Monday, September 19, 2011

Marc Faber: Invest in Gold, but Outside the US - My Loans Consolidated

In an interview with CNBC, Faber suggested that investors hold physical gold in their safe deposit box but preferably outside the United States. For over 20 days gold price rallied to its all-time high in the $1900 per ounce level. However, just days before the $200 dollar gold price correction last week, Marc Faber predicted the correction on CNBC. Below is the interview:

Americans are now waking up that the gold ETF is now bigger than the Spider ETF which mimics the S&P 500. However, Marc Faber does not think that buying gold today would be the right thing to do. Prices of precious metal has recently been in a run and he thinks that the price of precious metal should consolidate anytime or shake out the weak holders now. The market is currently experiencing a correction in gold price. However Faber believes that everybody should have some physical gold if he wants to own some cash as gold is the most honest form of cash that people can own.

When asked by CNBC what he means by physical gold and if gold ETF is ownership in physical gold, Faber answered, “It’s a claim on physical gold. But I prefer these investors hold physical gold in a safe deposit box ideally outside the US in various locations, Switzerland, Singapore, Hong Kong, Australia, Canada.”

When asked why should it be outside the United States, Faber explained, “I think it’s important today to diversify not only the various asset classes, in other words equities, bonds, gold, cash, real estate, commodities… but also the custody of your assets should be in different jurisdictions.”

Faber was asked if he thought we were in a recession right now and his answer was, “I think we never really came out of the last recession in many different sectors of the economy, although in some sectors we came out. And when you look at the world, the emerging market has continued to grow throughout the period from 2008 up to today. There is a slow down occuring in emerging economies but in the western world there is hardly any growth.”

Among other things, Faber mentions the bank of Asia. “Banks in Asia are reasonably sound,” he said, “because they never went and invested in all kinds of Greek bonds, and Portugese bonds and so on and so on.” He would not, however, buy them today as they would move lower along with the global market, but in general, he would eventually look at financial stocks, he would look at banks in emerging economies, in India, in Thailand, but possibly at some point in China.

Below is the whole interview of Marc Faber on CNBC: