Marc Faber loves that gold is finally breaking down. The reason is not
to gloat, or a prediction. Rather "gold will offer an excellent buying
opportunity".
Marc Faber on Bloomberg TV on the Fall in Gold Prices
"I love the markets. I love the fact that gold is finally breaking
down. That will offer an excellent buying opportunity. I would just like
to make one comment. At the moment, a lot of people are knocking gold
down. But if we look at the records, we are now down 21% from the
September 2011 high. Apple is down 39% from last year's high. At the
same time, the S&P is at about not even up 1% from the peak in
October 2007. Over the same period of time, even after today's
correction gold is up 100%. The S&P is up 2% over the March 2000
high. Gold is up 442%. So I am happy we have a sell-off that will lead
to a major low. It could be at $1400, it could be today at $1300, but I
think that the bull market in gold is not completed."
"$1300.
Nobody knows for sure but I think the fundamentals for gold are still
intact. I would like to make one additional comment. Today we have
commodities breaking down including gold. At the same time we have bonds
rallying very strongly. If you stand aside and you look at these two
events, it would suggest that they are strongly deflationary pressures
in the system. If that was the case, I wouldn't buy stocks or sovereign
bonds because the stock market would be hit by disappointing profits if
there was a deflationary environment."
On gold falling lower if we have a deflationary environment:
"Yes, I agree. That's why I said if the gold market collapse is saying
something about deflation and at the same time we have this sharp rise
in bond prices and the signals are correct that we have deflation, I
wouldn't buy stocks because in a deflationary environment, corporate
profits will disappoint very badly."
On whether a deflationary environment is possible right now:
"Everything is possible…In the economy of the cuckoo people that
populate central banks, everything is possible. What you have is
gigantic bubbles, the NASDAQ in 2000, then the housing bubble and then
commodities in 2008 when oil went from $78 to $147 before plunging to
$32 within sixth months. That kind of volatility comes from expansionary
monetary policies from money-printing."
"All I'm saying is
that I think we're going to have a major low in gold in within the next
couple of weeks. Gold, as of today, you should actually buy as a trade. I
think it can rebound in the next two days by $40."
On why gold will rebound $40 in the next two days:
"Because we are about in gold as oversold and we were essentially
during the crash in 1987. From there we have a strong rebound. All I am
saying as a trader I would probably enter the market quickly for a
rebound of $20 or $40. From a longer term perspective, I would give it
some time. We may go lower. I am not worried. I am happy gold is finally
coming down, which will provide a very good entry point."
On whether investors should also stay in cash:
"My argument is that you should always have in this kind of high
volatility environment a fair amount of cash because opportunities will
always arise again and again and if you have cash you can then buy
assets at a reasonable price. I think Patience is very important in this
environment. The question is, how do you hold your cash? Hopefully not
with a Cyprus bank.
Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.