Marc Faber: Invest Where Fed Has Least Impact

Now that the Federal Reserve has painted itself into a counter it will have difficulty getting out of, it's uncertain how long it will continue to stimulate and keep interest rates at artificial lows.

Also part of the larger problem is the decision for other major economies to print money as well, with ECB, Bank of Japan and China all using their central banks as an attempted means to boost their economies. None of it is working, and so the question now is where should investors place their money in a world of economic stimulus.

Marc Faber believes he has the answer, as he says the stimulus party is now over because asset prices will drop if stimulus efforts are stopped, and if the central banks continue stimulating, which they will for some time, the economies of the countries or regions will remain weak.

The problem is these countries refuse to allow the economy to heal itself; attempting to prop them up wit funny money while their respective currencies continue to plunge in value because of the resultant debasement. It's no different than the giant banks being allowed to fail when the opportunity arose for them to do so.

Faber recommends investors to look for areas where the Federal Reserve especially has minimum effect. Interestingly, one suggestion is telecom companies in Europe, and companies residing in places like Vietnam.

One the fallout comes from the stimulus measures, Faber sees nowhere to go for profits except places where there is lower impact from the actions of the central banks.

Marc Faber on Equities Losing 20 Percent of Value

Marc Faber reiterated his position on stocks in 2013 in an interview with CNBC on its Squawk Box show, saying he expects equities to lose 20 percent of their value next year.

He added that the so-called fiscal cliff issue isn't even part of his consideration and reason for making his assertion.

"I don't think markets are going down because of Greece, I don't think markets are going down because of the "fiscal cliff" - because there won't be a 'fiscal cliff,'" Faber said.

Instead, Faber gives this as the reason stocks will get hammered:

"The market is going down because corporate profits will begin to disappoint, the global economy will hardly grow next year or even contract, and that is the reason why stocks, from the highs of September of 1,470 on the S&P, will drop at least 20 percent, in my view."

Faber rightly notes that what America and the world has needed to do is go through a period of pain in order for the economic system to correct.

He said, "There will be pain and there will be very substantial pain. The question is do we take less pain now through austerity or risk a complete collapse of society in five to ten years' time?"

"In a democracy, they're not going to take the pain, they're going to kick down the problems and they're going to get bigger and bigger."

That's the problem of course. Selfish politician only looking to retain their jobs won't touch the cutting back of spending because it immediately sets a special interest group against them.

Of course politicians created these groups of zombies in order to buy votes. Now they're stuck with them, self-forced to wait until an economic collapse forces real spending cuts and smaller government.

As Faber says, waiting until this happens will be more devastating to people, and it would have been better for some short-term pain in order to clean the system out.

I think the whole global financial system will have to be reset and it won't be reset by central bankers but by imploding markets....

Faber is correct. There is nobody in the world that really knows how long it'll take to play out. The pieces are in motion, and with no political will to solve the problem, they will reach their inevitable end.

Our investments and lives need to be ordered accordingly.

Marc Faber Sees Major Stock Correction Coming

In an interview on the FuturesNow program, Marc Faber, who is author of the Doom Boom & Gloom report, said investors need to prepare for a huge drop in the market in the near future, which will provide a great buying opportunity for those who are ready for it.

Faber said, "I have a lot of cash at the moment, because on this rally since April I have been lightening up on positions."

Following on the footsteps of an accurate call in the early part of June that it was time to acquire equities, specifically those that had good dividend yields, where the Standard & Poor's 500 has jumped close to 14 percent since that time, Faber now tells investors they need to consider reversing those positions, saying he is now heavily in cash in anticipation of the downturn.

"Unfortunately I have a lot of dollars. I just want to have a lot of cash because I think that within the next six to nine months we can buy just about anything 20 percent lower than it is now," Faber noted.

Recently Faber said the U.S. economy has a 100 percent chance of going into a recession.

Marc Faber Says Bernanke Should Resign

Apparently believing Ben Bernanke has no shame, Marc Faber said in a CNBC interview that if he were Bernanke he would resign for screwing up the U.S. economy so badly.

"If I had messed up as badly as Bernanke I would for sure resign. The mandate of the Fed to boost asset prices and thereby create wealth is ludicrous - it doesn't work that way. It's a temporary boost followed by a crash," Faber said.

In the latest round of quantitative easing, identified as QE3, Bernanke said the Federal Reserve will acquire $40 billion in mortgage-backed securities indefinitely ... until the employment situation improves, which could be years into the future, based upon the response of the economy to the failure of prior quantitative easing initiatives.

Faber asserted and concluded this: "The money printers are responsible for this crisis. If we continue with this expansionist monetary policy we won't be facing a fiscal cliff it will be a fiscal grand canyon."

Also rightly taking a needed shot at the outrageous size of government, Faber said, "If we have an economic crisis in the Western world it's because the government makes up 50 percent or more of the economy. This is a cancer that is taking away people's freedom." He is right.

Marc Faber Recommended Gold Before Gold was Cool

While we haven't hit the place where gold is in danger of being in a bubble, there are an increasing number of institutional, and to a smaller degree, individual investors, putting a portion of their assets into gold.

Marc Faber has been calling gold for a long time before investors saw the possibilities gold offered because of trending government and Federal Reserve policies.

As with commodity investors Jim Rogers and Peter Schiff, Faber sees gold as one of the ultimate defenses against out-of-control government inflating and debt. What is being called quantitative easing today.

Faber hasn't encouraged investors to buy up more gold as a result of the obvious stimulus packages set in play, but has been seeing this happening since the early 2000s.

In one of his books named 'Tomorrow's Gold,' published in the latter part of 2002, Faber told investors they needed to put some of their assets in gold at that time. It was lower than $350 an ounce then.

In the early part of 2001 he called gold mining stocks cheap as well, which has also played out to be true for a large number of them.

All of this is in response to the macroeconomic changes about to hit the U.S. and Faber understood the signs of, and consequences of those actions, the reason he was so clearly right, and continues to be in regards to investing in gold.

Faber has also recently stated that gold prices are still relatively cheap, and quantitative easing will continue as the government is completely out of control and won't stop.

He recommends for people to become their own central bank and hold their own gold, as the Federal Reserve will continue to print money, as will many other central banks around the world.

While gold will build the wealth of those investing in it, Faber also sees it as financial self-defense against the misguided practices of the Fed and others endlessly printing money.

Faber advocates investors to allocate resources to gold on a monthly basis.

Marc Faber Says Gold Still Cheap

With gold prices breaking several all-time records this week, you would think most would think it's getting expensive to acquire the yellow metal, but not Marc Faber, who says gold bullion prices aren't expensive in his view.

At a CLSA Investors’ Forum 2010 in Hong Kong, Faber said, “Given all the unfunded liabilities and the money printing in the world and the size of the financial assets in the world, I don’t think we are in a bubble.”

While Faber doesn't believe we're in a bubble with gold, he does advise investors to increase their exposure on a monthly basis, and not to increase the percentage of their overall wealth too much into the metal, even as gold prices continue to skyrocket.

He also said there still will be strong corrections at times, a reason he suggest investing on a consistent basis instead of all at once.

Faber said under the right conditions, there could be a pullback as high as 30 percent. He cited the 50 percent drop in gold prices in the 1970s, where prices fell from $195 an ounce to $105 an ounce, although they resumed their upward climb to over $800 an ounce afterwards.

The point he's making is don't attempt to time the gold market.

NovaGold (AMEX:NG) Names Gerry McConnell New Chairman

NovaGold Resources Inc. (AMEX:NG) announced it has named Gerry McConnell as the new chairman of the board.

Chief executive officer and president Rick Van Nieuwenhuyse remains in his position, and continues on as a member of the board, which includes the feisty and interesting Marc Faber.

Van Nieuwenhuyse said on the appointment of McConnell, "I am pleased that Gerry has accepted this appointment as Chairman of the Board. Gerry's legal background and extensive knowledge of the mining business and our projects makes him the ideal candidate to manage the Board activities that help guide the company. NovaGold's Board of Directors and employees are committed to adding value for shareholders as we advance our world-class portfolio of projects."

NovaGold's assets are all based in North America, and include the Donlin Creek project in Alaska and the Galore project in British Columbia.

Barrick Gold (NYSE:ABX) is a partner in Donlin Creek, while Teck Resources (NYSE:TCK) is a partner in Galore.

Marc Faber Says China Growth Should Continue to Weaken

Market pundit Marc Faber, who publishes the famous Gloom, Boom & Doom report, said he sees the economy of China probably weakening over the next several months, and reiterated they could experience a property crash before the end of 2010.

The Chinese economy is already starting to show signs of slowing down, as recent reports say gross domestic product fell from last quarter's 11.9 percent growth to 10.3 percent over the last three months. Analysts had been looking for a 10.5 percent growth rate.

China has been projecting an 8 percent growth rate over the year, but at their current pace should still handily beat that, depending on whether or not the government takes any more steps to cool the economy off, especially the property market.

Some still think China isn't doing enough to slow the economy down, and it will ultimately experience a painful correction in response to that.

China has also been battling inflation, with a goal of bringing it down to 3 percent on the year, which they have now achieved, with it operating at a 2.9 percent rate in June.

The question is whether or not China has done enough to slow things down, and if the pace is low enough. Faber doesn't seem to think so, and he could be right, although, again, he sees it slowing down through the remainder of 2010.

Marc Faber: China Won't Appreciate Currency Against U.S. Dollar

Marc Faber said at the Asian Investor Fifth Annual Asian Investment Summit in Hong Kong today that China is highly unlikely to remove the peg it has with the U.S. dollar, as the European sovereign debt crisis has knocked the euro down hard and fast.

Faber said, “If I had to take a bet, I’d say that the renminbi will not go up this year.”

The renminbi, or yuan, has appreciated against the euro by 16 percent so far in 2010, and exporters from China are starting to get nervous because of the rising costs of doing business as a result.

Faber also said he believes China should have eased up more than they did. Since July 2008, the renminbi has been pegged at an exchange rate of 6.83 percent against the US dollar.

What Marc Faber Likes ...

Marc Faber said in a recent interview that there is one particular investment sector he particularly likes, and that is commodities. Within commodities he likes agriculture, which he views as getting very cheap.

Commodity investment guru Jim Rogers has been saying the same thing for at least the last year, with the idea that agriculture prices are depressed, and ultimately they'll start to rebound, as demand isn't going to ever go away, and will only increase.

For the three favorite picks of Faber in the agriculture sector, he likes three of the majors: corn, soybeans and wheat.

The timing is everything of course with all of this, and it's impossible to know when agriculture will finally start to move forward again.

But it's only a matter of when and not if, and then, not only will these major crops start to rise in value, but there will be an additional price rise for fertilizer companies and other firms connected to the sector as all elements related to agriculture benefit.

Marc Faber: Boot Greece!

Marc Faber said recently the European Union should boot Greece out of the European Union, and any other country which refuses to operate within the parameters laid out by the EU.

Talking to Bloomberg, Faber said, "The best would be to kick out Greece and the countries that abuse the system. They didn't have the fiscal discipline that was essentially imposed by EU."

Attempts to paint Greece as unique to the EU is ignored, as the threat of sovereign debt contagion is real, and there's little that can be said to convince us that things are different than that reality.

Jim Rogers has called for the EU to just let Greece fail, as another way of dealing with the situation, in order to show they are serious about the euro and countries adhering to the guidelines put forth.

Until government is limited, central banks closed down, and the culture of entitlement dealt with, there is very little that can be done to change things, the reason this is only the beginning of the sovereign debt crisis, which threatens to engulf the world.

Jim Rogers, Marc Faber Investment Advice

Jim Rogers and Marc Faber recommend investors cut back on their holdings in equities after the expected market correction happened yesterday which eliminated over $1 trillion in market value in the U.S.

Both Rogers and Faber said the market had been due for a correction, and it not something to be overly worried about, at least not yet.

While the 3 to 4 percent drop was a large number, Rogers said at this time it's no reason to panic. Faber believes this is the beginning of an ongoing decline in market value for some time to come.

Rogers addressed the Greek sovereign debt crisis again, reiterating it will be a good thing for Greece and the euro if they default. Even so, Rogers added fears of contagion could create an unstable market which could go on a wild ride, and that contagion isn't limited to the southern nations in Europe, as it could easily spread to the UK and the United States, said Rogers.

Faber's advice was for investors to decrease their positions whenever the share prices rebound, while Rogers continues to advise investors to invest in raw materials and agriculture.

Marc Faber: China May Collapse within the Year

Marc Faber says he sees signs China's economy may be poised for a collapse and it could possibly happen within nine months to a year.

In a television interview with Bloomberg, Faber said this:

“The market is telling you that something is not quite right. The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”

When the credit crisis exploded and American consumers stopped spending, China did the usual thing governments and central banks do, they attempted to stimulate their economy by spending billions on domestic property development and construction projects, which may account for about 60 percent of the Chinese domestic product at this time.

In the interview Faber also said the mining companies in Australia, which supply a large portion of raw materials to China, are acting "heavy," meaning they may be feeling exterior pressures of slowing demand.

It also looks like China has no intention of changing their policies either, as Finance Minister Xie Xuren said China will continue their expansion until the recovery takes hold.

One step the Chinese government has taken is to forbid taking out a mortgage on a third home while also raising interest rates on mortgages and increasing the requirements on down payments.

Estimates are that could cause the value of properties to fall by up to 20 percent in the second half of 2010 in hopes of cutting down are investing in risky real estate deals.

Faber says these measures could push investors toward the Chinese stock market, but since that's fully valued at this time, they could choose gold as their investment of choice, and who knows where that would bring the price gold to in light of the European sovereign debt crisis, which is only beginning to unfold.

Either way, if Faber is correct at the high end of his projection, the economy of China will slow, and what happens to the prices of commodities at that time when so many companies and countries have been relying upon to bring them out of the recession?

Couple all of this with the EU sovereign debt debacle and it's hard to figure how the financial press can endlessly repeat the mantra that we're in an economic recovery.

Marc Faber, Jim Rogers on Greece Bailout

In a Bloomberg interview, Marc Faber reiterated what billionaire Jim Rogers has been saying for some time, and that is that Greece shouldn't be bailed out by the European Union or the IMF, as it's only postponing the inevitable, and rewarding excessive consumption.

By excessive consumption, it means the people of Greece being given handouts from the Greek government which the Greek government couldn't afford to pay.

That is obvious to everyone now, but it was hidden from their fellow European neighbors, who are now foolishly ready to bail out Greece, which will only postpone the crisis temporarily while inviting more countries to the postponement party.

Jim Rogers has stated in the recent past a number of times that if the EU was serious about the euro, they would allow Greece to fail so the rest of the EU countries with similar irresponsible financial practices will start getting their houses in order and implement much strong austerity programs.

In other words they need to cut down on spending and eliminate a lot of the government sponsored and central bank enabled programs and perks that are in no way sustainable. It's also another way of saying governments need to get smaller and central banks hopefully some day eliminated as being a part of the financial network around the world.

Faber adds that Greece, when looking at it in a similar way as you would any corporation, should be allowed to go bust and no loans should be extended to them.

Also banks holding loans should write off the loans from 30-50 percent of the face value of them.

In the end, all this will do is lead to the ultimate bust in the view of Faber, who says the only thing democracies are doing now is postponing everything until it all blows up in their faces. They will never escape this, and eventually they'll all have to pay the price.

Loans simply don't take care of the reason behind the crises in Europe and the other democracies, and the only tool in Faber's outlook they have is the tool of postponement by loans. There is a day coming when postponement will no longer work and the entire system will collapse under the weight of entitlement and political expediency.

Marc Faber: China and Australia

If the insight of Marc Faber is correct concerning China, and he's not the lone person saying this, Australia, and any country strongly relying on Chinese demand for raw materials, or good and services, will find themselves going up and down with the Chinese economy, moving in unison with it.

Of course this is great as long a China continues to grow, but when it stalls, or if there is a bursting of their real estate market, it'll cause enormous repercussions for any business or country overly dependent on the Chinese, which to a large degree Australia is one of the leading ones.

China has largely been the reason Australia didn't suffer as much as other Western countries, as their focus on shoring up their domestic market has resulted in hundreds of billions being used for infrastructure projects, and some others that are dubious at best.

Some people who claim to have seen it say there are huge numbers of empty buildings sitting around which were built to create temporary jobs and nothing else. What happens when they sit around and generate no income? What happens when the bills come due in those cases?

Even if the Chinese government let's it all go, it was real money used to build, and that money was put into the system and has a significant impact on the economy.

China continues to say it's going to take measures to cool down its economy, but so far that has been only words and not actions. One way or the other China will have to cool off, as no country can continue to grow at that rate without severe consequences, especially since there may be many projects which have no use and no way to pay for themselves.

No matter if someone is an investor, a country or a company, the way of China can't continue to be only upward, and when that stops, there's going to be an awfully big headache to deal with, and quite probably a long one.

China should be a part of everyone's portfolio in some way, but those overly invested like Australia, will go as China goes. For now that's working great, what's going to happen when it no longer is?

Australia and others will discover that while they enjoyed a fairly sound economy during the worst of the great recession, they will probably suffer when other countries and economies are stronger, and China finally comes down to earth. The only question is how hard the economic gravity pulls them down, and if they land with a crash or only a thud. At this time it definitely seems a crash landing is what's ahead for Australia; it's not a matter of if, it's only a matter of when, and that may take some years (or not), but it will definitely come.

Marc Faber: Food at 200 Year Low

Marc Faber on Food Commodity Prices

Recently Marc Faber was talking food commodities and stated as a whole they are at their lowest levels when measured by real time dollars.

Faber said: “Food commodities are at 200 year lows in real time dollars.”

The question for the majority of food commodities is whether the supply of food will increase at a rate the demand is through a growing population.

Right now it seems there is a huge supply because, in fact there is. But that supply has come from a number of countries increasing their domestic acreage to grow a variety of commodities, especially major ones like wheat, corn and soybeans.

Once this come to fruition, the question then will be answered as to how the price of food commodities will react in the years ahead.

Even droughts and other events which bring down crop production hasn't dented the larger agricultural commodities because of the enormous amount being planted.

Eventually all of this will come to a head, but for now it seems a lot of the major food commodities will have downward pressure on prices.

One other major factor is the cost of inputs, which have seemed to rise in price some lately, but that can be offset by genetically modified plants which largely reduce the needs of those inputs, depending on which particular crop you're talking about.

The bottom won't hit with food commodities as a whole in my opinion, but they will be hit on a crop by crop basis, even more so the further you move from the major foods we eat.

Marc Faber on Food Commodity Prices

Marc Faber: Chinese Economy Will Slow, Not Crash

Marc Faber on Chinese Economy

Investment expert Marc Faber said the Chinese economy, which a number of economists and analysts have said could crash sometime soon, won't crash, but it will definitely slow down in the second half of 2010.

Some feel even if the Chinese economy does slow down, it'll still grow at a rate of 8 to 9 percent; solid growth by almost any standard.

Some American politicians, along with the increasingly irrelevant Paul Krugman, have been publicly blasting China for its monetary policy, a type of action that has never worked with Asian people, and is not the best way to gain cooperation.

China will eventually change its monetary policy, but these types of populist actions are just plain stupid and bad strategy.

The Chinese would win the battle if they simply decided not to acquire any more U.S. Treasury instruments, and could do more damage if they decided to sell them as well, as the Fed would then have to print hundreds of billions to purchase them, which would drive down the value of the U.S. dollar even more, which would bring a lot of consequences to the country.

Marc Faber: New Gold Standard Already Created

Marc Faber on Gold

Marc Faber recently sad in an interview that we have already entered into a new gold standard; one created by the free market and not anyone else.

Faber cited the increasing acquisition of physical gold by investors as well as the growing number of exchange traded funds.

In his interview Faber recommended that people flee cash and bonds over the next decade and buy gold and some equities.

Gold will continue to rise in value against all paper currencies which are depreciating said Faber.

Marc Faber: Buy Gold Forever

Marc Faber on Dollar and Gold

In an interview on CNBC today, Marc Faber told interviewers that he recommends investors to buy gold on a monthly basis forever.

Part of Faber's reasoning is the ongoing printing of U.S. dollars which will continue to weaken the currency going forward.

Faber also recommends for investors to look toward emerging market stocks rather than shares in U.S. companies.

For the U.S. dollar, Faber says it won't necessarily go down like it may have under normal circumstances, because foreign government are also printing money, essentially competing with the dollar on the downward spiral in value of their currencies, making it harder to predict than in the past.

Marc Faber on Dollar and Gold

Marc Faber: Gold Versus Currencies

Marc Faber on Gold and Currencies

Talking about gold recently, Marc Faber stated he believes that gold prices bottomed out as of February 5, and we'll continue to see them rise.

Faber added that two of the more important currencies in the world - the U.S. dollar and the euro - will continue to to drop in value against gold, and "all" paper currencies will do the same over a period of time.

There's nothing to suggest any of this will change any time soon either, as reports continue to conclude we're far from being over the recession, and there's a lot of pain to come, a climate gold investment and gold prices thrive in.

Marc Faber on Gold and Currencies