Wednesday, April 15, 2015

Marc Faber says Short Central Banks and Buy Gold

In an interview with Jack Otter, editor Of, Dr. Faber again reiterated his desire to short central banks. While that is technically impossible, the editor of the excellent Gloom, Doom and Boom newsletter indicated that it can be done by proxy through the buying of gold and silver bullion.

In a Barron’s video interview published by the Wall Street Journal, ‘Dr. Doom’ said,

I think that my bet is that if i could short central banks i would short central banks in 2015 because I think that investors will suddenly realise what a scam central banking is and then they will lose confidence. And there is only one way to short central banks and that is to buy gold.

In January he said at a Societe Generale presentation that he expected to price of gold to go “up substantially – say 30%” in 2015. Dr. Faber has an impressive track record of accurately predicting medium term patterns within the overall long-term trend.

He sees an anaemic economic performance from Europe this year, he thinks the U.S. is slowing and his attitude to emerging markets has cooled. “In some [emerging market] countries they may be growing 1-2%, in others there is a contraction in industrial production. The Chinese economy which is the dominant emerging economy in the world is definitely slowing down.”

Alone among the emerging markets, India is still growing impressively at 5-6%. However, Dr. Faber does not see the enormous gains made in some sectors of the Indian economy – the stock market rallied 35% last year- and those of other emerging markets continuing.

“A lot of markets are not terribly expensive but [they] are not bargains,” he said.

Ultimately he sees the global economy continuing to slow down. “In general, if you look at global exports they are flat, if you look at the global reserve accumulation they are flat. So I think that we will face a disappointing 2015 in terms of economic growth.”

He added that while China is slowing down he expects the stock markets to perform reasonably well due to the distorting influence of central banks.

There is a lot central bank interventions and expectations by investors what the central bank will do next and so investors pile into stocks in the expectation that the Bank of China will essentially ease.

When asked where one should invest their money he indicated that his main strategy currently was to short various sectors rather than shorting companies.

In particular he singled out the biotech industry and with less enthusiasm social media and semiconductor ETFs. He was considering shorting the Australian dollar and indicated that the U.S. dollar was also in his sights while he thinks the euro is oversold in the short-term.

While he sees mainly shorting opportunities, he is long gold, prefers physical gold and opts for storage in Singapore:

Yes I am long gold. I’ve been long gold since the mid 1990’s and I bought recently again more.

- Source, Market Oracle

Sunday, April 12, 2015

Marc Faber Doesn't Think Europe Is Even Close To Being Solved

The Greek problem is that the economy of the country is simply not large enough to support its current level of debt.

Marc Faber thinks Greece exiting from the European Union could create a closer relationship with China or Russia, which the West wouldn't like.

Faber thinks that the West is going to have to make concessions on the Ukraine so that Greece which has a very strategic physical location doesn't become closely tied with Russia.

Faber thinks that the EU will still exist five years from now but that the countries involved might be different. That could lead to a stronger Euro if only stronger members remain.

- Source, Guru Focus

Thursday, April 9, 2015

Dr. Doom says Greece is a lost cause, time to cut ties with dead weight

Greece bought itself more time Friday for Prime Minister Alexis Tsipras to continue his push for less imposing austerity measures tied to reconciling the country’s debt load. Greece and Eurozone finance ministers reached a deal to extend the heavily indebted country’s rescue by four months.

German Chancellor Angela Merkel and other hawks in the currency union appear willing to cede some ground in allowing the Greek economy breathing room to grow again, but many members are largely in favor of holding Greece to the strict conditions of its international bailout.

As the 19-member Eurogroup continues to weigh Greece’s options in Brussels, Marc Faber wonders how long it will take for them to wise up, cut their ties, and give their head a shake as to why the country was allowed to join in the first place.

“In my view it’s inconceivable under any condition that Greece will be able to repay their debts. That should be clear. I’m more interested in what happens if Greece leaves the EU or is kicked out of the EU, which I think would be the right thing,” said the editor and publisher of The Gloom, Boom & Doom Report.

While the impact of a Grexit could have toppled the Eurozone had the Greek debt saga reached a boiling point at the height of violent anti-austerity demonstrations in Athens and double digit jobless figures, today the risk of a domino effect of countries leaving is much diminished. Unemployment has fallen and failing banks have recapitalized.

Faber is on the fence about a potential parting between the EU and Greece – he says the odds are 50/50 – but what he is sure of is Greece’s role as dead weight in the grander scheme of Eurozone prosperity.

“The EU should never have taken Greece as a member. When the first problem occurred a few years ago, they should have written off Greece right away. But no, the central bank and the ECB supported by the Federal Reserve, they kicked the can down the street and leant them more and more money with the result that Greece now owes the EU and banks in the EU to the tune of $250 to $300 billion,” he said.

Analysts warn that a Grexit would be both costly and complex, speculating that bank machines would have to be shut down to prevent mass withdrawals and thousands of mortgages would have to be converted to a new currency. Faber says the currency ultimately stands to gain in Greece’s absence.

“I believe it will strengthen not weaken because the Euro needs strong countries not weak countries. We have to take a write off at this stage if Greece leaves,” he said.

BNN commentator Kevin O’Leary says there isn’t a policy fix for Greece’s problems, and the Eurozone shouldn’t make room for a member that’s unable to collect taxes effectively. He says Greeks have to undergo a cultural shift to embrace the merits of being taxed, and their government has to punish those who refuse to comply.

“Until they do that, Greeks won’t pay tax and they never will. Part of the culture of Greece is to celebrate the fact that you can have a swimming pool and you don’t have to pay the tax,” said O’Leary.

Faber holds out little hope for Greece, even with improved growth prospects stemming from the European Central Bank's €1.1-trillion quantitative easing program.

“The ECB could buy all the Greek bonds or lend them the money. It’s futile. They money won’t do anything to Greece. It won’t help Greece. It will keep it kind of afloat. In the end, instead of foreign debt between $200 and $300 billion, Greece will have a trillion dollars in debt,” he said.

- Source, BNN

Monday, April 6, 2015

The most attractive stock investment

Faber is more optimistic on gold stocks despite bullion's volatile start to the year.

"Gold shares are the most attractive asset class within the equity market – they have been hammered over the last three years and are showing signs of bottoming out," he said.

Faber's call is based on his bullish outlook for the precious metal this year, which he expects will trend higher as confidence in the ability of central banks to solve global economic woes dwindles.

"When confidence in central banks finally collapses, then gold has a 30 percent upside potential, easily, this year," he said in an interview with CNBC in January.

He recommends gaining exposure to gold miners through exchange traded funds such as The Market Vectors Gold Miners ETF (GDX), the Junior Gold Miners ETF (GDXJ) and Sprott Gold Miners ETF (SGDM).

Faber, however, cautions that the trade is not for the faint of heart.

"If someone is more risk inclined, he will do better in gold miners [than physical gold]," Faber said in an interview with Washington DC based TV channel RT America last week.

"There's a higher risk [in the miners], it's more volatile. Gold prices drop $200, the miners are going to get slammed. Gold goes up by $100, [the miners] go up by a higher percentage," he said.

- Source, CNBC

Friday, April 3, 2015

Dr. Doom’s take on India's dazzling stock rally

Following India equities' dazzling rally last year, the market no longer looks compelling, according to storied investor Marc Faber.

"The share market has gone up a lot over the last 12 months and the valuations are in most cases no longer terribly compelling," Faber, editor and publisher of 'The Gloom, Boom and Doom,' told CNBC's Indian affiliate, CNBC-TV 18, on Wednesday.

"I just looked at Nestle India, it is selling at close to 50 times earnings," he added.

India's benchmark Sensex Index rallied over 30 percent last year driven by robust inflows from foreign funds betting on an economic turnaround under the leadership of new Prime Minister Narendra Modi

The market is currently trading at a price-to-earnings ratio of 16.3, above the valuation of China's Shanghai Composite at 14, but below the valuation of Japan's Nikkei 225 at 19.5.

"Everything has to move in the right direction to justify these valuations," he said.

While India's economy appears to have turned a corner, the country's upturn is still at a nascent stage, with analysts believing further structural reforms required to unlock its full potential.

Investors will be closely watching the upcoming budget on February 28 to gauge the government's reform resolve.

As such, Faber, who has been investing in Indian stocks over the past two years, says he's not inclined to add to positions right now.

"The market could finish the year somewhat higher… it all depends also on foreign investment flows and on foreign economies," he said.

- Source, CNBC