World Economy Setting Itself Up for a Bigger Bust, Says Marc Faber
by Ryan Huang
Recently by Marc Faber: The Frame of Mind of American Economic Policymakers
Marc Faber — the man commonly referred to as Dr Doom by the investment community — said that the real financial crisis has yet to come for the global economy.
Speaking at a conference in Singapore on Wednesday, he said there will be another big bust stemming from credit expansion.
Mr Faber, author of the Gloom, Boom & Doom Report and famed for his bearish and contrarian views, is bullish about commodities and gold.
Mr Faber said: "The crisis has not solved anything. On the contrary there is less transparency today than there was before. The government's balance sheet is expanding, and the abuses that have led to the one cause of the crisis have continued.
"I think eventually there will be a big bust and then the whole credit expansion will come to an end. But before that happens, they will print money, and they will grow into very high inflation rate, and the economy will not respond.
"The average family will be hurt by that, and then in order to distract the attention of the people, the governments will go to war. People ask me against whom? Well, they will invent an enemy."
Despite the gloom, Dr Faber is upbeat about commodities in the long term because of competition for natural resources.
"At some stage, somewhere in future, we will have a war — that you have to be prepared for. And during war times, commodities go up strongly, said Mr Faber.
"If you want to hedge against war, you don't want to own derivatives in UBS and AIG, but you have to own them physically, like farmland and agricultural commodities. That is something to consider for you as a personal safety and hedge. You have to own some commodities," he added.
Analysts generally agreed that gold is an attractive asset class for investments.
Daryl Guppy, CEO, Guppytraders.com said: "The strength of gold is in direct relation to weakness in US dollar. The weakness in US dollar is likely to continue. You see the dollar index heading down towards to 71 US cents is not a support level. It could in fact fall lower than that.
November 19, 2009
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