are people who can pair trade, in other words, they are short one group and long another group or short one group, or long one stock and short another stock and they do it quite successfully. But in general, I would say in this money printing environment, I would be careful to be heavily short stocks. - in The Financial Sense NewsHour - 06 Apr 2012
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Marc Faber : The Middle East to Blow up in Flames

Marc Faber : The Middle East to Blow up in Flames

Marc Faber : "let's put it this way , equities have more or less doubled in price from the lows of March 2009 , we are in 2012 so we are 3 years into bull market I do not think that equities are a great bargain I think that the money printing has also flowed into corporate profits , so we have a corporate profit inflation we have a record corporate profit in the US but I don't expect it to go on for ever so I am very cautious about equities right now , in fact I think that we may have seen not just a temporary high a few weeks ago when the S&P went to 1422 , I think this could be the longer term high in other words , we don't exceed this April high this year , but equally I think it is a risk not to own any equities at all for the following reason , I think it is increasingly obvious that the central banks of this world will keep on printing money and that as a result of this money printing the purchasing power of paper money will diminish over time irregularly but it will diminish and so you have to own some assets , I happen to think that home prices in southern US are now relatively low , relatively attractive and I would probably if I were a US citizen and live in the US buy some homes remodel them and sell them out you will get a high return compared to say zero interest rate on deposits .....

Marc Faber : I have to give Credit to Mr. Bernanke

Marc Faber : I find it quite funny this talk about an exit strategy or an exit point because that they don’t have. And I think there will be no exit, but continuation of money printing. But I have to give credit to Mr. Bernanke. If I were in his shoes in the current situation, with the S&P having risen to 1422 the other day, I wouldn’t have embarked on QE3. I would rather wait and announce there won’t be any QE3 for the time being or depending on market conditions or on economic conditions and wait what happens, and if the market sells off 100 points on the S&P or 200 points, say it dips down to 1200 on the S&P, then come up again as the big savior of the whole financial system by implementing QE3 - in The Financial Sense NewsHour - 06 Apr 2012
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Marc Faber : We Have Negative Real Interest Rates

Marc Faber : Well, basically, it’s quite obvious that all central banks would like to reduce government debt as a percent of the economy by inflating. And over time you could do that. But obviously, it may not create a lot of prosperity, but rather problems down the line. And the question is not to what extent do you inflate because, say, in America, the Bureau of Labor Statistics will put, say, deflation at 2 to 3 percent per annum when, in fact, the cost of living increases for people is more like between 5 to 10 percent. So we have strongly negative real interest rates both on short term deposits and even on government bonds. So basically, there is a significant loss in the purchasing power of money. - in The Financial Sense NewsHour - 06 Apr 2012
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Marc Faber On why Gold did not perform well in Q1

Marc Faber : "Yes, that’s correct. But the returns have been very good since 1999 and year over year I think gold is still up 12%…I think that gold is in a correction period and we had an intermediate peak on September 6, 2011. And I always advise don’t put all your money into gold because it doesn’t have any cash flow. So you are really dependent on the price appreciation. That is different from owning, say, equities that have a dividend yield of 5%, which I can find in Asia." - in Bloomberg TV

Marc Faber on the Cycles of Gloom, Boom and Doom

Marc Faber MoneyandWealth Interview - Apr 21, 2012

Marc Faber : 'Over the last few months, the market has acted very badly. There are less new hires, the volume has dried out, insider sales have picked up, and this is the beginning of a downward trend. We may easily have a correction of 10-20% here. Most stocks are already down 10% from their highs. Markets have more than doubled from the lows in 2009. The global economy has actually deteriorated. 'It has optically improved because of huge government spending but in principle we are in a worse position today than we were in 2008 and 2009. There will be more money printing and if your are hyper bearish, maybe you are better off in equities than you are in government bonds and cash. I also advocate to own some gold'.

Marc Faber : not recommending to Buy more Gold

Marc Faber : "As you know, I have been very positive about gold and I still accumulate gold every month. But I think that we had an intermediate peak at $1921 on September 6 of last year. Then we dropped sharply to $1,522 an ounce on December 29, 2011. Since then we’ve had a feeble recovery. I think that the correction period is not yet over. I’m not selling my gold because I don’t trust governments and I don’t trust the Federal Reserve, nor would I trust the ECB or other money traders in the world. They are all going to print money. I still recommend to hold gold." - in Bloomberg TV

Marc Faber : QE3 going to be Enormous

Marc Faber : "It would have to be very significant to boost all asset prices including homes, stocks, bonds and commodities…Much larger [than QE1 and QE2]." - in Bloomberg TV

Marc Faber : Investors should have caution after April will come a Slowdown

Marc Faber : "Basically I think that earnings may begin to disappoint. That corporate profit margins could deteriorate. And I think we still have a lot of issues. Don’t forget we have QE1, QE2 and Operation Twist. I think in order to really hold asset prices across the board much more QE3 would have to be gigantic. I’m not ruling out that stocks can continue to go up but I doubt they will go up at the same rate as the first quarter. And if you look at the technical under underpinnings of the market, they have deteriorated. The list of new highs is deteriorating. The short positions are way down. And we have an overbought condition in the market if we measure the number of stocks above the 50-day and 200-day moving average. So, generally I would say maybe April is traditionally still a month of seasonable strength but somewhere in the next six months I think you can buy the whole market much cheaper." - in Bloomberg TV

Marc Faber : I advocate Investments that generate free cash flow

Marc Faber : Well, you see, I’m an advocate of investments that generate free cash flow. In other words, you invest in something and every year you get, after all expenditures, some money in the form of interest payments or in the form of dividends. And that allows you a lot of flexibility because if you have all your money in physical gold or in exploration companies the problem is you have no cash flow. So if let’s say your portfolio drops by 50 percent, you don’t have any money to add to your positions, whereas if you have cash flow, every year some money comes in and you have purchasing power to buy the assets that during that year fell the most or where you think some value is emerging. And I think it is very important to have always cash flow to invest in opportunities. And so I also advocate essentially a diversification. You know, a few weeks ago Mr. Buffett came out and said that gold is unattractive and so forth and several studies will show that stocks over the long run have performed better than gold. I fully agree with this study. It should be clear that the company that generates and pays out dividends over time will perform better than a dead asset like gold. However — and this is a big “However” — I once talked to Jeremy Siegel, he’s written many books about the performance of stocks, in 1800 and so forth. I [said], Jeremy, you start your book on the performance at 1800, are you actually aware that by 1841, the poor man’s recession, most of the canal companies and most of the banks were bankrupt. So if you invested your money in 1800, by 1841 most of it was gone. And this is the point, in equities you have to rebalance your portfolio and in gold you don’t have to do that. It’s a totally different type of asset. You can’t compare it. And the other day, you know, Kodak went bankrupt. I remember in ’72 and ’73 among the 10 most popular stocks among institutions you had Polaroid and Eastman Kodak and both went bust over time and they were disastrous investments. So it’s nice to say the market is going up in the long run by this and that, that I agree, but you have to rebalance the portfolio. And in gold you don’t have to do that. Gold is basically cash that doesn't pay any interest. - in The Financial Sense NewsHour - 06 Apr 2012
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Marc Faber : The Economy has Bottomed out but is far from Robust

Marc Faber : "First, I think there are some cost pressures creeping in terms of rising raw material costs, especially energy, and the problem with, say, a QE3 would be that you are doing it in an environment of very elevated oil prices. So, maybe the energy prices would go up more and squeeze the margins of some corporations. And certainly squeeze the consumer. And my sense is that the economy has bottomed out but is far from robust because the typical household is being squeezed by higher cost of living increases. There are various measurements. You can measure the CPI. It is rising by less than 3%. Everywhere I look I see households essentially paying between 5% to 10% more for goods and services than a year ago." - in Bloomberg TV interview 2 April 2012

Marc Faber MoneyandWealth Interview - Apr 21, 2012

Marc Faber MoneyandWealth Interview - Apr 21, 2012

Marc Faber : 'Over the last few months, the market has acted very badly. There are less new hires, the volume has dried out, insider sales have picked up, and this is the beginning of a downward trend. We may easily have a correction of 10-20% here. Most stocks are already down 10% from their highs. Markets have more than doubled from the lows in 2009. The global economy has actually deteriorated. 'It has optically improved because of huge government spending but in principle we are in a worse position today than we were in 2008 and 2009. There will be more money printing and if your are hyper bearish, maybe you are better off in equities than you are in government bonds and cash. I also advocate to own some gold'.

Marc Faber : Traveling has become very expensive

MARC FABER : Well, the first insight I can give you is that first-class tickets have essentially doubled in price over the last six, seven years, and that hotel prices have also gone up very substantially and that traveling has become very expensive. If you tell me, yeah, but there are lots of airlines where you can get cheap seats and so forth. Yes, if you have time, you can do that, but as a businessman, say, I have to be at a certain place, I can’t take the risk that I’m late. And so I have to travel essentially on a normal airline; that has become much more expensive. And the insight I have essentially from traveling around the world, the world is a huge place. And we just have to realize someone living in the south of the world, say, the South Pole, he sees the world from a different perspective than someone who lives on the North Pole. And so people who live in the Middle East have a different perspective on the world than an American; and Chinese have a different perspective than Americans and Europeans and so forth. And I think it’s very important for world peace for people to really understand that different people have different perspectives and different opinions. And I see it and I notice it, sadly, I don’t know whether it’s because of the social media or because of the internet, you have today far more polarized views than before. You have blogs, and blogs are for the gold stocks and all the gold bugs are together in these blogs. Then you have blogs for the super stock market bears and all the bears are there. Then you have newsletters that are oriented to mining stocks and all the mining stock owners are there. And there is actually very little cross-interaction in the sense that if I were convinced of my views that gold is a desirable investment, I would wish to hear the views of people who are anti-gold. In other words, you want to have interactions with people that have precisely a different opinion than you and not with people that have the same opinion as you have. This is very important. That is an insight I’ve kind of learned from traveling and seeing the world. You know, people in Brazil look at the world from a different perspective than an American. - in The Financial Sense NewsHour - 06 Apr 2012
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Marc Faber Interview with ABC Australia - April 9, 2012

Marc Faber Interview with ABC Australia - April 9, 2012:

MARC FABER: Well I mean right now the US stock market is outperforming other markets. But I think that in the US the fiscal deficit is a huge problem to which there are hardly any solutions, for the simple reason that the Democrats want to spend and the Republicans also want to spend. And nobody really wants to increase taxation. And so the deficit will in my opinion continue to increase and will necessitate money printing, but it may not lift economic activity. The second source of uncertainty is really what will happen in China. They have different views. Most economists will say well we'll have a soft landing and so forth. But I've been working in the investment business for 40 years. All the time I've heard about soft landing and no recessions and no crashes and no panics and so forth and so on. So who knows, maybe the Chinese economy will de-accelerate more rapidly than is generally expected and possibly even crash, in which case it would have a huge impact on economic activity around the world.

A China slow-down will cause the Australian economy to suffer badly

MARC FABER : Correct. If there is a meaningful slow-down in China then obviously the Australian economy will suffer very badly. I happen to think that the Australian economy will suffer regardless because we have a very elevated property market that has become unaffordable for a large number of people and we have already some cracks in the property market. We have a very high household debt to GDP ratio. So I'm not optimistic about the Australian economy.- in abc.net.au

A major Sovereign Crisis unfolding

MARC FABER : We will have another phase of the crisis, the question is from what level of asset prices and obviously also when will it happen. And I think the next time we will have a major sovereign crisis. - in abc.net.au

Marc Faber : Wealth is doomed to be destroyed by war and inflation

Marc Faber : “People of privilege tend to prefer to risk their own destruction than surrender their advantages.”

The Fiscal Deficit in The US is a huge problem

MARC FABER: Well I mean right now the US stock market is outperforming other markets. But I think that in the US the fiscal deficit is a huge problem to which there are hardly any solutions, for the simple reason that the Democrats want to spend and the Republicans also want to spend. And nobody really wants to increase taxation. And so the deficit will in my opinion continue to increase and will necessitate money printing, but it may not lift economic activity. The second source of uncertainty is really what will happen in China. They have different views. Most economists will say well we'll have a soft landing and so forth. But I've been working in the investment business for 40 years. All the time I've heard about soft landing and no recessions and no crashes and no panics and so forth and so on. So who knows, maybe the Chinese economy will de-accelerate more rapidly than is generally expected and possibly even crash, in which case it would have a huge impact on economic activity around the world. - in abc.net.au

Marc Faber Not optimistic about the Australian economy

MARC FABER : Correct. If there is a meaningful slow-down in China then obviously the Australian economy will suffer very badly. I happen to think that the Australian economy will suffer regardless because we have a very elevated property market that has become unaffordable for a large number of people and we have already some cracks in the property market. We have a very high household debt to GDP ratio. So I'm not optimistic about the Australian economy.- in abc.net.au

The FED creates one distortion in the market to the next distortion to the next bubble

MARC FABER : If I increase the quantity of money there will be symptoms of inflation. The Central Bank does not know where these symptoms will occur so it creates one distortion in the market to the next distortion to the next bubble. And so you have booms and busts and much higher economic and financial volatility. - in abc.net.au

Marc Faber warns of 20 percent fall in Equities

Marc Faber : "The question is not whether this is a correction, the correction has got underway. We may easily have a correction of 10% to 20% here."

Marc Faber : There is no Deflation in the system today except in the housing market

Marc Faber : Well, I mean, you know, I’ve learned that what I know I obviously learned from someone. I didn’t invent it. So I worked at White Weld with Gary Schilling and he’s a friend of mine; I see him occasionally at the conferences and so forth. And I disagree with him about that we have deflation. He lives in New Jersey. I went to New York airport the other and day and then I drove to New York City and the Lincoln Tunnel fee has just increased from $8 to $14. Well, I’m sorry, that is a 50 percent increase. And so there is no deflation in the system today. But if you say there is deflation in the housing market, yeah, there has been deflation in the housing market and if you ask me will there be one day a deflationary collapse, yes, one day there will be a deflationary collapse, but you understand, as an investor it’s nice to say there will be a deflationary collapse, but it could happen from Dow Jones 100,000 or gold price 20,000 or from home prices that are much higher than today and from a dollar that has depreciated much more than is the case today. So the difficulty for the investor is actually to navigate between today and the time of collapse that I think is inevitable. But how do you protect your wealth in the meantime and in the time of collapse? Investors, and I think they have to begin to think about this already today and say, okay, what does it mean if there is a global kind of deflationary collapse. In a deflationary collapse, everything essentially goes down in value, but obviously, like in an inflationary boom, in an inflationary boom you have different assets that go up at different times with different intensity. So let’s say if you look at 2000 to today, you were better off in gold and commodities than in equities. Now, in a deflationary collapse, the key is to say, okay, I’m only going to lose 50 percent when everybody else will lose 90 percent. So relatively speaking, I will be much better off. And that is the strategy that investors should consider: How to position themselves to lose less in the deflationary collapse in the final crisis than the majority of people. Then relatively to other people, their position will improve.- 06 Apr 2012
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Marc Faber : Gold would not help you a lot in the case of civil unrest

Marc Faber : .... I’m not sure that gold would help you a lot in the case of civil unrest. But the point is this. If someone that you meet who is well-to-do and says gold doesn't pay any interest, tell him at the present time your deposits are not paying you any interest either. And in real terms, inflation adjusted, you are penalized. You are losing out by say 5 percent per annum because your cost of living increase are going up by say 5 percent and the interest is zero. So in this environment, you have actually an advantage to own a sound currency like gold vis-à-vis paper currencies where the quantity can be increased. And by the way, you ask your well-to-do people once, when did you travel overseas the last time? Haven’t you noticed how expensive Australia and Canada have become relative to the United States or Switzerland? And if they say, yes, Canada is now very expensive. And you say yes, that is a symptom of US monetary inflation that depresses the value of the purchasing power of the dollar.- in The Financial Sense NewsHour - 06 Apr 2012
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Marc Faber : Warren Buffett was right about Gold

Marc Faber : Well, you see, I’m an advocate of investments that generate free cash flow. In other words, you invest in something and every year you get, after all expenditures, some money in the form of interest payments or in the form of dividends. And that allows you a lot of flexibility because if you have all your money in physical gold or in exploration companies the problem is you have no cash flow. So if let’s say your portfolio drops by 50 percent, you don’t have any money to add to your positions, whereas if you have cash flow, every year some money comes in and you have purchasing power to buy the assets that during that year fell the most or where you think some value is emerging. And I think it is very important to have always cash flow to invest in opportunities. And so I also advocate essentially a diversification. You know, a few weeks ago Mr. Buffett came out and said that gold is unattractive and so forth and several studies will show that stocks over the long run have performed better than gold. I fully agree with this study. It should be clear that the company that generates and pays out dividends over time will perform better than a dead asset like gold. However — and this is a big “However” — I once talked to Jeremy Siegel, he’s written many books about the performance of stocks, in 1800 and so forth. I [said], Jeremy, you start your book on the performance at 1800, are you actually aware that by 1841, the poor man’s recession, most of the canal companies and most of the banks were bankrupt. So if you invested your money in 1800, by 1841 most of it was gone. And this is the point, in equities you have to rebalance your portfolio and in gold you don’t have to do that. It’s a totally different type of asset. You can’t compare it. And the other day, you know, Kodak went bankrupt. I remember in ’72 and ’73 among the 10 most popular stocks among institutions you had Polaroid and Eastman Kodak and both went bust over time and they were disastrous investments. So it’s nice to say the market is going up in the long run by this and that, that I agree, but you have to rebalance the portfolio. And in gold you don’t have to do that. Gold is basically cash that doesn't pay any interest. - in The Financial Sense NewsHour - 06 Apr 2012
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Marc Faber interview - The Financial Survival Network - 13.Apr.2012

Marc Faber interview by The Financial Survival Network - 13.Apr.2012 , ".....the west is in decline says Dr. Mark Faber : not specifically the US but the entire western world is in relative decline compared to nations that have young populations growing populations and plenty of energy and drive , in the west we are an aging society that has become accustomed to wealth , we have grown in the last 30 years principally because of a rapid expansion of credit consumer debt mortgage debt and that has allowed people to live way beyond their expectations and beyond their means so there will be a payback time ..." says Marc Faber

Marc Faber FOX Business Network exclusive Interview - 13 Apr 2012

Marc Faber : We are in a Worse Position Than in 2008 and in 2009 : Investment analyst and entrepreneur Marc Faber spoke with FOX Business Network’s (FBN) Liz Claman about the health of the global economy saying 'over the last few months, the market has acted very badly', and predicted this is indicative of 'the beginning of a downward trend'. we can easily see a 10 to 15 percent correction in the markets says Dr Doom Marc Faber

On the health of the global economy
'Over the last few months, the market has acted very badly. There are less new hires, the volume has dried out, insider sales have picked up, and this is the beginning of a downward trend. We may easily have a correction of 10-20% here. Most stocks are already down 10% from their highs. Markets have more than doubled from the lows in 2009. The global economy has actually deteriorated. 'It has optically improved because of huge government spending but in principle we are in a worse position today than we were in 2008 and 2009. There will be more money printing and if your are hyper bearish, maybe you are better off in equities than you are in government bonds and cash. I also advocate to own some gold'. - Source: Fox Business Network