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Marc Faber Holding Gold as an Insurance Policy

January 9, 2013 - Marc Faber is not giving up his precious metals, though gold prices may continue to drop.

Faber told CNBC that he believes the government will print money and that there will be competitive devaluation so he wants to hold gold as an insurance policy.

He added that he believes gold may not increase soon and a further correction is possible. Faber said he does not like any assets at this stage, though he has a diversified portfolio and he states he is not liquidating anything.

Faber, a PhD in economics and editor of the Gloom, Boom and Doom Report, which is read the world over by investors and market participants, said he feels deeply uncomfortable about the future of the global economy, the geopolitical situation, and social unrest in different countries.

In his January Market Commentary, Faber had predicted gold would fall to $1,550 to $1,600 per troy ounce. He also said he planned to increase his gold position on any further weakness, although he sees the strength of the U.S. dollar as a possible headwind for a strong gold rally.

Faber sees 2013 as a year of Capital Preservation. He writes there is something not quite right with the economy as evident from the recent performance of Wal-Mart, Tiffany, Genesco, and Kohl’s. He is disturbed about most asset markets because gains have been outsized since early 2009.

Faber states that in his opinion investors’ expectations about future returns on their assets are far too optimistic. He says he believes 2013 will not be a favorable year for holders of assets and his priority has shifted to the preservation of outsized gains he has achieved over the last three years.

Gold has been a staple of Faber’s outlook with his views reaching new audiences since the metal’s popularity following the economic crises of 2007-2008. Dubbed Dr. Doom by mainstream media, Faber has been an outspoken critic of the monetary policy of Ben Bernanke, particularly the mid-September announcement of an open-ended QE that prompted Faber to say Bernanke would print money until infinity.

But Faber, though outspoken, has been right before and has earned an audience of notable investors the world over. On the day the first round of Quantitative Easing was announced, Faber predicted the second. He has tied the housing crash in the U.S. and the policy of Ben Bernanke to the rapid inflation of renting, which has been up 9 percent on the year in parts of the U.S.

Ultimately, Faber’s projection for gold is very good, given the policies and market interventions by central banks. As he said, he has not liquidating anything and he plans to purchase more gold on the dips.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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