Marc Faber warns of expropriation if gold prices explode
Source: BI-ME , Author: BI-ME staff
Posted: Sat April 24, 2010 11:23 pm

INTERNATIONAL. Marc Faber, the Swiss fund manager and Gloom Boom & Doom editor said the rising price of gold is far from over because paper money will continue to lose value.

Speaking in an exclusive interview with Kitco News, Faber told John Dourekas that "paper money has already lost a lot of value and in my view it will continue to lose value".

“If you have US$100 today, you buy that much less in terms of a basket of goods and services then you did ten years ago. The price of gold will adjust on the upside according to the loss of the purchasing power of money,” Faber said.    

Faber said that he continues to buy the yellow metal, “If someone is rich they should buy a ton every month.“

“At zero percent interest, I don’t see why someone would not have part of their money in gold and silver,”  he told Kitco News.

In one of his most memorable 'rants' Faber warned if gold prices substantially rise one day, there could be expropriation.

“The Americans could force the Europeans to do the same – once they have all the gold in the world they would re-value it at US$10,000 an ounce," he said.

Overall, Faber has little hope for financial reform in the US. “The US should have less regulation and not more regulation – that is the origin and cause of the crisis,” he said.

Speaking to CNBC Thursday, Faber went further, saying that "the governments are taking over".

"They will all bankrupt us and expropriate us, but it may not happen tomorrow. They'll give us something to play with, until the whole system breaks down...they'll just print money and print more money," he said.

"What I object to the current government intervention in so-called 'solving the crisis', (is that) they haven't solved anything. They've just postponed it."

"If you print money like in Zimbabwe... the purchasing power of money goes down, and the standards of living go down, and eventually, you have a civil war," he added.

Speaking to 'CNBC Squawk Box Europe' last month, Faber said "we already have now a gold standard created by the market place."

"We have the exchange traded funds that have proliferated and we have more and more physical buying of gold," he added.

The famed investor pointed out that between 2001 and 2008, gold outperformed bonds and stocks, but starting with 2009 stocks outperformed. "This means investors must own gold because generally retail investors cannot move in and out of different assets like institutional investors".

Investors should avoid bonds and cash over the next 10 years and choose stocks instead, he said, but warned that printing money will lead to an economic collapse in the end.

"Before we have the final collapse that will be a deflationary collapse, we will have more and more money printing."

As gold's supply can't be increased at the same rate as you can print money, Faber recommends everybody should buy some gold every month "forever".

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MIDDLE EAST BUSINESS COMMENT & ANALYSIS

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