Thursday, May 16, 2019

Marc Faber: All Fiat Currencies Will Collapse Against Precious Metals

I just wrote an essay about monetary inflation and the social impact of monetary inflation, because depending how the monetary inflation works through the system… in the case of hyperinflation, Germany in 1922, 1923, the middle class was essentially eliminated. They lost basically most of their savings one way or another. 

But the rich people made a lot of money. And I'm comparing it to the current time, where the middle class hasn't lost money per se, but because the rich people became so rich, the middle class has kind of been pushed down relative to the super rich people. That creates then an unfriendly environment.

The people that vote, they don't understand a lot. But it's very easy for a politician to go to people and say, "You know why you're not doing well? It's because of Jeff Bezos, he's got so much money, and because of Warren Buffet, he's got so much money, and Bill Gates, and so forth. And because of these hedge fund managers, they don't pay any tax or they don't pay much tax," which is actually true. The corporate world in America pays very little tax compared to individuals. If you look at the composition of tax revenues by the government, the bulk is paid by individuals, not by the corporate sector.

And so, through destroying wealth and income inequalities, the mood is in favor of taking money away from the wealthy people and distributing money to the ordinary people. And then they see, the ordinary people, how much is being spent on defense, in the case of the U.S., close to 750 billion dollars a year. And a lot of it is not accounted for. And they say, "Well, this money shouldn't be spent on defense. It should be spent on social programs," and so forth and so on. So the mood, towards socialism, especially we have surveys that showed the millennials, about 60% of the millennials, they are in favor of more government interventions.

The one thing I want to say, that everybody who lived through the monetary inflation of Germany - which ended up in kind of a hyperinflation, but I just want to explain - in the case of Germany, the hyperinflation was also made possible because the other countries didn't inflate. And so the mark depreciated against the foreign currencies, which then added to inflationary pressures. In the present state of monetary policy around the world, because everybody prints money, currencies don't collapse against each other, with very few exceptions like the Turkish lira and the Argentine peso and so forth. But basically, the major currencies, they trade against each other.

So where will the collapse of the currencies come from? In my opinion, they'll all collapse against precious metals. And it is conceivable, and this is something we just don't know, it is conceivable that they'll also collapse against some cryptocurrencies. Now, I think there is a chance, we're not sure - this is a kind of a theory - it is conceivable that Bitcoin becomes the standard, the gold standard of cryptos. But I'm not sure.

All I want to say, investors, in an environment such as we have of money printing, they need to diversify. They need to own some equities. We don't know whether these monetary inflations will end up with a deflationary bust, in which case you may want to own some U.S. Treasuries, or it could lead to high inflation, consumer price inflation, in which case you want to own maybe a farm or some properties overseas. Or you may wish to own some precious metals. I think in any scenario, you should own some precious metals. Or the question is, should you own 3% of your money in precious metals or 90%? That everybody has to decide for himself. I recommend about 20, 25% of your assets in precious metals.

And as to the question, which one is (likely to perform) best? I think platinum is the cheapest at the present time of the precious metals. And I think it has actually a favorable outlook. I think there will be a supply shortage, and that the price could significantly outperform gold and silver.

- Source, Marc Faber

Saturday, May 11, 2019

Marc Faber: The Dollar Should Weaken and the Stock Market Will Follow

I think the dollar is strong because many investors argue that the economy in the U.S. is either better conditioned than European economies. Who knows? But one reason the dollar has been strong is you have all these negative interest rates in Europe. In Germany the 10-year yield is now negative, and in Japan as well, in Switzerland as well. 

And in Spain you have interest rates on the 10-year government bonds of 1%, whereas in the U.S. it's 2.58%. So, I could argue it's logical that if you get more than twice as much interest in U.S. Treasuries than in Spanish bonds, and you're an insurance company in Europe, or sovereign fund in the world, you rather buy U.S. Treasuries than Spanish bonds. I think it's quite logical. So, I think that has supported the dollar.

But I personally, I think the dollar should in due course weaken, and as the dollar weakens it could also trigger weakness in the stock market.

The Chinese had all this excessive credit growth. Now you could argue, well, they have this excessive credit growth because they have also a very high propensity, or rate of capital spending to build apartment buildings and bridges and roads, and the whole infrastructure. 

This is very costly. And so the borrowings are very high. But whether China will go into recession or not is a question also, can in China some sectors be in a recession, like car sales are down this year, and other sectors continue to expand? It's a huge country. It's actually almost a continent with 1.3 billion people. So, different sectors will perform differently. 

But since I live in Asia, my observation is that there has been a slowdown in economic activity. We're not in a recession, but we're in a very low-growth phase. There's very little growth at the present time, and if there is growth it is because of borrowings… but that is also the case in the U.S. Without a trillion-dollar deficit and the debt build-up, student loans and car loans and everything, and credit card loans, the U.S. economy wouldn't be growing either.

- Source, Marc Faber via Seeking Alpha

Tuesday, May 7, 2019

Marc Faber: Currencies To Collapse Against Precious Metals

It's particularly complex at the present time because the global central banks, I mean the major central banks, they can argue, well, there is little inflation in the system, and so we can continue to print money or to purchase assets, which, either way, is true. There is little consumer price inflation, partly because the economy of ordinary people is not particularly good. 

We have a split economy. The economy of the well-to-do or extremely well-to-do people is doing well, and the economy of the ordinary people in Europe, in Japan, in the U.S., is not doing well. And so there is little inflationary pressure, but there is a lot of inflation, or has been a lot of inflation in asset prices. Stocks are at highs in the U.S. essentially, not the oil industries but several industries. And we have now 10 trillion-dollar worth's of bonds in the world that have negative interest rates, it's in some kind of a bubble, or a big bubble.

And so we have this asset inflation, and in my view, the central banks and the policy makers, they realize that if the asset bubble really breaks, if the stock market drops 20%, if home prices drop 20%, if bond prices go down 20% or so, the whole world is in a depression. So, I think that when they started actually in 2008, with QE1 in December 2008, and I was asked at the time, "How do you think it will end?" I said, "They just started QE unlimited. I think they will continue to print money until the system breaks." And that can take another few years.

But I think, yeah, it's likely, if you were to look at the political landscape, you have on the one end the Republicans, at the present time under the leadership of Mr. Trump. He wants to spend on defense and on his wall and on all kinds of things. And the Democrats, they also want to spend on all kinds of things. So, you can be sure that the deficit in the U.S. will remain around a trillion dollars a year for the foreseeable future. And in my view it's more likely that this deficit will go up, and possibly quite substantially. So, the money printing, in my view, will continue.

Now could you have QE, and at the same time the Fed raising interest rates? That is a possibility. But in the current environment, where the economy has been slowing down, I think they will rather do nothing, especially also under the pressure from the White House, which essentially accuses, or tells the world that if the Fed hadn't raised interest rates, the stock market would be much higher. So, I think they will not increase rates further. I think they will not cut the rates, as Trump and Kudlow would suggest, to simply show them that they're independent, and that they don't need Mr. Trump and Mr. Kudlow to tell them what to do.

- Source, Marc Faber via Seeking Alpha

Friday, April 5, 2019

Warren Buffett Might Convert to Bitcoin, Dr Doom Already There


Famed Swiss investor, analyst and, until recently, crypto skeptic Marc Faber, 73, has bought his first bitcoin in another sign the old guard of investments is warming to crypto.

Speaking to German finance website Cash, Faber revealed he recently bought bitcoin for the first time to learn more about cryptocurrencies and following some persistent and high-profile badgering.


GLOOM, BOOM AND DOOM

His normally pessimistic market outlook earned him the nickname “Dr. Doom.” Faber, with a net worth reportedly around $25 billion, famously predicted the crash of 1987. He pens the Gloom, Boom and Doom monthly market report.

Younger readers of the newsletter, plus a “one-hour talk” with Wence Casares, CEO of Xapo, convinced Faber to take the plunge and buy bitcoin.

It’s a sign younger, clued-up investors who place more trust in crypto than traditional markets, are gradually asserting their influence on the old guard.

But Faber is not the only billionaire investor to be linked to crypto. Warren Buffett, 88, who famously called Bitcoin “rat poison squared” last year is also warming to blockchain.

Speaking on CNBC’s Squawk Box, he has praised blockchain, despite admitting he doesn’t fully understand it:

It’s a very ingenious thing to figure out how to have a limited supply and make it harder and more expensive to create. This is explained to me by people a lot smarter than I am.

INSTITUTIONAL MONEY’S ALREADY HERE

Along with a $40 million investment from two US pension funds into Morgan Creek Digital’s crypto venture fund, the signs are positive of a subtle shift in attitudes towards bitcoin, and cryptocurrencies more generally.

Many claim the market has bottomed out. Meanwhile, wealthy investors and institutional money are only too aware of the Bitcoin’s potential.

Faber said he bought Bitcoin around the end of February. Prices were hovering around $3.8k per coin. He believes BTC now looks better from a technical perspective. The crash of Bitcoin contributes to his analysis.

During the interview he hinted that while not guaranteed, the future for bitcoin was good.

He said:

It’s not certain, but possible, that Bitcoin will be the standard for money transfers.

Faber is probably the best-known, but also the most controversial, Swiss investor.

As well as being nicknamed Dr. Doom or “the crash prophet”, he gained international recognition after predicting the Black Monday stock market crash in 1987.

He’s well known for his regular criticism of central banks and traditional monetary policy.

- Source, CCN

Monday, April 1, 2019

Legendary Investor Marc Faber Just Bought His First Bitcoin

After being a bitcoin skeptic for almost a year, Marc Faber is willing to give the digital asset a try.

In an interview with Cash, the legendary investor and stock market expert said that he bought his first bitcoins in late February. He admitted that he wanted to learn more about how digital currency works, which led him to his first decentralized asset purchase. 

He also added that at circa $3,000, bitcoin rates “looked better” to him that at $20,000 more than a year ago.

“I was tempted to purchase bitcoin when it was available for $200. But I held myself from purchasing something that I didn’t fully understand,” Faber told Cash.

The call-to-buy followed a year-long bearish market in which BTC lost approximately 79 percent of its market capitalization. 

The digital asset, for a brief time, maintained calm above $6,000 but poor fundamental dynamics created around November’s infamous Bitcoin Cash hard fork pushed the price to its 18-month low. 

Bitcoin has now located a new temporary bottom near $3,100 and, at the press time, it is priced at $3,867.

“In the last three months, bitcoin has surged 15 percent,” Faber noted.

Not a Bitcoin Bull

Faber warned that his followers should not presume his involvement in BTC as an endorsement. 

He stated that he remains unconvinced about the cryptocurrency. At the same time, Faber added that bitcoin could become “the standard for money transactions.”

Avid followers know Marc Faber as a cautious investor who tends to minimize investment risks. He is mostly known for predicting the 1987 stock market crash, also known as Black Monday. 

The accurate prediction earned him a lot of credits from his followers. He continued to be a central bank critic and blamed their monetary policies for every economic downturn.

Source, News BTC

Wednesday, March 27, 2019

Renowned Swiss Investor Marc Faber Finally Bought Bitcoin

Marc Faber, a renowned Swiss investor and publisher of the Gloom Boom & Doom Report newsletter, has finally bought into the world’s #1 cryptocurrency, Bitcoin (BTC), according to an interview with Germany’s Cash, a prominent financial news outlet.

Faber’s Bitcoin investment is a big deal, as the savvy investor is ranked among the top investors in the world along with Warren Buffet. However, unlike Buffet, who is notorious for bad-mouthing Bitcoin, Faber has long been intrigued by the revolutionary cryptocurrency.

Marc Faber, a Famously Skeptical Investor

Faber is typically pessimistic about the outlook for financial markets and a devoted critic of central banks, whose monetary policies he believes are leading up to another financial recession. He is even dubbed “Dr. Doom” by the press for his skeptical and pessimistic outlook on markets.

With this outlook, Faber is famous for buying depressed assets which he considers are undervalued. This is the reason he finally took the plunge and bought his first chunk of Bitcoin, as the nascent asset class has lost near 80% of its value since its highs of late 2017.

Per the interview, which was held on March 8, Faber noted that he has always been interested in the developments of Bitcoin because of its comparison to gold or commodities.

However, he mentioned that up until 10 days ago he had been cautious and skeptical of it… counting back 10 days, this means he bought Bitcoin on or around February 27, 2019. According to Faber, Bitcoin reached an attractive price point compared to its $20,000 highs, which motivated him to take the plunge and invest.
Is the Bitcoin Bear Market Nearing Its End?

Faber isn’t the only big-time investor getting into crypto now.

For instance, Fidelity Digital Assets has opened its doors to select institutional clients that can now buy Bitcoin.

Twitter’s Jack Dorsey has been loading up on Bitcoin and Bitcoin miners in China are preparing for a bull run. There is so much bullish news happening, and the mentions here don’t even scratch the surface.

So is the Bitcoin bear market finally coming to an end?

Nobody knows for sure, and Faber isn’t making any calls either. However, he was quoted saying:

“It’s not certain, but possible, that Bitcoin will be the standard for money transfers.”


Friday, March 22, 2019

Marc Faber: Huge Asset Bubble Will Be Deflated


Legendary contrarian investor Dr. Marc Faber warns, “When I started to work in 1970 on Wall Street, the stock market capitalization of the U.S. as a percentage of GDP was between 25% and 30%. 

Now, the stock market capitalization alone is 150% of GDP, and when you add the bonds to it, we are at 300%. It’s a huge asset bubble compared to the real economy. 

I think no matter what they do, this asset bubble will be deflated, and it will be very painful. 

The asset holders are the powerful ones here, and they don’t want it deflated.

The question is would it have been better economically to go into the hospital in 2008/2009 and clean up the system rather than to essentially inject the sick patient with more opioids to keep him alive? 

It’s going to get much worse the next time it happens.”

- Source, USA Watchdog

Thursday, March 14, 2019

Marc Faber on the Fed, Stocks, and GOLD


Everyone wants to know whether this stock market sell-off is a buying opportunity or the first move in a long-term downtrend. 

Swiss investor Marc Faber joins Silver Doctors with a word of caution. 

Faber doubts the majority of stocks will make new highs. In the next two years, many investors will not make money in equities, he says. 

The Fed will likely try to prop up the market through more accommodative monetary policy. 

He sees a possible rolling out of quantitative easing and a halt to rate raising. At that point, the Dollar will weaken.