Marc Faber Is Conflicted About the Price of Gold 38 comments
Tim Iacono
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Depending upon where you get your news, Gloom, Boom, and Doomer Marc Faber thinks that, after the recent run-up, the price of gold will either:
- Dip to as low as $800 an ounce, or
- Never sink below $1,000 again
There appears to be very little middle ground. Commodity Online and a few other news outlets report that a weak U.S. economy will soon pull the price of the yellow metal down.
Legendary investing guru Marc Faber says gold price is rising without any fundamental factors and thus the price of the yellow metal will plunge to $900-$800 levels.
Faber, celebrated author of Gloom, Boom & Doom Report says that gold prices will dip in the short term, falling to $800 an ounce from current values around $1,117.
"The US economy will require further stimulus packages, which will weaken the dollar, thus making government debt also a bad investment choice in the short term. Commodities such as oil and gold have been rallying on a weak dollar, but that will change as prices must correct," Faber wrote in a recent column.
Apparently, in this case, a weaker dollar will not be supportive of the gold price, a very curious statement indeed since many think that nearly everything is now rising in price because of the steady weakening of the U.S. currency.
(By the way - Is it just me or do others hear Dr. Faber's thick accent in their head whenever they read something in quotes attributed to him?)
On the other hand, gold bulls will take heart in this report from Bloomberg today that has the good doctor singing a completely different tune about the future of the gold price. Gold won’t fall below $1,000 an ounce again after rising 27 percent this year to a record as central banks print money to help fund budget deficits, said Marc Faber, publisher of the Gloom, Boom & Doom report.
Again with the accent when reading between the quotes...
...
“We will not see less than the $1,000 level again,” Faber said at a conference today in London. “Central banks are all the same. They are printers. Gold is maybe cheaper today than in 2001, given the interest rates. You have to own physical gold.”
China will keep buying resources including gold, he said.
“Its demand for commodities will go up and up and up,” he added. “Emerging economies will grow at the fastest pace.”
In contrast, Western countries will be lucky to avoid economic contraction, while the Federal Reserve will maintain interest rates near zero percent, he said.
Hopefully, that seed hasn't been planted in your head as well after reading this, though, it really isn't all that bad a thing to have happen to you now and then.
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This article has 38 comments:
1) News outlets could abuse Marc Fabers' name to get the attention of readers, accuracy or no.
2) News outlets could quote Marc Faber correctly, but Marc Faber himself may talk his book when performing on these news outlets.
3) Marc Faber may have changed his mind in the mean time.
Personally, I do take statements Marc Faber supposedly makes in news outlets with a HUGE grain of salt. I do however value his Gloom-Boom-Doom (GBD) reports greatly.
Why? Because that is how Marc Faber makes part of his money. If he would piss-off his GBD subscribers by 'lying' in the GBD report , he would quickly loose his suscriber audience and thus a large part of his income.
I subscribe to the Gloom, Boom, Doom report and Faber said that if gold falls below $1000 it could quickly go to $800 because of technical selling.
Faber has been bullish on gold since 2001 when it was trading around $250.
Thanks for that...it's probably the funniest thing I've read in the news today. And yes, I do!
And BTW, YES, I read this report with a thick Austrian accent in my head.
On Nov 12 02:58 PM Nathaniel C wrote:
> I have noticed that the media (especially CNBC) hype statements by
> Faber. A while back he said the dollar was looking oversold and could
> get a meaningful bounce--Cnbc ran a headline that said "Faber: Dollar's
> rise will punish all assets."
>
> I subscribe to the Gloom, Boom, Doom report and Faber said that if
> gold falls below $1000 it could quickly go to $800 because of technical
> selling.
>
> Faber has been bullish on gold since 2001 when it was trading around
> $250.
Gold is at all time highs and it could go higher
If it does large cap multinationals at these levels will appreciate as well and are a much better investment now when pes are low and gold is high
Faber like many of us were bullish in 2001 because Pes were high and gold was at a multi year low
Its not brain surgery but it takes discipline
Media outlets polarize what he says, because that's more interesting that the gray world of maybe's. If gold falls below 1000, he thinks it could fall all the way to 800's. AND, he doesn't think gold will fall below 1000. These are not necessarily mutually exclusive thoughts...but strip out the qualifiers. So a stop at 999 if you worship at the alter of maybe.
I say the Fed will pull the plug, no matter what the reflation traders seem to think, because when the "money goes funny," everyone will know making a living being a stock market bull isn't as profitable as growing your own food in the middle of nowhere ... and at that point, the reflation traders will have their plug pulled when they can't go to the grocery store and buy food.
The USD weakness will persist according to Faber's comments. However, this weakness is a long-term scenario. As no trend ever goes straight down or up, the USD's downtrend will have bear rallies. Please note that the USD made an intermediate bottom through a MorningStar Candle completed last week on the wkly chart. It's testing the bottom of that this week and forming a possible hammer. Given that it has formed a double-bottom on the daily chart, it is highly probable it will close out the week with a hammer (wkly chart). If so, then there should be a bear rally in the next few weeks ... marking a corrective phase for the gold and oil sector.
It's important to note the Farber did not discuss timing but about the overall economic condition.
I've been a big, big Marc Faber fan for many years and my "Faber is conflicted" angle here was more "tongue in cheek" than anything else after seeing these two reports in the news on the same morning.
It seems clear that, in the first report, the headline is not representative of what Faber actually said, similar headlines appearing elsewhere, and the comments about hearing Faber's accent when reading between the quotes (while very true) should have been a tip off that this was not an attempt at investigative journalism on my part.
in his heart, he's a firm believer in the gold's bull case.
anyone who believe that gold will go to 5000 or above, shouldn't be concerned with short term pullbacks if any.
Greta only talks out of one side of her mouth.
Even so, things are geting a little bit out of hand. I doubt the Fed can let another year of doble digdet dollar debasement go on in 2010. Thus anytime is a good time to cut and run in case they decide to clean out the swamp that is QE.
I do now, thanks a lot!
On Nov 12 03:08 PM The Recusant wrote:
> "BTW - Is it just me or do others hear Dr. Faber's thick accent in
> their head whenever they read something in quotes attributed to him?"
>
>
> Thanks for that...it's probably the funniest thing I've read in the
> news today. And yes, I do!
I don't understand this argument that I've heard many times. Central banks buying gold, ie: increased demand and no new supply, is not a fundamental factor? China banning the export of gold is not a fundamental factor? Companies such as Barrick removing their hedges against gold and investment banks ending their future shorts against the metal are not fundamental factors? Heck that's a sign that gold price was kept down without any fundamental factors.
And i though it was just me that had a mental problem!
It's good to know there are others. LOL
That's why I was also surprised when he then said that gold couldn't go below 1000 $. My only explanation is that in the meantime he has heard from reliable sources that central banks are eager to buy gold in big quantities and they wouldn't let the price fall below 1000 $. Maybe he has also realized that the mood among investors has changed. Max Keiser said that the hedge funds industry has decided to have 20-30 % of their money into commodities in the future.
On Nov 13 07:48 AM Shaftsinker wrote:
> "Legendary investing guru Marc Faber says gold price is rising without
> any fundamental factors"
>
> I don't understand this argument that I've heard many times. Central
> banks buying gold, ie: increased demand and no new supply, is not
> a fundamental factor? China banning the export of gold is not a fundamental
> factor? Companies such as Barrick removing their hedges against gold
> and investment banks ending their future shorts against the metal
> are not fundamental factors? Heck that's a sign that gold price was
> kept down without any fundamental factors.
It is proven historically that gold is the answer to difficult times.
considering the fed, politicians, burearats, pundits, banksters, bailouts, taxes, largesse, ...anybody else mad as hell?
Greenspan was against any government surplus so in a downturn, all we have is debt. Many other economies build surpluses. Debt fuels financial capitalism but a debt based economy is hard to kick-start and imposes a debt tax on output. Our economic policies are confusing. Old savvy industrial capitalists financed with stock, not debt. We learned the issues of debt financing during the Long Depression. Innovative debt remains debt.
On Nov 13 09:28 AM Billy Hawkfinder wrote:
> Although the author may think that the comments about "thick accent"
> are preciously brilliant, in my opinion they are offensive and unnecessary.
> If you want to say "Austrian School," say it. Billy
Billy,
Come on..lighten up!
On Nov 13 09:28 AM Billy Hawkfinder wrote:
> Although the author may think that the comments about "thick accent"
> are preciously brilliant, in my opinion they are offensive and unnecessary.
> If you want to say "Austrian School," say it. Billy
However, current price has been artificially and prematurely elevated by an upward manipulation on the part of PPT banks, who are also the most influential clearing members of COMEX. That's right...gold is not only manipulated on the downside. The recent upward manipulation is a break with the recent past, but it is by no means an isolated incident. Whenever it creates higher profits for the PPT banks, they forget about the needs of the Federal Reserve, and gold is manipulated upwards also. Remember, volatility is the mother of profit on Wall Street.
This most recent upward manipulation was done 1) to sell the Barrick gold mining public offering shares quickly, 2) to help the IMF get a better price on its gold from India/China, and, most importantly, 3) to draw in new leveraged long players, in order to harvest their cash deposits (margin) in the near future.
The upward manipulation has been applied to both gold and silver. I suspect that they wanted to make sure that silver moved in tandem with gold. Silver charts look ominous right now, with a narrowing wedge and head and shoulders top having formed in classical fashion. It is ripe for a huge fall according to all understanding of classical technical analysis. The only thing that might save it is a massive change in sentiment arising out of a war, or big terrorist attack. But, I think the silver chart probably applies to gold, also, although we are not seeing it because of the current enthusiasm over central bank buying. As soon as that changes, however, the gold chart will revert to the same ominous patterns as we see in silver.
At any rate, current CB interest in gold, and Barrick's ongoing buying back of its hedges, is bolstering the gold chart. Once the dollar starts rising, however, Asian CBs are going to temporarily lose interest in gold, and the gold chart will probably start looking just as ominous as the silver chart and the chart of the DJIA/S&P500. All asset classes, including precious metals, are currently overpriced, because the Fed has been injecting so much cash into the financial system.
All assets, but especially silver, are going to experience a DEEP collapse within the next 3-6 months. Gold could go as low as $800, again, and silver to about $8 per troy ounce in the short run. This will happen as PPT artificially props up the dollar to, perhaps, 93 on the DX. They are sure to do this in order to stop Asian CBs from abandoning the U.S. currency, prior to the time that the U.S. is finished selling its worthless bonds.
Manipulations are quite effective in the short to medium term. However, in the longer run, the dollar is doomed, and this will support gold, causing it to rise, eventually, to $6,000 +. It won't be a "real" rise, because all that will really be happening is that the dollar and other paper currencies will be collapsing, but it will seem quite real, for those who have rid themselves of the paper. I'll be waiting and watching, and when the time is right, I'll buy more of both!
I don't care which way a market moves, as long as it is moving. I do have a bias, macroeconomically speaking, that forms the basis of my beliefs regarding the long term direction of a market, but I will not predict where price will go over the next several minutes, hours or days. I can only observe the price action, and control my entries and exits to the best of my ability to benefit my P&L.
Either way, I am (like most sensible people) are BUYING PHYSICAL GOLD and SILVER, period!
Where is ANY HINT of news that buying PMs is not a good idea when you look at what the Obama Administration, er, I mean the damn Bush Administration is doing to RUIN this great country. Is there anyone with an ounce of sense out there that thinks the current econimic situation is going to get better EVER, but at least not in the next decade? Well, then, what else does one buy to pad their nest egg for whats coming down the road? Oh, yeah, EXACTLY where is the PROOF that 8.333 million ounces of gold reserve ?
" should also mention some concerns (for now of short-term nature) I have about commodity prices including gold (see Figure 19). A large number of commodities including oil (see Figure 13), the CRB Index, and gold broke out on the upside in early October. I would regard a failure to hold above the “upside breakout points” in the period directly ahead with great concern. In the case of gold a decline below $1000 would likely lead to further more meaningful weakness (possibly down to between $800 and $900).
Finally a rebound in the US dollar seems to be underway, which is
consistent with weak asset markets as I have explained in the past on numerous occasions. Particularly vulnerable would seem to be
commodities related currencies (see Figure 20).
Gold Must Hold Around $ 1000 Otherwise a More
Pronounced Correction Could Take Place!"
This report was sent out on Nov1st 2009, and during the convention in London on Nov 11th, Dr. Faber says Gold would not touch US$1000 per ounze again.
Dr. Faber used the opportunity in London to correct his view in regard to his forecast on gold.
Always, ordinary people change their minds. Sometimes even extraordinary people do change their mind too. We are all human afterall regardless if we are considered by others to be ordinary or extraordinary.
C'mon, Marc Faber is a heavy-hitter and doesn't use the phrase "it's possible" willy-nilly. Sure, taken literally, this phrase was used in Wayne's World when Wayne said it's possible that monkeys might fly out of his butt. In the finance world, "it's possible" means the speaker thinks there's some degree of likelihood.
On Nov 13 08:23 AM Botswana wrote:
> It's true that Faber has made two contradictory statements in the
> last days. First, he said that there could be a dollar rally which
> could bring the price of gold down to 800 $. This statement doesn't
> mean that he thinks it will happen, it only means that he thinks
> it's possible.
>
> That's why I was also surprised when he then said that gold couldn't
> go below 1000 $. My only explanation is that in the meantime he has
> heard from reliable sources that central banks are eager to buy gold
> in big quantities and they wouldn't let the price fall below 1000
> $. Maybe he has also realized that the mood among investors has changed.
> Max Keiser said that the hedge funds industry has decided to have
> 20-30 % of their money into commodities in the future.