The Dollar Has Nowhere To Go

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Gold Will Stay Above $1,000 an Ounce Forever, Says Swiss Dr. Doom

by Dan Burrows

Recently by Marc Faber: The Frame of Mind of American Economic Policymakers

Leave it to Switzerland’s version of Dr. Doom to make the latest apocalyptic pronouncement on the future of the U.S. dollar — and the outlook for gold prices.

Marc Faber, investment advisor and fund manager to the uber-wealthy, says gold will forever stay above $1,000 an ounce. If you’re unfamiliar with Faber’s pitch-black outlook for the future of the Western economies and the developed world in general, well, he’s probably best known as the author of the Gloom, Boom & Doom Report.

Enough said.

"We will not see less than the $1,000 level again," Faber said at a conference in London, Bloomberg reported Thursday. "Central banks are all the same. They are printers. Gold is maybe cheaper today than in 2001, given the interest rates. You have to own physical gold."

Also bolstering gold prices will be the Beast of the East, according to Faber. "China’s demand for commodities [including gold] will go up and up and up," Faber said, Bloomberg reported.

With the yellow metal now trading at nominal record highs of more than $1,100 an ounce, gold bugs have been laughing all the way to Fort Knox. Gold is up about 27% on the year and about 50% in the last 52-weeks.

(The ductile metal would still need to more than double to reach a true all-time high because of a little thing called, ahem, inflation. Why we talk about an inflation hedge without adjusting for inflation is a mystery.)

It’s All About the Benjamins

So why has gold been such a sterling investment? (Silver has done even better, by the way.) Because gold is the classic hedge against global inflation (central banks are printing gazillions of dollars as part of their stimulus programs, making fears of future inflation run rampant). More important, gold is denominated in dollars. Any time something is denominated in greenbacks — like gold or oil — its price goes up as the buck falls.

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Dr. Marc Faber [send him mail] lives in Chiangmai, Thailand and is the author of Tomorrow’s Gold.

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