Faber sees best value in gold miners

As gloom and doomish as he's ever been at the Barron's Roundtable, Marc Faber does, however, lean against Felix Zulauf's recommendation to short the Hong Kong ETF (EWH) as a play on a credit bust in China. Property companies are a big component of the Hong Kong stock market, says Faber, and may have already priced in an implosion as they're selling for just 40-50% of asset values. "I would rather buy Hong Kong shares and short the Nasdaq," says Faber.

It goes without saying that Faber is bullish on gold, but he's a bigger fan of the miners (GDX), noting the fast pace of insider buying in the industry. A member of the board at Sprott, Faber says Eric Sprott has been selling company stock to buy shares in small miners (GDXJ). "If the gold price goes up 30%, Sprott's shares might double, but mining stocks could go up four times."


Making a decent run after a horrid 3-year stretch, the GDX is up 12% YTD; GDXJ up16.8%.

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Comments (20)
  • Donald Johnson
    , contributor
    Comments (786) | Send Message
    If you subscribe to StockCharts.com, check out this chart of gold prices since 1980.




    Or try going to the web site and searching for Donny Lewis on pubic charts. He's got every kind of chart you can imagine and then some.
    25 Jan 2014, 01:12 PM Reply Like
  • Donald Johnson
    , contributor
    Comments (786) | Send Message
    Or go to stock charts.com and create a point and figure chart for your precious metals stock for free.


    i.e. NEM. $24.88. Bearish price objective, $12.
    GDX $23.67. Bearish price objective $17.
    $GOLD $1268.80, has switched in last few days from a bearish price objective of around $1,000 to a bullish price objective of $1,440.
    25 Jan 2014, 01:20 PM Reply Like
  • rheimerl
    , contributor
    Comments (494) | Send Message
    you mean my nem is going to 12?!!
    25 Jan 2014, 03:48 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4207) | Send Message
    I think Gold is not a sound investment as it has not much intrinsic value. If the tapering commences Gold probably won't go up much. It is a speculation. I rather buy an undervalued copper miner like SCCO. I do think copper demand will eventually go back up.
    25 Jan 2014, 02:17 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4297) | Send Message
    You are correct that gold is not an investment. Its chief use was as money until politicians and their sycophant economists realized that gold imposed too much of a burden on profligacy. Financial discipline is unnecessary when you can print your own currency. With that in mind, passing on some physical gold to your children is one way to make up for participating in the profligacy.
    25 Jan 2014, 06:17 PM Reply Like
  • stockmarketadvantage
    , contributor
    Comments (60) | Send Message
    I like the word profligacy. It describes a vast subsection of American society.
    26 Jan 2014, 11:02 AM Reply Like
  • june1234
    , contributor
    Comments (4471) | Send Message
    Have to agree with him on gold miners, would not short those, gold playing catchup on that one
    25 Jan 2014, 02:52 PM Reply Like
  • jculley
    , contributor
    Comments (659) | Send Message
    Faber hasn't been right in 5+ years. Much like Meredith Whitney. Two completely worthless financial talking heads.
    25 Jan 2014, 04:57 PM Reply Like
  • omarbradley
    , contributor
    Comments (966) | Send Message
    ummm. Detroit did go bankrupt. Ironically in a State that may have the largest natural gas reserves in the country.


    So, no. Meridith Whitney wasn't wrong at all.
    I haven't heard any "new news" on her view of the Banks currently....but their numbers were really bad. Fixed income is a big driver of earnings...and that market has been crushed by the Fed this year. "Right up her ally" actually.


    Don't get me wrong...i'm still not a bear...incredibly...and would be a buyer of Morgan Stanley here if Twitter is any example of what we have to look forward to this year as well.


    There is nothing "intrinsically" wrong with gold...but gold mining is a REALLY tough business. If you're bearish on the market then obviously to be logically consistent you have to be bearish on the GDX since "it was the thing that just collapsed."


    I am unclear if Mr. Faber has now changed his view of the market over all. Ms. Whitney has to my knowledge never changed hers.


    If I were to say "what is the best gold mining play out there" I would choose this equity actually: http://bit.ly/1eogNki
    not saying buy it here because i'm not bullish on equities right now.


    this company does have earnings however. and in theory "access to a billion tons of refined product."
    25 Jan 2014, 08:35 PM Reply Like
  • jculley
    , contributor
    Comments (659) | Send Message
    Sorry, but Whitney has been a train wreck since her banking sector call in 2007. Her muni bond implosion never came and she has been bearish on everything since 2007. She has shutdown her appropriately named W(ild) A(ss) G(uess) advisory group after losing tons of cash over 3 years by positioning for the bear market that never happened.
    Faber is the same story, only with gold.


    Those two (along with countless others) are the proverbial broken clock.
    25 Jan 2014, 10:01 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11311) | Send Message
    The sellers of the junior gold miners did the majority of their selling in late 2013. They are tired and tapped out.


    Short interest is decreasing while mines are still closing.


    Consolidation will levitate values over the next few quarters.


    (JNUG) up 52% in 2014 (not a typo) but I like the (http://bit.ly/MB7Atz) http://bit.ly/1enQQBu
    25 Jan 2014, 05:04 PM Reply Like
  • kangkim
    , contributor
    Comments (6) | Send Message
    Coal miners got pummeled the last 2 years yet there were no consolidation and surprisingly few bankruptcies. They are zombie stocks now.
    25 Jan 2014, 06:39 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11311) | Send Message
    Actually, I believe coal stocks will do better than tech stocks in 2014. (BTU) is my favorite for perhaps a double this year.
    25 Jan 2014, 06:51 PM Reply Like
  • rseiter
    , contributor
    Comments (142) | Send Message
    It's all about choosing the right miner. I'm up 90% on Corvus, up 81% with Pretium, 55% on Bayfield. I am in the red on others (a few beatings) but when gold moves up, the stocks will as well.
    25 Jan 2014, 05:50 PM Reply Like
  • John Grandits
    , contributor
    Comments (657) | Send Message
    nice bottom fishing....are you a Casey Research subscriber? those have been some of their big winners of late. take a look at Dynacor if you have time and looking for more exposure to gold.
    25 Jan 2014, 05:55 PM Reply Like
  • rseiter
    , contributor
    Comments (142) | Send Message
    I'd hardly call Pretium bottom fishing......I've had a look at Dynacor, haven't decided yet.
    25 Jan 2014, 06:03 PM Reply Like
  • leopardtrader
    , contributor
    Comments (3789) | Send Message
    I believe Faber is wrong on Gold. Gold could get to $800. Dont see it above $1350/400 zone. I agree with him on Hong Kong Or China in general. Despite the negatives on China..the recent structural changes (One Child policy abrogation) and so on have not been taken by the market seriously but they are huge. This is what I believe is gonna play out going forward http://bit.ly/LXxBb1
    25 Jan 2014, 07:55 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4297) | Send Message
    I believe you are wrong on gold.
    25 Jan 2014, 10:00 PM Reply Like
  • Tradevestor
    , contributor
    Comments (5014) | Send Message
    Well, well look at this http://seekingalpha.co...
    25 Jan 2014, 08:06 PM Reply Like
  • fxdudeinmia
    , contributor
    Comments (744) | Send Message
    Marc Faber was interviewed on Bloomberg TV back in late June during the tail end of the market's Taper Tantrum. He said at the time he wouldn't be surprised if the SP500 lost 20% by year end 2013. This was at a time the SP500 was at 1575. I remember it vividly because I was getting hurt in the market then, and his comments pushed me to go into a major cash position. The market bottomed out within a week's time and then moved up quite substantially since then.


    So, let's not be led to believe that Marc Faber has had the hot hand calling major market movements lately. Yes, he was excellent in 2007-2009 period and this cemented his guru reputation, but 2013 was by no means a great year of prognostication for Mr. Faber. Quite the contrary, listening to Mr. Faber in 2013 cost me a great deal of money.


    Mr. Faber wrote about his very poor prediction in a Jan 9 blog entry: . In 2013 "I wrongly predicted a 20 percent correction—it hasn't happened. But I think when it's over, it will be more than 20 percent."




    I suppose eventually we'll get a 20% selloff, but anyone who keeps on predicting it becomes like a stopped clock, which eventually is right. I'd like to hear what Lazslo Birinyi has to say about the market now. He has been right as rain the past few years, staunchly bullish, including all the way through 2013. If he predicts a 20% selloff, then I'll definitely want to be in a major cash position. Not going to worry about Marc Faber's prognostications right now.
    26 Jan 2014, 05:15 PM Reply Like
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