Marc Faber – Now I am Worried About A DEFLATIONARY Collapse

“I worry about the time when the current asset inflation will give way to a serious asset deflation, which will inevitably happen sometime in the future.” “As an observer of markets I am, therefore, concerned that the decline in gold prices could be telling us that we are about to enter a period of asset deflation” - Marc Faber excerpt from The March 2013 Monthly Market Commentary (MMC) was published on the MMC subscribers only section and emailed on 1-Mar-2013.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Marc Faber Warns: ‘Market Has Peaked Out’

If the stock market continues to climb into July or August, a crash is possible, says Marc Faber, publisher of the Gloom, Boom & Doom Report. The stock market has "peaked out" and bonds may be on their way to a rebound, Marc Faber, publisher of the Gloom, Boom & Doom Report, said Thursday on CNBC. "I think we have made an intermediate top, and it could be a longer-term top," he said on "Fast Money." "I don't think the market is as overbought as it was in '87, so I don't expect a crash. But I think for the time being, the market has peaked out, and I think in the meantime, bonds, which are extremely oversold, could rebound," he said. The S&P 500 closed at 1,502.52 Thursday. A level of 1,530 could prove to be a longer-term high, Faber said. "What I maintained in earlier interviews is that either we have a correction now, and then we go up further or we go straight up high in July-August, from where we could crash, so I welcome a correction here," he said. "The question will be, after this correction, we have to watch the market's rebound, whether it can make a new high or not." Faber's holdings are 25 percent gold, 25 percent equities, 25 percent corporate bonds and cash, and 25 percent in real estate. Why should investors believe his bearish prognostications? "There was a correction between March, April 2012 and actually June 2012, so we had a correction, and then from September onward, when the S&P reached 1,474, we also had a correction into November, at which stage I said that the market would now rally. So I don't think I've been so totally wrong about the moves of the market, especially since 2009, and I can document those with the performance of my portfolio. "But I think that the market has now become quite overbought and that is very significant or overextended, bullish sentiment. Everybody says, 'Sell bonds, buy equities.' And when everybody thinks alike, one has to be careful."

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

China Commodities and Gold

CHINA'S demand for commodities is set to level out in the coming years, famed contrarian Marc Faber has warned, while China's ongoing reliance on commodities imports is likely to add to geopolitical tensions throughout Asia, the Middle East and Africa. Dr Faber, the author of the Gloom, Boom and Doom report and a regular speaker on the conference circuit, told the Mining Indaba forum in Cape Town that credit growth in China was beginning to grow at a much faster rate than growth in gross domestic product, with potentially negative implications for commodities demand. "I think oil consumption in the world will continue to go up, but for some industrial commodities like iron ore and copper, China has probably reached a level where demand may not contract, but won't go up dramatically," Dr Faber said. Sporting his trademark ponytail and a bright pink tie, Dr Faber noted that while credit in China had grown at about the same rate as GDP between 2000 and 2007, since 2008 credit had grown at a much faster rate. Much of that credit growth had been "misallocated" into an overinflated Chinese housing market, potentially sowing the seeds for a future economic crisis in the country. "I think they (Beijing) can again postpone a crisis, but this is probably the last time they can do it. After that, economic growth will come under a lot of pressure," he said. "I would assume that the Chinese economy will grow at a much, much slower pace in the next 10 years . . . and this will have an impact on the demand for raw materials." Dr Faber also said he was concerned about the geopolitical implications of China's reliance on oil imports through the Straits of Malacca and the strategic vulnerabilities that come with that. "What would you do if you were a military strategist in China and you knew all the oil (being imported into China) comes through the Straits of Malacca?" He warned of rising tensions throughout Southeast Asia, the Middle East and Africa as China looked to shore up its commodities supplies and delivery routes. "I think there will be on this continent a lot of struggle over resources. We have to live with a lot of volatility," he said. Dr Faber repeated his long-held belief that money-printing by governments around the world made gold a must-have investment. "I would have 25 per cent (of my investment portfolio) in equities, 25 per cent in bonds, 25 per cent real estate, 25 per cent gold and 25 per cent cash," he said. "I know it doesn't add up, but I have now the accounting standards of US Treasury." He said investing in gold and other precious metals was vital. "I would strongly advise you, for your children and so forth, don't keep your money in cash. "I'm not saying rush out the door and buy gold, I'm just saying that over time it's likely that, as has happened throughout history, paper money has always lost value." source: http://www.theaustralian.com.au/business/economics/faber-tips-tension-from-chinas-demand/story-e6frg926-1226572129326

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

March 2013 Gloom Boom Doom- Asset deflation worries

The March 2013 Monthly Market Commentary (MMC) was published on the MMC subscribers only section and emailed on 1-Mar-2013. "I do not believe in a deflationary Collapse but I am afraid of it" I worry about the time when the current asset inflation will give way to a serious asset deflation, which will inevitably happen sometime in the future. As an observer of markets I am, therefore, concerned that the decline in gold prices could be telling us that we are about to enter a period of asset deflation. I should like to make two points very clear. I am not sure when the asset deflation will start. Most likely, different asset classes will deflate at different times and with different intensity. The second point I wanted to make is the following. In a deflationary environment (whenever it will happen), financial assets (stocks, government and corporate bonds especially high yield bonds) would likely be the most vulnerable assets. In fact, in a deflationary collapse, I would envision money to flow into a sound currency and move out of “funny” paper monies. Therefore, I continue recommending the gradual accumulation of physical gold. Similarly, most societies die because of their ill-conceived fiscal and monetary policies, and not because of their economic problems.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Nasty sell off waiting

The stock market's run will result in either a 20 percent correction or a more nasty sell off at some point this year, Marc Faber, publisher of the Gloom Boom and Doom report, told CNBC's "Closing Bell" on Thursday. Faber pointed out that it's been almost exactly four years since the stock market bottomed out. "We're up very substantially, I think investors who today rush into stocks should be reminded of that," he said. He sees two possible scenarios. Either a 20 percent correction for stocks and then a move higher, or a scenario that is similar to 1987 or 2000 when stocks rise strongly early in the year only to drop sharply.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Gold can be volatile & shake weak hands

The gold market can be extremely volatile, a normal symptom of a fiat-backed financial system inducing the public into schizophrenia—of clinging to the familiarity of a 67-year-long financial system, moving to periods of fearing total loss at the currency graveyard—will chase investors out. Related Symbols: GLD, SLV

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Gold can have strong corrections

A 30 percent correction or 40 percent correction cannot be ruled out, but as I maintain, again and again, I’m not going to go and sell my gold,” Faber said forcefully, as he explained that owning gold is should be viewed as the ultimate insurance policy to cover financial calamity.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Gold and Inflation

I don’t hear about gold. I lived through the last gold bubble between 1978 and January 1980. The whole world, whether you were in the Middle East or in Asia or Europe or in America was trading London gold, buying and selling every day,” he recalls. “This has not happened yet, and it hasn’t happened. Your friends, the deflationists, have been telling people that gold will collapse to $200 an ounce for the last 10 years and that’s it was in a bubble. [They] said it [gold] was in a bubble at $500; they said it at $600, and they’re still maintaining it. So a lot of people they don’t own it; they bought it and sold it again. But in the meantime, gold has moved into sold hands.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Marc Faber not selling his gold

In my case, I’m not going to sell my gold unless I have to. In other words, everything else is bankrupt, bond market, stock market, cash and real estate.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

China became big so quickly

When you have an economy like China that becomes so big so quickly, you can have a more meaningful setback. If the U.S. economy grows at 3% or contracts that 3%, it has no impact on the price of copper to speak of….In the case of China, whether the economy grows at 10% or 5% has a huge impact on the demand for iron ore and copper and aluminum, steel and coal. The Chinese economy today has a much larger impact on the rest of the world than is generally perceived economically speaking.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Stocks will end up bad this year

Echoing recent comments made on CNBC by Stanley Druckenmiller, founder of hedge fund Duquesne Capital, Faber said "Druckenmiller is a very thoughtful person, and I share his views that it will end badly for stocks. But unlike Stan, I believe it will end badly this year."
Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.