“His [Marc Faber’s] thesis is simple. As the Fed reneges on its traditional duty of domestic price stability, Faber reckons the US central bank is becoming ever more a standard bearer for Wall Street and for key indices such as the Dow and the S&P500.
If they ever look like falling, the Fed will simply accelerate the operations of the printing presses. When too much money is chasing too few assets, prices rise. However, in real terms, there is little point in buying US assets, points out Faber, who estimates that in Euro terms US growth has been anaemic, if not negative, since the late 1990s. “Investors have to look for assets which cannot multiply as fast as the pace at which the Fed prints money,” he says.
Consequently, gold is a great bet, along with other precious metals. Faber recommends actually holding physical gold in gold-friendly countries such as Hong Kong, India and Switzerland. He counsels against holding gold in the US for fear that it might be nationalised by the government. He is still bullish on other commodities in the face of global shortages and booming Asian economies. He’s also bullish, as it were, on war. “Rising commodity prices often trigger wars – which in turn cause commodity prices to go ballistic.”
One thing seemed to be clear from Faber’s speech. If things continue along the current trajectory, the argument that Western financial and information technology expertise is a substitute for Asian R&D, a high savings rate and engineering expertise will have been comprehensively discredited….”
My Comment:
Faber is a leading financial guru, but I would say this is advice for people who know what they are doing…
You can lose money trading in and out of gold even in a gold bull market if you don’t.
It’s also worth noting that many people (and I take their side) think gold will go down before it goes up and that over the next year, if (and this is a big if, of course), the Fed does not embark on a reckless rate cutting course, gold will probably go down as a commodity in a general deflation, before eventually rising as big-time inflation sets in. But that’s simply one estimate.
Jim Rogers elsewhere suggests selling dollars and bonds immediately and getting into agricultural commodities (except wheat), Chinese renminbi and even Japanese yen. Again, I don’t know what time- frame is meant in that advice.
The long and short of it is that the government is fleecing middle- class (and lower middle-class) savers to service the improvident rich.
That is the official hall mark of a third-world country (and I should know, shouldn’t I?).
Of course, the average broker, banker, and stock tout will tell you differently. But ask yourself, who do you think knows better? The world’s leading investment experts or salesmen in the financial industry, who probably haven’t paid off their homes yet and may be writhing under as much debt as the poorest sub-prime holder?