Marc Faber’s Latest Take On The Gold Price (GLD, SLV, TLT, TBT, GDX, IAU)
Dominique de Kevelioc de Bailleul: After gold‘s (NYSEARCA:GLD) nearly $150 rebound from its December low, Marc Faber continues to believe that gold is not done with its correction, but he recommends the precious metal during an environment of negative real yields on U.S. Treasuries engineered by a Bernanke Fed.
Speaking with Fox Business on Jan. 17, the publisher of the Gloom Boom Doom Report suggests that, in response to record-low interest rates, investors should accumulate a “little bit” of gold each month instead of trying to pick a bottom in the gold price and going all in. Get my next ALERT 100% FREE
For approximately a decade, Faber has liked assets, which have historically benefited from widening U.S. current account deficits and central bank money printing, especially following 9-11. For most investors, today, that means holding stocks and precious metals.
“Well, I think that eventually you want to be positioned more in equities than in government bonds, and you want to own some precious metals as well,” Faber said as a response by investors to future inflationary pressures he expects as a result of rapid money supply expansion and continued $1+ trillion U.S. budget deficits.
Taking the opposing position of those held by 40-year veteran Jim Sinclair of JSMineset.com, currency specialist Jim Rickards, and another veteran gold analyst GoldMoney’s James Turk (who believe the lows in gold had been reached in early January), Faber apparently still harbors the notion that gold could drop to as low as the $1,100 to $1,200 range before beginning its next move to all-time highs.
“Well, I like it [gold], yes, but I think the correction is not over yet,” he said. “I think, we had a big correction from the peak September 6 when gold hit $1,921. We went down to around $1,522 at the end of December. Now we’ve rebounded above $1,600. I think we can have another leg down.”
In September 2011, Faber told CNBC, ““We’re now close to bottoming at $1,500, and if that doesn’t hold it could bottom to between $1,100-1,200.” So, Faber remains unconvinced that the gold price has bottomed. See BER article, Marc Faber Releases Gloom Boom Doom Report.
In countless previous interviews, Faber has said he would never sell his gold due to its special historically based role as insurance against profligate government spending, expansionary central bank monetary policy or financial disaster.
“If I were an investor or a saver I would buy every month, a little bit, and not everything at the same time, because what you want to essentially have is an insurance policy,” Faber suggested.
As no surprise to those already familiar with Faber’s thinking, he has recommended that investors stay far away from U.S. Treasury debt, a viewpoint also held by another popular investment guru, Jim Rogers of Rogers Holdings—who, by the way, is short U.S. bonds.
Faber has said repeatedly that at some point bonds will fall and interest rates will rise, but he doesn’t know when that will happen.
“It’s very difficult to tell when the central banks are manipulating and keeping interest rates artificially low,” he said.
Though not asked during this interview, Faber routinely gives a similar response to journalists who ask him how high gold can go before the gold bull market comes to an end. His pat response is usually, “I don’t know; you’ll have to ask Mr. Bernanke.”
Related: SPDR Gold Trust (NYSEARCA:GLD), iShares Silver Trust (NYSEARCA:SLV), Market Vectors Gold Miners ETF (NYSEARCA:GDX), iShares Gold ETF (NYSEARCA:IAU), iShares Barclays 20+ Year Treas Bond ETF (NYSEARCA:TLT), ProShares UltraShort 20+ Year Treasury ETF (NYSEARCA:TBT).
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