Marc Faber on Gary Schilling bet against Copper

Marc Faber : I have known Gary Schilling since 1970 when we worked together. He has been a frequent bear about commodities and about copper. I happen to think copper is likely to come down, but I would not bet too heavily on it, because it takes a long time to bring on additional copper mines. Unless the Chinese economy collapses, the demand for copper will stay relatively high. If the Chinese economy collapses and Jim Chanos is right, then you want to be short not only copper, but short everything - in Bloomberg

Marc Faber : advices to avoid industrial commodities copper, nickel, and zinc, for the time being

Marc Faber believes China’s economy will slow down and likely crash in 9-12 months. He suggests avoiding industrial commodities, like copper, nickel, and zinc, for the time being and avoiding companies exposed to Chinese economic growth. Faber finds wheat, corn, and soybeans attractive and believes these agricultural commodities are in the process of making major lows.

Marc Faber recommends copper, nickel, iron and oil amongst the Commodities and Thailand and Singapore among the Emerging Markets

The system will be bankrupt in five to ten years

According to Marc Faber author and publisher of the Gloom Boom and Doom Report , the developed economies have now become more risky than emerging economies , in a recent interview with the Swiss news paper Letemps.ch he stated that The United States will seek to create an inflation of 6% per year, but will not be able to do it without problems on debt. To create this inflation rates will be kept exceptionally low, approaching zero as at present.

The deficit this year will be 1.6 trillion U.S. dollars and in the medium term is unlikely to be less than 1,000 billion, this will result in five or ten years, a payment of 35% of fiscal revenues and the interest.

The banks, now feeling safe will take the money and will pay 0% to 5%. This will penalize savers and enrich the banks.

In five or ten years we will have the effect of a new crisis, resulting from the bubble of borrowing countries. Some countries will fail, starting with the United States, which is already technically bankrupt.

Usually emerging markets are at bigger risk of failure, but today they have a financial situation better than many developed economies.

The most interesting markets for Faber are Thailand and Singapore, but also India and China, although on the latter prices are already very high.

Good prospects, again according to Faber, for commodities such as copper, nickel, iron and oil. Regarding gold, Faber maintains a 10 to 15% of the portfolio. On agriculture: they represent the best long term investment.

Regarding the stock market: it may grow, but in relation to the amount of money that will be printed.

Gloom, Boom and Doom Report , Dr Doom or Dr Copper !

Copper is generally a leading indicator of economic growth because of its use in new construction (housing and commercial property).

Dr. Faber might be in agreement with Dr. Copper (as copper is sometimes called for its ability to 'diagnose' the economic conditions). Dr. Marc Faber's latest letter landed in the mailbox yesterday. There were some real gems in this month's Gloom, Boom, and Doom Report. One was this quote from Charles Kettering, "Success is getting what you want, happiness is wanting what you get."

Dr. Faber also has quite a bit to say about whether the large rallies in global stock markets since March (and earlier in some cases) constitute a recovery in the economy or just a "bear market rally." He says that, "At least in nominal terms, the global printing presses being run by the world's central banks and fiscal deficits have begun to impact asset prices positively."

This is a concession that the big quantitative easing efforts of the Fed have found their way into bond prices and certain other sectors. Also, by trashing cash the Fed has made stocks look relatively more attractive. Dr. Faber also thinks that, "In the case of resource and mining stocks, as well as Asian equities (and, for that matter, most emerging and other stock markets around the globe), the lows that were reached between October and March of this year are likely to hold-that is, for now."

And what about Australia specifically? He did not single the country out. But he did say that, "The markets that have the highest probability of having made major longer-term lows are resource-related equities, emerging markets, and Japan."

"Conversely," he writes, "the asset market that has the highest probability of having a made a secular high (such as Japan in 1989, or the NASDAQ in March 2000) is the U.S. long-term government bond market. Despite a still-weakening economy and massive quantitative easing, long-term bond yields appear to be on the verge of breaking out on the upside."

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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