Marc Faber: "I Would Recommend People Buy Every Month Some Gold For Ever"
March 4, 2010 by admin · Leave a Comment
Marc Faber’s latest thoughts on the euro (not good), on Greece (also not too good), and gold (good to quite good). “I don’t think it will work out, and I think other countries like Spain and probably Portugal (and Italy) will then also have to be bailed out eventually, and it will lead to more monetization in Europe, one of the reason the euro has been so week… The pain of the austerity will be very, very burdensome on Greece, and eventually the economy can not grow with the kind of budget they will have to enact, and under these conditions their currency is way overvalued (they are in the euro). And so without the ability to grow, their ability to pay the interest and repay the debt will actually diminish…. I think everybody should accumulate some gold over time. I would recommend people to buy every month some gold for ever.”
Faber’s response to whether gold is the “ultimate ponzi scheme”:
“Gold is not a liability of someone else, you really own it, you keep it in a safe deposit box, its quantity can not be increased at the same rate as you can print money which will eventually again weaken the US dollar. I am not saying that the dollar will go straight down, but eventually the purchasing power of money will lose.”
Lastly, for Faber’s view on why this time it is different, and the developed world will not be able to pull itself out by its bootstraps, his view:
If you compare the depression years, in the depression years we did not have credit cards and we did not have unfunded liabilities from Social Security, from Medicare, from Medicaid. These are all debts that will come due that will have to be paid by the government, and eventually this fiscal deficit will lead to a government debt that will then, because of its increasing size lead to sharply rising interest burden. In other words, in ten years time I would estimate that between 30 and 50% of tax revenue will be spent on the interest payments on the government debt. That will necessitate the monetization of the debt and that will then lead to a weak dollar.
Full clip.
