INTERNATIONAL. Marc Faber the Swiss fund manager and Gloom Boom & Doom editor said he has some short-term concerns about commodity prices including gold. He is also reluctant to invest in bonds.
In the latest issue of the Gloom Boom & Doom, Faber writes: "Since we had in 2008 the third best annual return (41%) in the last 35 years and since each time high returns were followed by negative returns I would be, regardless of the economic outlook, very reluctant to invest in long term government and also in corporate bonds.
Faber says he is more negative about US bonds under a further deterioration of the economy than under a recovery, adding that 'inevitable' further economin weakness 'will lead to further fiscal stimulus packages and necessitate further money printing'.
He believes the latest GPP growth figures are a result of massive government interventions into the free market which inevitably resulted in extremely volatile economic and financial conditions.
As a result assets are over-stretched: equities are too high, the euro is over-bought the dollar is over-sold. Even gold may be due for a short term correction, he says.
"I should also mention some concerns (for now of short-term nature) I have about commodity prices including gold. A large number of commodities including oil, the CRB Index, and gold broke out on the upside in early October," Faber said.
"I would regard a failure to hold above the “upside breakout points” in the period directly ahead with great caution. In the case of gold a decline below US$1,000 would likely lead to further more meaningful weakness, possibly down to between US$800 and US$900," Faber added.
Faber has been reiterating, in various recent interviews, the notion of over-streched assets and a possible short-term dollar turnaround.
Speaking in a Bloomberg interview from Istanbul on Tuesday, Faber said: "Maybe the dollar has made a turn, it can easily rebound by 10%”.
“It may have started already since the asset markets started to go down 10 days ago.”
“I don’t think that the dollar will be a strong currency, but you can have periods like in 2008 that the liquidity tightens”.
“If you have the private sector withdrawing credit and the government throwing credit at the system you can get a lot of volatility,” Faber said, adding he would be careful to buy equities now as “we are in a correction period.”
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