Marc Faber Interview: The Gold Price Outlook

BullionVault
May. 09, 2012

2 May 2012 - BORN AND EDUCATED in Switzerland, Marc Faber's distinct voice is a common sound on CNBC and Bloomberg TV when it comes to big-picture forecasting in investments. The contrarian views of his "Gloom, Boom & Doom Report" often garner headlines, but Faber does go along with the crowd when it comes to pointing out the dangers of rising government debt and unabated monetary intervention.

Hard Assets Investor caught up with Faber at his Hong Kong residence and spoke to him about gold, the Treasury market, which countries should be out of the Eurozone and what an ideal portfolio allocation looks like.

Hard Assets Investor: At Inside Commodities last December in New York City, you presented a line chart that compared Gold Prices to US federal debt and showed the parallel trajectory lines of both. With debt increasing every day, your charts say gold will keep increasing, right?

Marc Faber: People say the price of gold is in a bubble stage and it is up substantially from the lows in 1999, which was, at the time, around $252 per ounce. But at the same time, we had an explosion of debt, not just government debt, but private sector debt, and an explosion of unfunded liabilities such as in the pension fund industry, and not just with Medicare, Social Security and Medicaid.

So now, 12 years after gold's low, we are essentially in a situation where maybe the price of gold should be much higher because the economic and financial conditions are worse than they were 12 years ago. I go to lots of conferences and I usually ask the audience, "How many of you own gold?" Normally, hardly anyone owns it. I've been to conferences with thousands of people attending, and nobody owned any physical gold.

I doubt we are in a bubble stage. When you went to an investment conference in 1989, everybody owned Japanese stocks. And in 2000, everybody owned tech stocks. That is the bubble, when the majority of market participants own an asset. I think there are more people that own Apple stock than gold.

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