Marc Faber sees 'no huge downside risk for gold,' more sovereign defaults
Source: BI-ME , Author: BI-ME staff
Posted: Thu February 11, 2010 6:38 pm

INTERNATIONAL. Marc Faber the Swiss fund manager and Gloom Boom & Doom editor said the governments of every developed economy will eventually default on their sovereign debts, so the one thing he will never do in his life is 'sell my gold.'

Potential defaulter include the US, the UK and Western Europe.

Speaking to CNBC in a live interview via telephone, Faber said: "In the developed world we have huge debt to GDP, in terms of government debt to GDP and unfunded liabilities that will come due."

"These unfunded liabilities are so huge that eventually these governments will all have to print money before they default," he added.

Speaking at Russia's Troika Dialog Forum in Moscow last week, Faber said: "I'm convinced the US government will go bankrupt, but not tomorrow, and before they do they will print money [and] you'll get a depression with very high inflation rates."

"If you ask me about the correction in the gold market, sure, we already corrected 10% from the peak and it could last somewhat longer.

"But when I look at Mr.Obama, Mr.Bernanke, Mr. Tim Geithner and Mr. Larry Summers, the one thing I will never do in my life is sell my gold."

In an interview with Bloomberg Television in Hong Kong on Thursday, Faber reiterated he doesn’t see a “huge downside risk” for gold.

“I won’t rule out that gold will go down to US$950 or US$1,000, but I don’t expect more downside."

“I don’t see any scenario where gold will collapse," he added.

The famed investor told Bloomberg the euro may rebound to US$1.40 against the US dollar because the currency is currently “oversold” amid concerns over Greece’s deficit, the largest in the European Union.

The region, along with the European Central Bank, will probably “bail out” the country, in turn creating more deficits, he also said.

“When Greece is bailed out, it’s a further indication that paper money is losing its purchasing power because it’s diluted through larger and larger bailouts and more and more deficits,” Faber said. “Now it can rebound to around US$1.40 but more than that, you shouldn’t expect.”

Any other recommendations?

“Other commodities haven’t gone up yet, such as the grains,” he said. “It may take time until they start to go up substantially but if you have time, you should be long wheat, corn, soya beans or own a farm, which is one way to participate in future food price increases.”

The global stock markets, which have mostly fallen about 10%-20% from their peaks, have begun a correction phase that Faber expects to continue.

He said he thinks the new resistance level for the S&P 500 will be 1,100, though an oversold market could cause a relief rally over the next ten days.

Faber has said in many interviews that he sees dips in gold as an opportunity to buy some more bullion. But how long can the gold bull market last?

"The gold bull market will come to an end when sovereign wealth funds – sick and tired of their investments in financial stocks – will finally purchase gold," wrote Faber back in January 2008 in  his Gloom, Boom & Doom report.

RELATED ARTICLES

'The risk is really not to own any precious metals at all,' says Marc Faber

Much further to go for gold but watch for correction, says Adrian Day

The China controversy, gold and the stock market

Nouriel Roubini says US economy still in trouble

Stage set for prolonged depression, says Peter Schiff

Is gold in a bubble? George Soros reignites the debate

Global markets 'overdue for a correction,' says Jim Rogers

I still can't see bubbles in gold and commodities, says Jim Rogers

Turning paper into gold is a 21st century alchemy, says Chris Potter

Marc Faber says 'we are all doomed,' predicts cyber wars

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: October 29, 2014
UAE. Total wealth in the GCC stood at US$ 1.7 tillion in 2014, up 4.75% from 2013; Total wealth in Saudi Arabia and UAE grew by 5%; Global household wealth up 8.3% to US$263 trillion, driven by the US and Europe, according to Credit Suisse Research Institute.
date:Posted: October 29, 2014
UAE. Significant increase in inflows of private capital into UAE in 2014; UAE seen as hub between Africa and Asia; Political stability remains a major factor driving flows; UAE clear winner in the region, as other GCC countries see net outflows of private capital.
date:Posted: October 28, 2014
INTERNATIONAL. Foreign policy is what a president wishes would happen; foreign affairs are what actually happen; the problem that Obama has, which has crippled his foreign policy, is that his principles have not been defined with enough rigor to provide definitive guidance in a crisis.
UAE. Total wealth in the GCC stood at US$ 1.7 tillion in 2014, up 4.75% from 2013; Total wealth in Saudi Arabia and UAE grew by 5%; Global household wealth up 8.3% to US$263 trillion, driven by the US and Europe, according to Credit Suisse Research Institute.
dhgate