Marc Faber : I consider precious metals money

Marc Faber : "...An investor has the choice to invest in real estate, in equities, in bonds, in commodities, and I separate precious metals from commodities, from industrial and agricultural commodities, because I consider it money. Also we can buy art, and stamps,and other collectibles.I have a large subscriber base for my Gloom, Boom and Doom Report , and I asked each one of them to let me know if they have the impression that the cost of living increases,in other words, the percentage of how much they pay every year, more, for their families,is less than 5%. So far I have not received a single email, so I think inflation is around 5%. The return on deposits is essentially zero. And then people begin to worry, because paper money is no longer a store of value, and at the same time, it is a bad unit of accounts, because it is debased by the central bank.So people buy paintings, they buy real estate, they buy stocks, they buy, to some extent,bonds – last year, we had large inflows into bond funds– and they buy precious metals.The problem with all these easy monetary policies and artificially low interest rates, is that not everything goes up at the same time. In other words, we had a bubble in the NASDAQ in 1997 to March 2000, then the bubble burst. Then we had a real estate bubble 2000-2006. Then in September 2007 and July 2008, oil went from $78 to $147and the CRB went ballistic, so we had a commodities problem. In 2008 everything collapsed. Oil, in an unprecedented move, went, in July 2008, from $147 to a low of $32in December 2008. In other words, in six months, oil fell from $147 to $32 a barrel.These kinds of moves are brought about by the Federal Reserve monetary policies, and for the investor, there is no point to be overly dogmatic. From 1999 to 2007 and 2008,gold outperformed equities by a huge margin. Also, silver outperformed equities by a huge margin. In 2009, equities outperformed gold, and from here onward, it is going to be the same pattern. There will be suddenly other assets that appreciate, and some assets go down.I happen to think that some prices will go down, but they have become oversold on a year-term basis, because over the last three months, the whole world became overly enthusiastic with the inflation phase, so the thinking was, government bonds are bad, and equities are good. That may reverse for a little while, but I think long-term if you look at ten years, one of the worst investments will be long-term U.S. government bonds."

This was an extract of the long interview that Dr. Marc Faber did with McAlvany on 23 February 2011 , below is the full interview :