TD: With that in mind, how far into this commodities down cycle do you think we are?
Marc Faber : Well, compared to the stock market commodities are probably relatively inexpensive. But a strong price recovery I don’t see. First of all, a lot of commodity supplies are coming on stream.
Second, a lot of producers will continue to produce as long as they cover variable costs. Three, as I mentioned before, demand from China is not likely to pick up anytime soon.
So the outlook for commodities is maybe not much lower on the downside and maybe you can have a rebound. Oil fell from over $100 down to around $40. Maybe we can have a rebound to $60. I would guess the long term equilibrium price of oil is somewhere between $40 and $60. But you can undershoot, like in 2008, when it went down to $32. -- in www.proactiveinvestors.com
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.
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