Marc Faber: Cling to your gold

Investment guru Marc Faber sees trouble on the horizon thanks to the Federal Reserve's money-printing.

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.

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."

Recommended

What will happen to the price of gold in 2022?
Gold

What will happen to the price of gold in 2022?

Gold is traditionally the go-to asset during inflation. But with inflation at 30-year highs, it has gone nowhere. Dominic Frisby investigates why, and…
20 Jan 2022
Vivek Ramaswamy: beware of the "woke industrial complex"
Investment strategy

Vivek Ramaswamy: beware of the "woke industrial complex"

Merryn talks to author and investor Vivek Ramaswamy about how big fund managers are using ESG investing to undermine the foundations of democracy.
26 Nov 2021
Spencer Adair: getting rich slowly with “cockroach” companies
Investment strategy

Spencer Adair: getting rich slowly with “cockroach” companies

Merryn talks to Spencer Adair of the Monks Investment Trust about how he shuns “glamorous” growth to find solid “cockroach” companies that thrive over…
19 Nov 2021
The price of gold is ready to rebound
Gold

The price of gold is ready to rebound

Despite a recent rally the price of gold is still 10% below its all-time high of summer 2020. But the year-long correction may be nearing its end as i…
12 Nov 2021

Most Popular

Ask for a pay rise – everyone else is
Inflation

Ask for a pay rise – everyone else is

As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why yo…
17 Jan 2022
Temple Bar’s Ian Lance and Nick Purves: the essence of value investing
Investment strategy

Temple Bar’s Ian Lance and Nick Purves: the essence of value investing

Ian Lance and Nick Purves of the Temple Bar investment trust explain the essence of “value investing” – buying something for less than its intrinsic v…
14 Jan 2022
Interest rates might rise faster than expected – what does that mean for your money?
Global Economy

Interest rates might rise faster than expected – what does that mean for your money?

The idea that the US Federal Reserve could raise interest rates much earlier than anticipated has upset the markets. John Stepek explains why, and wha…
6 Jan 2022