Even by his standards, Marc Faber has been sounding unusually gloomy of late. The Hong Kong-based Swiss investor, who foresaw the 1990s Asian crisis and was among the first to call the multi-year raw materials upswing, says we are in danger of "a total collapse".
In recent years we have been through "a period of huge asset inflation" in assets ranging from equities to real estate, Faber told Bloomberg TV. And now the outlook is darkening. The economists at America's Federal Reserve "have boxed themselves into a corner where they are now desperate".
Fearful of the impact of higher market interest rates, they have opted to keep printing money, and will print even more to reassure investors if stocks slide. Trapped on a money-printing treadmill, the Fed has launched 'QE unlimited' just as Faber feared in 2008 when quantitative easing began.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
It's not as though the real economy has benefited from all this money, says Faber. All it has done is to raise asset prices, thus increasing inequality because the wealthy tend to invest more, while commodity prices have risen, making it more expensive for people to go to work and heat their homes. The remote academics at the Fed have no empathy with ordinary people, he claims.
The upshot is that we are in for a nasty bust as asset prices slump and, to make matters worse, because of all the money printing this could turn into an inflationary collapse in fiat currencies.
So, it's no surprise, then, that, like MoneyWeek, Faber sees gold as an "insurance policy". Keep some close to you, he warns. "It is important that one day when the so-called sh*t hits the fan and I think the Fed is well on the way to creating this situation you have access to your gold, that it is not taken away."
-
Cash in on the growth prospects of Europe's companiesOpinion Marcel Stötzel, co-portfolio manager of the Fidelity European Trust, selects three stocks
-
Is the AI boom another dotcom bubble?25 years on from the dotcom bubble bursting, is it time for investors to consider the sustainability of the AI boom in the stock market?
-
Gold regains some of its shineNews The gold price perked up this week, hitting a four-week high.
-
Gold regains its shine after inflation risks resurfaceAnalysis Gold prices have been rising over the past month as fears of US inflation resurface. Saloni Sardana explains whether this could usher in a new bullish era for the precious metal.
-
The going looks good for goldAdvice With inflation fears rising and interest rates nailed to the floor, the outlook for gold is bright, says John Stepek.
-
Mark Mobius: “I love gold”Features Mark Mobius, perhaps the best-known emerging markets investor in the world, reckons that gold should form at least 10% of any investor’s portfolio. And now is a good time to buy.
-
Gold is poised for a new bull marketFeatures The price of golf has hit a six-year high, breaching the $1,400 an ounce level not seen since August 2013.
-
Why you need to own goldTutorials All the talk of Modern Monetary Theory misses one key point, says Eoin Treacy. We’re already well down the road of printing money to fund government spending.
-
Fed interest-rate rises won’t hold the gold price backFeatures Some analysts worry that higher US interest rates are bearish for gold. But the evidence doesn’t bear this out.
-
The weak US dollar trade is still on – stick with goldFeatures With little chance of higher US interest rates in the near future, the weak dollar trade is still on. John Stepek explains why, and the best way to profit.
