We Already Have a New Gold Standard, says Marc Faber
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Marc Faber, the Swiss fund manager and Gloom Boom & Doom editor, said the markets have created their own gold standard because of uncertainties regarding other asset classes.
Speaking to ‘CNBC Squawk Box Europe’ Thursday, Faber said: "I think 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.
Faber 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," he said.
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."
“I think interest rates forever in the US will be at zero. By zero I mean below the rate of inflation," Faber told CNBC.
The same pattern occurred after the 2001 recovery. The fed fund rates went from 1% in June 2004 to 5.25% in August 2006 but there was never any monetary tightening
"It will result in a lot of inflation but inflation has a lot of different symptoms."
The financial sector, especially firms that know how to move money quickly between various asset classes, stand to gain from the increasing volatility, Faber said.
Discussing US Treasurys, Faber said an extreme bubble has been deflated for the moment and yields are likely to rise sharply over the next years.
"I still think that Treasurys are overpriced," Faber said told CNBC.com.