mick silver
14th April 2010, 10:24 AM
http://www.bi-me.com/main.php?id=45873&t=1&c=62&cg=4&mset= ... INTERNATIONAL. Marc Faber, the Swiss fund manager and Gloom Boom & Doom editor, warns that when the next crisis hits, 'you'd see people flee from all paper currencies into precious metals'.
Speaking in an exclusive two-part interview with The Daily Crux, Faber said: "When the percentage of interest payments to tax revenue gets too high, it will become clear to everyone that the government will need to print money in earnest to make these payments. That's when you're likely to see a crisis of confidence in the dollar".
"The question is will there be a crisis of confidence in all paper monies and what will the reaction of investors be? I would imagine that when the crisis really emerges, you'd see people flee from all paper currencies into precious metals," Faber added.
Does he think gold will fall anytime soon below US$1,000, or even US$900?
Faber wouldn't rule out a move to the US$950-US$1,000 level, where gold broke out last year.
"My sense is that if gold went lower than US$1,050, the Chinese would come in and buy some. I think they're waiting for lower prices".
"But honestly, I'm telling everybody in the world the same thing. I own my gold and I will never sell it, especially when I see clowns like Ben Bernanke, Larry Summers, Tim Geithner...
When I'm looking at all these characters in government, I want to own physical gold."
"We're just coming out of a seasonal period where gold is often weak, and heading into a period of seasonal strength, so it's possible gold may start outperforming here," Faber said.
Explaining how investors often miss on long term bullish trends by timing the market, Faber said:" As prices rise in a bull market, investors often try to be clever, and will sell thinking they'll buy the asset back when it drops back down a bit. Of course, many times they never get the chance to do that, and end up missing a large portion of the rise."
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."
“I think interest rates forever in the US will be at zero. By zero I mean below the rate of inflation," Faber told CNBC.
In a recent interview with a German website Faber said it is impossible for the American government to fulfill its obligations because the current deficit is already US$1.6 trillion this year.
The total US debt is already 375% of the GDP, excluding medicaid medicare and social security. If you include these, the national debt is at 600% of the GDP, he said.
The legendary investor reiterared his belief that eventually there will be a big bust and then the whole credit expansion will come to an end. But before that happens, governments will continue printing money which in time will lead to Zimbabwe-style hyperinflation, and the economy will stop responding to stimulus.
Speaking in an exclusive two-part interview with The Daily Crux, Faber said: "When the percentage of interest payments to tax revenue gets too high, it will become clear to everyone that the government will need to print money in earnest to make these payments. That's when you're likely to see a crisis of confidence in the dollar".
"The question is will there be a crisis of confidence in all paper monies and what will the reaction of investors be? I would imagine that when the crisis really emerges, you'd see people flee from all paper currencies into precious metals," Faber added.
Does he think gold will fall anytime soon below US$1,000, or even US$900?
Faber wouldn't rule out a move to the US$950-US$1,000 level, where gold broke out last year.
"My sense is that if gold went lower than US$1,050, the Chinese would come in and buy some. I think they're waiting for lower prices".
"But honestly, I'm telling everybody in the world the same thing. I own my gold and I will never sell it, especially when I see clowns like Ben Bernanke, Larry Summers, Tim Geithner...
When I'm looking at all these characters in government, I want to own physical gold."
"We're just coming out of a seasonal period where gold is often weak, and heading into a period of seasonal strength, so it's possible gold may start outperforming here," Faber said.
Explaining how investors often miss on long term bullish trends by timing the market, Faber said:" As prices rise in a bull market, investors often try to be clever, and will sell thinking they'll buy the asset back when it drops back down a bit. Of course, many times they never get the chance to do that, and end up missing a large portion of the rise."
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."
“I think interest rates forever in the US will be at zero. By zero I mean below the rate of inflation," Faber told CNBC.
In a recent interview with a German website Faber said it is impossible for the American government to fulfill its obligations because the current deficit is already US$1.6 trillion this year.
The total US debt is already 375% of the GDP, excluding medicaid medicare and social security. If you include these, the national debt is at 600% of the GDP, he said.
The legendary investor reiterared his belief that eventually there will be a big bust and then the whole credit expansion will come to an end. But before that happens, governments will continue printing money which in time will lead to Zimbabwe-style hyperinflation, and the economy will stop responding to stimulus.