Friday, December 30, 2011

Marc Faber Bearish

"I am convinced the whole derivatives market will cease to exit. Will become zero. And when it happens I don't know: you can postpone the problems with monetary measures for a long time but you can't solve them... Greece should have defaulted - it would have sent a message that not all derivatives are equal because it depends on the counterparty."

 And on the long-term future: "I am ultra bearish. I think most people will be lucky if they still have 50% of their money in 5 years time. You have to have diversification - some real estate in the countryside, some gold and some equities because if you think it through, say Germany 1900 to today, we had WWI, we had hyperinflation, WWII, cash holders and bondholders they lost everything 3 times, but if you owned equities you'd be ok. In equities in general you will not lose it all, it may not be a good investment, unless you put it all in one company and it goes bankrupt." As for gold: "I am worried that one day the government will take it away." As for the one thing he hates the most? No surprise here -government bonds.

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.

Friday, December 23, 2011

How to Invest $1000 Safely -

One of the best tips a novice investor can get is probably to simply expect moderate returns and to be happy with a lack of volatility. For those investors with a great deal of money to burn, perhaps riskier investments might make sense, but if $1,000 represents a significant chunk of the savings for you or your family, the tortoise approach to investing is probably the wisest course of action.
Starry-eyed dreams of massive returns is precisely what drove investors into the arms of Bernie Madoff or led them to think the subprime mortgage market was the way to go. So, for the investor interested in steady, slow, but most importantly safe returns, here are some simple, very broad, very general pointers that can help get you started.
Italian Treasury Bonds and Highly Leveraged Hedge Funds
Just kidding. Wanted to make sure you were paying attention. These would fall into the opposite category of high risk/high reward. If you have $1,000 you can afford to lose, maybe it’s worth doing some research, playing a hunch, and seeing if you can make money where MF Global’s (MFGLQ.PK) Jon Corzine failed. However, more likely than not, you don’t have the time, knowledge, money, or access to information that the people who play these markets professionally have, so it’s probably not worth it in the long run.
Mutual Funds
Ah, here’s something simple. Mutual funds are investment vehicles specifically designed for the consumer. In essence, mutual funds pool the funds of many different investors to buy a portfolio of equities, bonds, and money market instruments. Most mutual funds are typically geared toward being very low risk, providing the average small-time investor an avenue to invest his savings that will garner a better rate of return than a savings account while having lower risk for collapse. Because of the pooled money, mutual funds can feature a diversified portfolio that would be difficult to assemble for any individual investor. Picking a mutual fund can be tricky, but most funds have ample data on their historical performance.
Think of a mutual fund like long-term parking for your car at the airport. It isn’t necessarily the most economical place to park your car, but you can feel confident that your car won’t get broken into. If you’re primarily concerned about your car being where you left it when you get back, long-term parking is the way to go, and mutual funds are a relatively safe place to park your car…er, savings.
Exchange-traded funds are very similar to mutual funds in that they’re a collection of assets pooled together to provide a chance for an investor with limited funds to diversify his portfolio. Investing in any individual stock means taking a chance on a specific company, which can be risky. Just ask anyone who put money into Netflix (NFLX) last year. However, ETFs are a portfolio of investments designed to mimic the performance of a particular index or sector. This allows an investor to make fairly broad, fairly general bets about the economy without having to do the meticulous research required to find specific companies to invest in and also mitigates the risks of investing in individual stocks.
There are a dizzying array of ETFs available, including those that speculate on commodities futures, currencies, and specific sectors and subsectors (have a particularly strong feeling about the future of companies specializing in wind power? Well the First Trust ISE Global Wind Energy Index Fund (FAN) and the PowerShares Global Wind Energy Portfolio (PWND) are both specific to the segment!), but the casual investor should most likely avoid these specific ETFs.
Broad, index-based ETFs like the SPDR S&P 500 ETF (SPY) are fairly safe bets over a long enough period of time. The S&P 500 Index has returned 13.5% annually over the past 50 years against 11.8% for the average mutual fund. Of course, this is no guarantee. Anyone who thinks that 50 straight years of growth means that there’s no chance that things can change should ask anyone who was heavily invested in home prices continuing to increase in 2007. However, betting on the S&P continuing to increase at a similar rate over a long enough period of time is still a reasonable bet.
Blue Chips With Strong Dividends
Once again, investing in specific stocks presents an extra level of risk that isn’t as present in ETFs or mutual funds. Namely, you’ve pinned your hopes on one company rather than dozens, and who knows what might happen. However, there are certain massive corporations that have reached a point of relative inertia that makes it hard to see them completely collapsing. While they probably won’t offer big upward moves in share value either, they are safer than companies with smaller market capitalization (a number reached by multiplying the total number of outstanding shares by the price per share) and offer a major benefit: Dividends.
Dividends are how major companies with little room left to grow bolster their share price, essentially paying cash back to shareholders when big enough profits are turned. These companies are typically in industries with a set demand for their product and a history of performance, like food makers or telecommunications companies.
Dividends are typically expressed as a “yield,” which is essentially what percentage of your investment will be paid back in the form of a dividend over the course of the year (dividends are paid in four quarterly installments). Any dividend yield of over 5% is a strong return on investment, and this can further be bolstered by rising share prices over time. What’s more, dividends can also allow an investor to continue making money even if the share price drops. Dividends aren’t certain; companies can and do change them, but they can offer a path to increasing returns on a longer-term investment horizon for anyone willing to take on a little more risk.
No investment is completely safe, and even the lowest risk bets can ultimately prove a mistake. But any investor willing to forgo dreams of miracle stock-picking and crushing the market can find a number of simple, relatively safe investment vehicles that, with patience, can offer solid returns.
This article was written by Joel Anderson.
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Perma-Bear Marc Faber: U.S. Equities Not Terribly Expensive - Wall St.Cheat Sheet

Marc Faber, publisher of the Gloom, Boom & Doom Report spoke to Bloomberg TV and said that U.S. equities are not “terribly expensive” and that he thinks the euro will survive.

Faber on his latest report:

“It’s actually quite gloomy but if you’re very gloomy what do you invest in: Treasuries, Italian bonds or commodities or equities?  I happen to think U.S. equities are not terribly expensive, so relatively speaking to other assets, they may for a while actually do quite well.”

On the market now:

“Right now, the market is in neutral territory. It was very oversold on October 4th when the S&P dropped to 1,074. Now around 1260, the upside in my opinion will be between 1,280 and 1,350 because there’s a lot of supply around that area. But if there is some good news coming out of Europe, and good news would simply mean postponing the problems for another few years with some kind of money printing operation, either by that ECB or IMF or EFSF, [that] lift stock prices higher.”

“[Postponing problems] is not good news, but it is better news than if the whole eurozone falls apart. It gives some time to maybe find better solutions. I doubt they will be found, but with money printing you can hide a lot of things and you can postpone problems as we have seen in the U.S.”

On the outlook for the euro:

“I think the euro will survive, the question is in what form. It may survive without the weaker countries or it could survive theoretically just as a currency aside from local currencies. You would have in France and Italy and Spain and Greece, local currencies and…the dollar. So, I could travel anywhere in Europe and still pay in euros.”

On whether he’d rather own euros or dollars:

“I have a very special stock tip for you. The symbol is g-o-l-d (NYSEARCA:GLD). That is what I prefer to hold. Both the euro and the dollar are long-term undesirable currencies, especially given zero interest rates in the U.S. Equities to some extent become like cash because they become a store of value compared to cash at a zero interest-rates. Paintings become a store of value, stamps become a store of value.”

On emerging markets:

“There is close correlation between all markets in the world. This year, the U.S. has grossly outperformed the emerging markets   In Asia, we’re down between 15% and 25% in markets. In Eastern Europe, even more. The U.S. this year is a wonderful market relative to the rest of the world. ”

“I think this outperformance may go on for a while. Some emerging markets could rebound more strongly than the U.S. because they are more oversold. Like India, the currency is down 18% since July and the market is down 22%.  Currency adjusted, the market has been extremely weak and is oversold. It could rebound somewhat here, but forget about new highs. It’s not going to happen anytime soon.”

On China:

“The reason I’m not very keen on China at the present time [is because] we had a credit bubble, we still have artificially low interest rates and a huge fiscal deficit in orders words artificial stimulus. That’s coming to an end. Yes, the government can further stimulate and slash interest-rates again and reduce reserve requirements, but it will just postpone the problem and aggravate the problem in my opinion.”

“When you have an economy like China that becomes so big so quickly, you can have a more meaningful setback. If the U.S. economy grows at 3% or contracts that 3%, it has no impact on the price of copper to speak of….In the case of China, whether the economy grows at 10% or 5% as a huge impact on the demand for iron ore and copper and aluminum, steel and coal. The Chinese economy today has a much larger impact on the rest of the world than is generally perceived economically speaking.”

Thursday, December 22, 2011

Faber: Dissolve European Union to Ignite Growth -

Economist Marc Faber, publisher of The Gloom, Boom and Doom report. says the European Union should be dissolved to facilitate growth.
"Unless there's an authority that can really punish (rule breakers) it's not going to work," Faber told Fox Business Network. "I think the best thing to do is dissolve the EU. Let the markets sort this out. Let the countries default."

"It's going to be painful, very painful," says Faber. "But rather than to intervene into something that is not going to work in the long run … (intervention) is the wrong medicine." Mentalities in Greece, Portugal and Spain are totally different from that found in Germany, Faber observes, making forging and carrying out agreements difficult.
Moreover, Faber says that if the euro becomes history, countries can always trade in dollars. "In most countries now, the euro is actually a better currency than the U.S. dollar, but you could have dual currencies."

For example, Faber says that Greece could conduct transactions in drachma and euros or dollars. "The same is true in Latin America." says Faber. "I pay in dollars, I never exchange any money."

Faber points out that the U.S. has intervened in the free market since the savings and loan crisis, and "each time the crisis grew larger and larger and larger."

"I think that's a big problem."

The Washington Post reports that Sean Callow, a senior currency strategist at Westpac Banking, says the euro may reach $1.27 in the first quarter of 2012.

Jim Rogers vs Marc Faber: Faber Cautious On China; Rogers Bullish OnAll ... - ETF Daily News

The dog fight between Thailand’s Marc Faber and Singapore’s Jim Rogers is on. The point of contention is:  Which way will commodities prices go now that China’s (NYSEARCA:FXI) bubble economy appears to be headed for some sort of economic slowdown, contraction or crash?  “Well if we define a bubble as a period of excessive growth and artificially low interest rates, then China had a huge bubble,” Faber told King  World News on Wednesday, reiterating his previous calls for a China economic hard landing.  “Usually bubbles are not deflated by a soft landing, but by a hard landing and this concerns me, actually, much more than the European  situation.”

If China’s rapid growth slows “meaningfully” or crashes, “it will have a huge impact on the demand from China for raw materials, for commodities,” according to Faber, which “will impact Australia, Africa, the Middle-East and Latin America” and could create a “vicious spiral on the downside” to one of the  only few outperforming sectors of the world economy—commodities.

The pony-tailed Swiss money manager and 20-year+ resident of Thailand isn’t alone with his grim outlook for China and commodities prices.  Echoing concerns about the implications to commodities prices from a possible China crackup have been expressed by Eclectica Asset Management’s CIO Hugh Hendry and  Kynikos Associate’s President and Founder Jim Chanos, two additional and respected minds on the subject of China.

Hendry, who attended a December 2010 investor conference in Russia, which incidentally was chaired by Faber, said, “There should be a Confucius saying ‘Thou shall not invest in overcapacity.’”  Hendry went on to emphasis that he’s suspicious of China’s growth rate after factoring out it’s behemoth ‘manufactured’ capital spending component, a component which can be directly tied to Beijing’s centrally planned projects.

Chanos agrees with Faber and the fears of a hard landing to the Chinese economy.  Chanos told Bloomberg on two recent occasions, on Oct.  28 and Nov.  24, the real estate bubble has popped and the banking crisis that is most likely to result from drop in real estate prices may rival the financial crisis in the West.

“The Chinese are beginning to realize that property prices can go down as  well as up and this is going to be a very, very troubling development for the Chinese property market,” he said, and will lead to a “hard landing” in  China.

“Most China observers were not talking about any landing three months ago and  now they are confidently talking about a soft landing,” he added.

Pundits to the Chinese hard landing scenario, including Jim Rogers of Rogers Holdings, in particular, took a swipe at Faber on Friday in an email to CNBC regarding Faber’s take on commodities as an investment.

“Marc still does not understand China,” stated Rogers. “There are going to be several hard landings in the next few years, but China’s will be less hard overall than others such as Greece, U.S., et al,” and added that he believes China’s economy will undergo some busts in some sectors but will be offset by booms in other sectors.

According to Bloomberg, Rogers continued his email with references to two great bull markets of the recent past, one in stocks from 1983 to 1999 and the other bull market in gold from 1971 to 1980, that underwent steep consolidations such as the one commodities have been going through today before resuming their climbs.

After stocks took a drubbing during the 1987 crash, the bull market in equities continued for another 12 years, returning approximately 725 percent from the lows of the crash.

Rogers also cited the super bull market for gold (NYSEARCA:GLD), which crashed in price by 50 percent in 1974 following a six-fold move in the  price of the yellow metal to $200 from its pegged price of $35 per the ounce in  1971.  After reaching as low as nearly $100 following the crash, the gold price continued its bull market with a 750 percent gain during that six-year  period.

“Corrections are the normal way of all markets,” stated Rogers, and remains bullish in all commodities, especially silver (NYSEARCA:SLV) and rice in the shorter term.

Roger’s thesis on the outlook for China, with its enormous appetite for commodities during this decade and expectation to continue for at least another decade, has a strong advocate in Steven Leeb, a researcher and author of several  financial books on the subject of bull markets, whose new book, Red Alert:  How China’s Growing Prosperity Threatens the American Way of Life
discusses  this very issue.
When asked about Chanos’ point (adopted by Faber), specifically, about China and his expectations for weak commodities prices and a possible end to the bull market in ‘things’, Leeb told Financial  Sense Newshour’s James Puplava that China’s overcapacity is quite intentional and part of a much bigger plan being implemented by Beijing’s  hierarchy, a plan that includes building out capacity now in anticipation of the global demand for alternative energy products it sees later in the decade.

China intends to dominate the world in the production of alternative energy technologies and products, according to Leeb, adding that China has been “eating  our [America's] lunch” in the competition to gain control of the  world’s mega-trillion dollar market—clean energy products, specifically products  which utilize the sun and wind.

And according to Leeb, the amount of raw materials China will need to roll out its alternative energy industry will be simply “enormous.”

“It’s the height of arrogance for Americans to look at China and say they’re  doing things wrong,” said Leeb, referring to conclusions drawn about the Chinese economy by Chanos’, directly.

“There’s no doubt there was a real estate bubble there, but they’ve gained  control of it.  People tend to view China . . . through the same lens as  they do America; they do it through this kind of monetary lens, through this money lens,” Leeb explained.  “China’s not like that . . . they don’t think  in terms of minute to minute trading bonds day to day.  They think in terms of 10 to 20 year increments.”

Leeb gives an example of China’s impact upon the solar industry, citing the demise of one of America’s darling solar stocks, Evergreen Solar (ESLRQ.PK) as a prime example of what happens to companies which stand in the way of Beijing’s  plans to dominate the alternative energy market.

“This [Evergreen Solar] was the bellwether solar company, no fraud, no  nothing,” Leeb said.  “A few years ago the stock traded at $120, now it’s trading at 3 cents.  And it’s trading at 3 cents because the Chinese have underbid, they’ve under-priced.

“No one can stay in business.  These companies are not competing against other companies; they’re competing against a country that has over $3 trillion in reserves.  They are competing directly against China.”

Leeb ends his point about the misconceptions of Westerners regarding the  Chinese social, political and economic model by referencing a passage from one  of the books authored by former Secretary of State Henry Kissinger.

“There’s that very famous page in Kissinger’s book, I think, on China, in which Kissinger asked Zhou Enlai, who was the former leader of China, do you think the French Revolution was a success?  And Zhou Enlia, after thinking about it for minute said, ‘You know, I think it’s too soon to say.’”

Marc Faber Says Europe Should Dissolve the EU for Economic Growth - TheMarket Oracle

Marc Faber on the Euro-zone crisis, that the problem is that governments cannot agree to sticking to the 3% budget limits and the only option they have is to print money. The best solution is to dissolve the EU and let the markets sought things out.

 Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.

Wednesday, December 21, 2011

Prince Alwaleed's Twitter Investment Isn't For Politics Or FootballScores - Forbes

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.
Prince Al-Waleed Bin Talal, nephew of the Saud...Prince Alwaleed Bin Talal Alsaud announced today that his Kingdom Holding Company is investing $300 million in Twitter, the microblogging social media site that delivers everything from breaking news to lame trending topics. Twitter played a notable about role during the Arab Spring uprisings – which included threatened violence in Saudi Arabia – leading some to call the Saudi Prince’s investment ironic. Though Prince Alwaleed does not use the service himself, his wife, Princess Ameerah Al-Taweel has a popular account. She took the opportunity to retweet a follower today, rejecting the claim that Alwaleed’s investment is political [rough tranlastion]: “Some consider Alwaleed’s investment in Twitter as political. This is not true. It is an investment and exchange in new media that is not restricted to Football Scores on Twitter.”
Alwaleed, the 26th richest man in the world, echoed the fact that the investment is a business decision, not a political one, in a statement, calling Twitter one of the world’s “promising, high-growth businesses with a global impact.”
Eng. Ahmed Halawani, the Executive Director of Private Equity and International Investments at Kingdom Holding Company, added, “We believe that social media will fundamentally change the media industry landscape in the coming years. Twitter will capture and monetize this positive trend.”
In fact, Alwaleed has been vocal about the need for change, particularly with regards to communication and technology. In an editorial published in the New York Times earlier this year, the prince called for meaningful interaction using technology – something Twitter hopes to provide. “For any reform to be effective,” wrote Prince Alwaleed in February of this year, “it has to be the result of meaningful interaction and dialogue among the different components of a society, most particularly between the rulers and the ruled. It also has to encompass the younger generation, which in this technologically advanced age has become increasingly intertwined with its counterparts in other parts of the world.”
Prince Alwaleed Bin Talal sat down with Steve Forbes in January of 2010 to discuss his investments and his outlook for media companies in particular. He has been a large stakeholder in News Corp. and other media companies like Disney and Time Warner, as well as in Saudi Research and Marketing Group, which publishes a number of magazines and news sources.
“The Web has revolutionized everything. It changes the whole equation,” Prince Alwaleed told Forbes. “We are seeing right now – in News Corp. and some other companies – they would like to have the Web pay for content. Still, they have not found the equilibrium point on what to do with it. Is it just that you have to pay? How much? And to whom to pay? This thing is an ongoing dialogue right now, but it’s very interesting what’s going on.”
Prince Alwaleed has also recently announced plans to launch his own news network, called Alarab. One would guess some integration with Twitter could be in the cards.

View the original article here

Investors not shying away from solar power - San Francisco Chronicle

Stion, a new solar manufacturer in San Jose, has raised a total of $234.6 million from venture capitalists and other investors.

Solyndra notwithstanding, some investors are still willing to bet big money on solar power.

Google, for example, reported Tuesday that it will invest $94 million to help build four solar power plants near Sacramento.

And Stion, a San Jose startup that makes thin-film solar cells, said Tuesday that it has raised another $130 million in private investments, much of it from Korean private equity funds.

The high-profile bankruptcy of Fremont's Solyndra in September prompted intense scrutiny of all manner of solar companies and projects, particularly those involved in manufacturing. A flood of inexpensive solar cells pouring from new factories in China has undercut many American solar businesses, pushing several into bankruptcy.

But the plunge in solar-cell prices has been a boon to developers of solar power plants.

The four plants that Google will fund - along with investors Kohlberg Kravis Roberts & Co. - will be built by San Francisco's Recurrent Energy, a subsidiary of Sharp Corp. The plants will sell their electricity to the Sacramento Municipal Utility District and should begin operations next year. Three are already under construction.

"The declining cost of solar has really driven demand for us, in our business," said Arno Harris, Recurrent's CEO. "I would say unequivocally that there's a ton of interest in investing in these projects."

Google has already invested in solar-thermal power plants, which use mirrors to concentrate sunlight, generate steam and turn turbines. But the Recurrent project marks the first time the Internet search giant has invested in power plants that use photovoltaic panels, which generate electricity directly from sunlight.

Google's clean-energy investments have now topped $915 million. The company reported in November that it was pulling the plug on an ambitious four-year research effort to make renewable power cheaper than coal, but it has not stopped investing in the sector.

Stion, meanwhile, has now raised a total of $234.6 million from venture capitalists and other investors. The company will use some of the most recent funding to expand its solar-module manufacturing facility in Hattiesburg, Miss.

Stion also will create a subsidiary in Korea to build a factory there, supplying thin-film solar modules to growing markets in Asia. One of the lead investors in Stion's new financing round is Avaco, a Korean company that makes thin-film processing equipment.

"Solar has always been a global business, and this investment enables Stion to address market demand in Asia and beyond," said Chet Farris, Stion's CEO. "We have added world-class investors as well as a strategic partner with deep technical expertise."

Wednesday, December 14, 2011

Jim Rogers: Faber's Wrong About China -

Jim Rogers thinks Marc Faber has got it wrong about China, when he says the country is possibly headed for a hard landing, which would lead to a devastating impact on commodities around the world.

"Marc still does not understand China. There are going to be several hard landings in the next few years, but China’s will be less hard overall than others such as Greece, U.S., et al," Rogers told CNBC in an email.Rogers says some parts of China's economy will have a "hard landing" but other parts will continue to boom. He says the commodity market will have a correction, but rebutted Faber's view that it would be devastating."Yes, there will be consolidations in the commodity bull market just as all markets have consolidations," he said. "In 1987, stocks declined 40-80 percent worldwide, but it was not the end of the secular bull market in stocks."Rogers said he was still long commodities, adding that gold went up 600 percent in the 1970s and then corrected by 50 percent scaring a lot of people. "It then continued its secular bull market and rose 850 percent. Corrections are the normal way of all markets."According to Faber, Rogers' bullish call on commodities is misplaced. "If I was always bullish about commodities and completely missed out on the crash in 2008, then obviously, having tied essentially my reputation to commodities, I'd continue to be bullish," Faber said.But Rogers said Faber had got it wrong when it came to his call in 2008. "I proclaimed repeatedly far and wide that one should not buy commodities in the run up phase. I also explained that I was not selling mine since we were [and are] in a secular bull market," Rogers said."I explained that my shorts of Citibank, Fannie Mae, all the investment banks and homebuilders, plus my long position in the Japanese yen would protect me in any sell-offs. When one’s shorts decline 90-100 percent, it is a good year even when one’s longs decline," Rogers added.

According to Rogers, Faber is the one who has made many wrong calls, arguing that he "totally missed" the secular bull market in commodities that began in early 1999."Also back in those days, he and his friends proclaimed often that China was a mess and would continue to be so," Rogers said. "They all were wildly excited about Russia. Some of his friends even left China to start operations in Russia. We all know how that resulted."

Tuesday, December 13, 2011

Dissolve the EU; – Marc Faber - Wall Street Pit

Investment analyst and entrepreneur Marc Faber spoke with FOX Business Network’s (FBN) David Asman and Liz Claman about the European debt crisis and attempts by the European Union (E.U.) to restore fiscal austerity. Faber said the best course of action would be to “dissolve the EU” and he blamed “bureaucrats” for not keeping the “3% maximum fiscal deficit and government debt to GDP maximums” in order to remain fiscally sound. Faber said the EU should “let the countries default” and while it “is going to be painful” it is better than an intervention that “is not going to work in the long run.” Excerpts from the interview are below, courtesy of Fox Business Network
On the whether the European Union was destined for failure:
“If they had kept the agreement 3% maximum fiscal deficit and government debt to GDP maximums, it could have worked. Why didn’t it work? What do these bureaucrats in Brussels do besides eating well and sleeping and sharpening their pencils? They are useless bureaucrats that brought about the financial crisis worldwide.”
On whether states in the European Union would be willing to give up their sovereignty to regain fiscal austerity:
“I doubt they are willing to do that. The best would be to dissolve the EU. Let the market sort this out. Let the countries default. It is going to be painful, but rather than intervene into something that is not going to work in the long run.”
On Germany rejecting the bailout proposal:
“Eventually they will come to some kind of compromise and there will be some kind of money printing.”

Marc Faber Fears Gold Confiscation From The Government (GLD, GDX, IAU,DZZ, SLV) - ETF Daily News (blog)

Aside from the cherished and entertaining Faberisms
deployed from  time to time in his fight to preserve the truth in front of television audiences  controlled by a media-based establishment propaganda machine, Marc Faber also demonstrates why he’s the go-to man for clarity and thoughtful insights in the  midst of today’s Orwellian headache.
Speaking with FinancialSense Newshour’s (FSN) James Puplava on Wednesday, Faber, the editor and publisher  of the Gloom Boom Doom Report discusses a range of topics, from geopolitics, to freedom  and tyranny, to his concerns of people living in an age of central bank monetary  cannons gone completely rogue.  He also touched on one of his favorite  asset classes, gold (NYSEARCA:GLD), and the  third-rail subject of interest to every gold bug: government confiscation. 

As far as how high the price of gold (NYSEARCA:IAU) can go, it depends upon who has control of the printing presses, according to  Faber.  Right now, he said, the power hungry in Washington won’t let gold bugs down,  as each sign of a lurking systemic collapse or stock  market meltdown has been propped up by the Fed.

“If I could show you a picture of Mr. Ben Bernanke and Mr. Obama, then I  would have to say that the upside is unlimited,” said Faber.

And the downside risk to gold (NYSEARCA:DZZ) rests on the shoulders of central bankers, as  well, as the Fed, and now the ECB, will go to any length to feed the global  financial system with creative and backdoor credit expansion mechanisms.

“In my view the downside exists if money printing by government is  insufficient to revive or maintain credit growth at this level and you have a credit collapse,” he said, and also noted that competing asset classes would  most likely fall more, thus retaining gold holders purchasing power during a bona fide deflationary collapse.

But, first, the globe will undergo roaring inflation, according to Faber, then, second, the Robert Prechter, Gary Schilling and David ‘Rosie’ Rosenberg  deflationary spiral scenario will play out.

“One day there will be a credit collapse, but I think we aren’t yet  there.  Before it happens they’re going to print,” Faber speculates.  “And when printing as it has done in the last 12 years in the U.S. leads to  discontent populations, because when you print money then only a few players in  the economy that benefit, not the majority of households.”

However, Faber warns that the gold market’s extremely volatile, a normal  symptom of a fiat-backed financial system inducing the public into  schizophrenia—of clinging to the familiarity of a 67-year-long financial system,  moving to periods of fearing total loss at the currency graveyard—will chase  investors out.

“A 30 percent correction or 40 percent correction cannot be ruled out, but as  I maintain, again and again, I’m not going to go and sell my gold,” Faber said  forcefully, as he explained that owning gold is should be viewed as the ultimate  insurance policy to cover financial calamity, a viewpoint shared by famed Dow Theory Letters’
Richard Russell—another periodic guest of FSN.
Whether the gold price is in  bubble territory, as a few prominent analysts claim, Faber doesn’t see it that  way, at all.  In fact, he said, very few people own it or talk about  it.  History clearly demonstrates that every bubble will suck in the very  last investor before collapsing under its own weight.

Besides, the powerful propaganda machine, which endlessly repeats the party  line of a system predicated on a fiat system of dollar hegemony, will not allow  cheerleaders of the gold bugs to expend too much airtime away from Wall Street  advertisers and obvious shills (to the trained eye) of CNBC, Bloomberg and other ‘mainstream’ media.

So far, the propaganda has only delayed the inevitable rush into gold—the  next and longest stage of the bull market.

“I have one concern about gold.  I was recently on Taiwan and South  Korea, at two large conferences, nobody owned any gold,” Faber said.  “Gold  is owned by a minority, even in the U.S..  Most people in the U.S. have no clue what an ounce of gold is or looks like and so forth.  The same in Europe.”

But as the ‘wealthy’ begin to acquire gold, the chasm between the ‘rich’ and  poor will widen substantially, not just between the 1 percent and the rest, but between the upper 10 percent and the growing-poorer middle class.  That’s  when the democratic process turns ugly, morphing from a society of rights to a nation ruled by a tyrannical banana republic political dynamic.  See FSN  interview, Ann Barnhardt: The Entire Futures/Options  Market Has Been Destroyed by the MF Global Collapse.
Or transcript.
Populist political leaders vying for votes from the masses will opt to score easy points with the 90 percent have-nots at the expense of the haves, with  draconian taxes on assets such as gold and silver held by the haves, not just through taxes on capital gains, but maybe even through a wealth tax on the holdings.

“This is what the tyranny of the masses can do,” Faber explains.

“You can make it, advertise it to the masses by just taking away from a few  people, he added.  “I’m worried most about is the case of gold, not the price; that I’m not worried . . . but I’m worried about the government taking it  away.”

The interview moves on to the discussion of the bull rally in gold and silver (NYSEARCA:SLV).   After 11 years of continuous gains in the price of gold, why, then, do so few  investors hold the metal?

Faber explains that there remains too many deflationists holding to their  thesis of a tumbling gold  price, though, as Faber suggests, there has been no factual evidence to  support the argument since the pop of the Nasdaq bubble of 1999.

What deflationists point to as proof of their contention, declining housing  prices and stock prices, are really manifestations of inflation moving out of  those asset classes into others, such as commodities,  precious metals and overseas assets, of all kinds.  Inflation, Faber has  stated in the past, doesn’t move all asset prices up simultaneously.

“I don’t hear about gold.  I lived through the last gold bubble between  1978 and January 1980.  The whole world, whether you were in the Middle  East or in Asia or Europe or in America was trading London gold, buying and  selling every day,” he recalls.  “This has not happened yet, and it hasn’t  happened.  Your friends, the deflationists, have been telling people that  gold will collapse to $200 an ounce for the last 10 years and that’s it was in a  bubble.

“[They] said it [gold] was in a bubble at $500; they said it at $600, and  they’re still maintaining it.  So a lot of people they don’t own it; they  bought it and sold it again.  But in the meantime, gold has moved into sold  hands.

“In my case, I’m not going to sell my gold unless I have to.  In other  words, everything else is bankrupt, bond market, stock  market, cash and real estate.”

Faber also points out, even though the price of gold appears to look like and  quack like a bubble duck, with the price of the yellow metal sporting gains of  700 percent since the year 2000, the monetary base and credit creation by the  Fed has been so large for so long, the gold price has much more room to move  higher to reach ‘fair value’.  See Goldmoney Founder James Turk’s analysis  on this very point: BER article, Goldmoney’s James Turk, $11,000 Gold Price
“I can turnaround and say, look if I consider the price of gold, an average  price in mid-1980s, then we take $400 or $450, or whatever it is,” Faber  explains, “and we take the monetary base at that time; we take the international  reserve; we take into consideration that China hasn’t really begun in earnest to open up; and we haven’t had this wealth expansion in emerging economies, and so  forth and so on.  Then, I can maintain, well, actually the gold price is  not up; it’s just the price of money, or the value of money, has declined so  much against a stable anchor.  So I don’t think that we’re in a bubble  stage.”

For the newcomers to the gold market, Faber stresses, “Don’t buy it on  leverage.”

Reiterating his previous comments during the interview, Faber leaves the FSN  listener with his overriding observations of a U.S. government (other Westerner  countries, as well) that shows signs of eventually taking the next steps in its  fight to maintain a hopelessly broken political and financial system:  confiscation, not necessarily though a highly unlikely and dangerous  door-to-door search of proof of non-paid taxes on a citizen’s bullion stash, but  through confiscatory levels of taxation and possible criminal penalties to those  who daring to escape the Marxist or Fascist regime’s grip on power over its  population’s wealth.

“My only concern with the gold insurance is government will take it away,” Faber concluded.  “That is my only concern.  I’m not concerned about the price.

“I also have a concern generally speaking about our capitalistic system.  For sure people with assets, they will be taxed more heavily,  that’s for sure.”

Monday, December 12, 2011

US Not Terribly Expensive, Euro will Survive

“It’s actually quite gloomy but if you’re very gloomy what do you invest in: Treasuries, Italian bonds or commodities or equities?  I happen to think U.S. equities are not terribly expensive, so relatively speaking to other assets, they may for a while actually do quite well.”

I think the euro will survive, the question is in what form. It may survive without the weaker countries or it could survive theoretically just as a currency aside from local currencies. You would have in France and Italy and Spain and Greece, local currencies and…the dollar. So, I could travel anywhere in Europe and still pay in euros.

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.

Thursday, December 8, 2011

Marc Faber, Jim Rogers not selling gold, but it’s not all good news forbullion

Investment gurus Jim Rogers and Marc Faber in recent interviews seem to agree on the dynamics in the gold market. Rogers says he’s not selling his gold and Faber says there is no bubble. But that doesn’t mean bullion is not still in a correction phase.

Investment Week quoted legendary global investor Jim Rogers, co-founder of the Quantum Fund with George Soros now based in Singapore, on the outlook for gold on Monday:

“It has been correcting for the past three months so it is overdue for a stronger correction, but I have no idea by how much. It is very unusual for any asset to go up for 11 years in a row with no correction. I own gold and I am not selling my gold.

The price at which I buy will depend on the circumstances. If it is going down because the world is going bankrupt then it would need to be priced at $900 for me to buy it. If there is an artificial occurrence then maybe between $1,200 and $1,400. It depends on what is going on in the world.”

Last week Bloomberg interviewed Marc Faber, fund manager and author of the widely followed ‘The Gloom Boom & Doom Report’ based in Chang Mia, Thailand (the conversation about gold starts around the 11:00 mark):

Faber tells how he recently asked a room full of Asian investors if they owned gold and only a one said yes, which signalled to him that gold was not in a bubble because “if [he] asked the same question about Yahoo! type of stocks ten years ago everybody would have put up their hands.”

Gold’s spike above $1,900 an ounce was a “huge move” and bullion was “still in a correction phase” although it has to be remembered that for the year gold is still up 20%. Faber commented on the record gold price in early September saying at the time “when you buy gold, it’s an insurance against systematic failure and problems in the financial markets.”

Wednesday, December 7, 2011

Jim Rogers to Marc Faber: you are wrong on China (FXI, RJA, EEM)

Legendary investor Jim Rogers claims that noted China bear Marc Faber is wrong about the country and its economic future.  Goldman Sachs ( GS , quote
), Morgan Stanley ( MS , quote ) and JP Morgan ( JPM , quote ) agree with Rogers and are all also calling for a "soft landing" in China, too. In an interview with CNBC, Rogers noted that "Marc still does not understand China.  There are going to be several hard landings in the next few years, but China's will be less hard overall than others such as Greece, U.S., et al."
Rogers' disagreement with "Doctor Doom" seems odd given the fact that Faber is an old Asia hand currently based in Thailand. To be fair, Rogers himself now lives in Singapore.
They agree that at least certain sectors of the Chinese economy were destined for a "hard fall," however.
The correct answer will be reflected in the performance of China funds like FXI  ( quote
), and as China goes, so go global emerging markets funds like RJA  ( quote ).
Rogers, the co-founder of the Quantum Fund with George Soros, remains long on commodities as he states there is "100% chance" of another financial crisis that will be worse than 2008, as detailed in articles
on .
He does anticipate corrections in commodities, although these will not be devastating,
"Yes, there will be consolidations in the commodity bull market just as all markets have consolidations.  In 1987, stocks declined 40% to 80% worldwide, but it was not the end of the secular bull market in stocks," he says.
Speaking of corrections, the publicly traded portfolio that attempts to replicate Rogers' investment strategy, the Elements Rogers International Commodity Agriculture exchange-traded note ( RJA
, quote ), is off sharply for the year, down almost 20%.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Thursday, December 1, 2011

Marc Faber Sees Signs Of A Major China Slowdown Everywhere He Looks InAsia

There's something that worries Marc Faber more than Europe: China. Faber warned of a China crash in an interview today with King World News.

He says the slowdown is evident from his home in Chiangmai, Thailand:

"In China, if the economy slows down meaningfully or if there is a crash, it will have a huge impact on the demand from China for raw materials, for commodities.  It will impact Australia, Africa, the Middle-East and Latin America...

"I’m sure the economy (of China) is softer than official statistics would suggest and probably the government will start to print money at some point.  So maybe stocks will rebound here because of money printing, but again, it won’t help the economy....

I live in Asia and all I can say is I observe a meaningful slowdown in business activity recently and increasing corporate earnings that disappoint...

“There’s a huge capital flight [from China], there’s no question about this.”

Marc Faber Tells Fox Business Not to “Expect Too Much” from the CurrentMarket Rally

The rally came from a very oversold level. We have a very strong support on the S&P between 1100-1150. And usually the December month is a strong month as well as January so we have seasonal strength and oversold conditions and we can rally, but I don’t think you should expect too much. I think we’ll get into overhead resistance when the S&P rallies another 5% or so between 1250-1300.

“The optimism arises from some sort of a bailout and monetization. But if you look at the market, OK it’s up, but gold is also up and oil is up. Like in the US, we monetized time and again and it’s just postponing the problem. In the end, crisis will eventually happen. The problem of the Western world is that there is too much debt and too many unfunded liabilities.”

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.