Gold Is Very Cheap in Comparison to the Money and Credit That Has
Been Created, Says Marc Faber
Business Intelligence Middle East
the Swiss fund manager and Gloom Boom & Doom editor says
it is a big error to print money because it rarely flows into the
assets central banks aim to boost. He says more people have already
sold their gold than have increased their positions and he doesnt
think gold is in a bubble.
Mexico City to Matt Miller and Carol Massar on Bloomberg
Television's "Street Smart" on Wednesday ahead of a speech
titled "When everything else fails, policy makers can always
be sure of immortality by making spectacular errors" Faber
said: "A big error is to print money. I think it doesn't help
in the long run. It can give a temporary boost to economic activity
but it doesn't lead to sustained economic growth."
it creates a mispricing of assets and goods & services and has
negative implications on the pricing mechanism," he added
is the easy part of it, knowing where it will flow to is trickier
he noted, adding that money printing in the US hasn't flown into
the assets the Federal Reserve wants to boost, namely housing. Instead
it created other bubbles overseas and in commodities.
Does he expect
there will be QE3, but not right away", Faber said, suggesting
the Fed would like to see a correction of up to 20% in equities
and then" to have an excuse for QE3".
is there will be QE3, QE4, QE5, QE6......until QE26, until the whole
system breaks down," he said
turned bearish shortly before the 2007-2009 bear market, says QE2
is fully discounted in the markets. He expects some seasonal strength
in April, perhaps a new high, but then we will have a more "significant
setback in May, June".
be the impact of the Fed stopping QE2 today on the market?
will go down, however "the market is designed to go up and
down. That is the purpose of having a market economy," he said.
He went on
noting that the marginal impact of printing money diminishes, "so
every times you need to print more money to push the markets higher".
the US economy is already out of control and he sees a need for
every interest group in the US to make sacrifices.
In the latest
edition of the Gloom Boom & Doom report he writes: A
level-headed, knowledgeable, and intelligent American friend of
mine (she has been buying gold for years) recently observed that,
Only when the American people insist that sound business practices
and moral standards be brought back will we be able to give the
people of this country a future. Unfortunately, I believe
that the ongoing moral decay among US politicians and the business
elite, the irresponsible fiscal and monetary policies, the decline
in educational standards and infrastructure, the trade and current
account deficit, the weak US dollar, and the heavy- handed and ambiguous
meddling in foreign affairs by US officials, are all pieces in a
puzzle, which when assembled reads: Failed State.
he suggest investors put their money at this point?
terms, Faber recommends real estate, equities, commodities and precious
should have at least 25%-30% in precious metals," he suggested
as he doesn't think the Fed will increase rates to a positive real
warned precious metals could correct but remain poised to go much
higher in the long run and suggested buying the dips.
the rest of the article
Marc Faber [send him
mail] lives in Chiangmai, Thailand and is the author of Tomorrow's
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Intelligence Middle East
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