Marc Faber

The ‘Fearmongers’ Will Get The Last Laugh

I haven’t had much to blog about recently when it comes to the “crash prophets”- Marc Faber, Jeremy Grantham, Jim Rogers, and Peter Schiff.

I have noticed one thing though. These individuals appear to be coming under a growing barrage of attacks in the mainstream media and elsewhere lately. Following them as I have for a number of years (anyone remember when I used to be the editor of Investorazzi.com, “Tracking The World’s Greatest Investors,” from 2008 to 2010?), the harsh atmosphere feels a lot like it did in the middle of the last decade, when these four were calling for the bottom to fall out of the housing and stock markets, the economy, and larger financial system- and were subsequently ridiculed for it.

We all know what happened next. And the initial pain could have been a hell of a lot worse if Washington and the Fed hadn’t papered up that debacle and kicked it down the road a few years into the future.

As for their antagonists back then? Well, a particular line from “Grace” the school secretary in the 1986 film Ferris Bueller’s Day Off comes to mind when I think of their fate:

Well, makes you look like an ass is what he does, Ed.

These days, it’s an all-out assault again on Faber, Grantham, Rogers, and Schiff by the financial Pollyannas, emboldened by some positive economic/investment data in an overall lame recovery, historically-speaking. Case in point, a February 26 Yahoo! Finance article in which Jeff Macke wrote:

The Dow Jones Industrial Average made a fresh high, joining its cousin the S&P 500 and now we await the Nasdaq to push above 5,048. Instead of celebrating prosperity here’s what the media is likely to do which is the wrong attitude.

Trot out the usual cast of fearmongers to tell everyone why a biblical crisis is in our immediate future. This week it was Nobel Prize winning Yale Professor Robert Shiller…

I’m not picking on him. Quite the opposite. As fear mongers go Shiller is the best of them. The worst is probably Marc Faber who emerges from a cave in Switzerland periodically to call for “an 1987 level crash”. Faber started making that explicit prediction in spring of 2012 when he said the chances of a global recession that year or 2013 were 100%. He was wrong of course but that was a better call than his 2009 prediction that the U.S. would suffer hyperinflation levels only seen in Zimbabwe. For the record Zimbabwe experienced 231 million percent inflation that year. If Faber isn’t wrong on that call he is very, very, very early…

A couple of things came to mind reading Macke’s piece:

When did high stock prices become interchangeable for “prosperity”? I’d like to see the evidence demonstrating real economic prosperity and a booming stock market go hand-in-hand each and every time. Last I heard, the White House and the Fed were still on their knees praying this happens.
• Robert Shiller a “fearmonger”? If I’m not mistaken, didn’t Dr. Shiller spot both the dot-com bubble and the housing bubble? Fearmonger? Try a damned good economist. And a public servant for warning anyone who would listen about these financial debacles.
• “The worst is probably Marc Faber…” The same Dr. Faber that became well-known for advising clients to get out of the U.S. stock market one week before the October 1987 crash, for predicting the 2008 global financial crisis, for calling the March 2009 U.S. stock market bottom and subsequent rally, in addition to correctly-forecasting the rise of commodities, emerging markets, and China in the 2000s? Yeah, he’s the worst.

“But that was a better call than his 2009 prediction that the U.S. would suffer hyperinflation levels only seen in Zimbabwe. For the record Zimbabwe experienced 231 million percent inflation that year.” Did Dr. Faber predict Zimbabwe-like hyperinflation would strike the U.S. between January 1, 2009, and December 31, 2009 (which seems to be insinuated by the inclusion of that second sentence), or did Faber make this forecast during 2009 that it would eventually occur here? I see the haters have latched on to the former. In which case, produce the evidence he said hyperinflation would strike the U.S. in that particular year.

You see, here are the problems with such attacks on Marc Faber, Jeremy Grantham, Jim Rogers, Peter Schiff, and others.

• First, the “crash prophets” have a pretty solid track record over time when it comes to making correct market/investment calls. Over the years I’ve read material by journalists confirming this. Plus, I’ve catalogued it on the “Crash Prophets” page. That being said, no one’s perfect, and bad calls happen once in a while.
• Second, unless specifically stated, since I started observing Marc Faber, Jeremy Grantham, Jim Rogers, and Peter Schiff a decade ago, I get the impression they take a long-term approach to many of their forecasts. Yet, the attacks often consist of trying to call the outcome of the ball game while it’s still in the early innings, so to speak. I can’t even begin to count how many times I’ve heard/read attempts to discredit these guys because something they predicted still hadn’t materialized. Perhaps it’s because the forecasted event is still unfolding?
• Third, investigating where and from whom the attacks are coming from often reveals the real motives behind the trash-talk. And many times, “where you stand depends on where you sit.” In other words, lots of obvious self-interest out there.

I expect attacks on Marc Faber, Jeremy Grantham, Jim Rogers, Peter Schiff, and other “crash prophets” to intensify as the nation’s “financial reckoning day” grows closer. It’s an evitable consequence of not donning rose-colored goggles and playing ball with the Pollyannas.

But like in the period of time after the housing crash, the “Panic of ’08,” and subsequent “Great Recession,” I’m pretty sure these esteemed investors/money managers will be having the last laugh.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

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Marc Faber: Central Banks, Governments Will Try To Confiscate Privately-Held Gold

Last week I was listening to a King World News interview of Swiss-born investment advisor/money manager Marc Faber. The publisher of the monthly investment newsletter The Gloom Boom & Doom Report warned listeners that he believes privately-held gold is in danger of being confiscated by central banks and governments. From an exchange between Eric King and Dr. Faber in that interview which appeared on the website on February 10, 2015:

KING: Marc, we were talking about the money printing earlier. Obviously, we had the revaluation of the Swiss franc overnight that led to so much chaos. But what I wanted to ask you today is, you’ve already said I think gold is going to have a strong 2015, but are we going to wake up at some point in the future and have a massive revaluation of gold overnight? Is that something you see happening not this year but in the future? Is that coming at some point?
FABER: Yes. But I think before it will happen the central banks and the governments will try to take the gold away from ordinary people, you understand? I think they know that this would be one solution for the global financial system to peg it again to some extent on gold. But before they do that, I think they’ll go after you and me and say, “Okay, parasites of society that do not spend but keep their money in gold that is unproductive- let us take it away.” That is the threat. I’m not worried about the price of gold. What do I care if the gold price is at $1,000 or $500 or $1,500 or $5,000? What I care is that I can keep ownership of gold.
KING: Just so I understand this, there may be a global coordinated effort by as many central banks that can get together on this to seize the gold, to take the gold.
FABER: Yes, because the professors at the central banks and the academics, most of them have never owned a single ounce of gold. And they know that gold is the honest currency that cannot be printed. Yes, the supply increases and sometimes the price goes up and sometimes the price goes down. But this is a market they really cannot control in the long-run. They can manipulate it in the short-run, but the more they manipulate it, the more it will eventually go to its real level. And so central bankers basically who are the money printers- the counterfeiters of this world- they hate gold. Period.

Later on in that King World News interview, “Dr. Doom” talked about the investments he owns these days. Faber revealed:

I own some real estate in Asia. I own some gold. I own some stocks. I own some bonds, because I agree with you at some point the bond market will diverge. In other words, they’ll print money and buy bonds, but the bond market will go down.

You can listen to the entire interview on the King News World website here (gold confiscation discussion begins at 14:09).

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Marc Faber: ‘The President, For Whatever Reason, Might Not Finish His Term’

This year’s Barron’s Roundtable convened on January 12, 2015, at the Harvard Club of New York. And one member of the Roundtable, Swiss-born investment advisor and fund manager Marc Faber, brought up some interesting scenarios for the coming year. Dr. Faber told Roundtable participants:

Many surprises could occur in the next 12 months. The president, for whatever reason, might not finish his term. China’s president, Xi Jinping, doesn’t speak as much as Obama, but when he speaks, he makes sense. He is a powerful person. In the past 45 years, China has pursued a policy of nonintervention in other countries’ domestic affairs. But that might change because of its oil interests in the Sudan. China is the largest supplier of troops to the U.N. peacekeeping forces. Its troops are conveniently placed next to Sudan’s oil facilities. China also has a large interest in the Iraqi oilfields. If ISIS moves toward southern Iraq, which it currently can’t do, China will protect its interests. The Chinese are becoming more assertive in their geopolitical ambitions. They must ensure a supply of natural resources, such as oil, copper, and iron ore. In their view, the Americans have no interests in Southeast Asia and eventually will have to move out. It is unclear how this will be achieved, or when, but it probably won’t happen peacefully

(Editor’s note: Bold added for emphasis)

Thailand-based Faber, like fellow “crash prophets” Jim Rogers and Peter Schiff, recognizes that the West’s economic power is steadily being transferred to the East. He added in New York City:

Even if Asia doesn’t grow much this year, economic power is shifting to Asia. The Indian economy could grow by 5%-6% in 2015, although the Indians would say I am too pessimistic. Nonetheless, a 5% growth rate is enormous, compared to zero in Europe.

(Editor’s note: Bold added for emphasis)


Heineken Commercial “The Date” feat. Mohammed Rafi, Jaan Pehechaan Ho (1965)
YouTube Video

You can read the entire Roundtable discussion on the Barron’s website here.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Marc Faber: Gold Going Up 30% In 2015

“BullionVault, an online service for investors to buy and sell physical gold and silver, said its Gold Investor Index fell in December to an almost five-year low.

The gauge, which measures the balance of buyers against sellers, slipped to 50.5 from 52.1 in November, the London-based company said in an e-mailed report today. That’s the lowest level since February 2010 and marked the biggest drop since 2013. A reading above 50 indicates more buyers than sellers…”

-Bloomberg.com, January 6, 2015

Regular readers of Survival And Prosperity know that Swiss-born investment advisor/money manager Marc Faber has been a gold bull for some time. And the publisher of the monthly investment newsletter The Gloom Boom & Doom Report is so confident about a rising price of gold in 2015 (in spite of all the negative sentiment among investors) that he made an eye-opening prediction yesterday. Sara Sjolin reported on the MarketWatch website Tuesday afternoon:

“I’m positive [that] gold will go up substantially [in 2015] — say 30%,” Faber, whose investment letter is called the Gloom Boom Doom Report, said at Société Générale’s global strategy presentation in London on Tuesday.

“My belief is that the big surprise this year is that investor confidence in central banks collapses. And when that happens — I can’t short central banks, although I’d really like to, and the only way to short them is to go long gold, silver and platinum,” he said. “That’s the only way. That’s something I will do.”

(Editor’s note: Bold added for emphasis)

BullionVault

Dr. Faber repeated his recent “bubble in everything, everywhere” statement while in London. Sjolin added:

“We simply have highly inflated asset markets. Real estate is high, stocks are high, bonds are high, art prices are high, and interest rates and short-term deposits are basically zero,” Faber said. “The only sector that I think is very inexpensive is precious metals, and in particularly precious-metals stocks.”

(Editor’s note: Bold added for emphasis)

Faber, who became well-known for advising clients to get out of the U.S. stock market one week before the October 1987 crash and for predicting the 2008 global financial crisis, appeared on CNBC’s Squawk Box back on September 19, 2014, and warned viewers:

Today, the good news is we have a bubble in everything, everywhere- with very few exceptions. And, eventually, there will be a problem when these asset markets begin to perform poorly. The question is- what will be the catalyst? It could be a rise in interest rates not engineered by the Fed, because I think they’ll keep interests rates at zero on the Fed funds rate for a very long time… We could have essentially a break in bond markets at some point. We also could have a strong dollar. A strong dollar has already happened in the last two months signifies that international liquidity is tightening. And when that happens, usually it’s not very good for asset markets.

Dr. Faber also sees a potential investing opportunity in emerging markets, which you can read about in Sjolin’s piece on the MarketWatch website here.

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Marc Faber, Jeremy Grantham, Jim Rogers, And Peter Schiff All Sound The Alarm

I find it both funny and disturbing that the financial types who missed the U.S. housing bubble/bust and global economic crisis that was readily-visible by the second half of 2008 are now claiming the U.S. economic “recovery” is on solid footing and there are no asset bubbles in sight.

Meanwhile, the few individuals who correctly-predicted that carnage- including Marc Faber, Jeremy Grantham, Jim Rogers, and Peter Schiff- are sounding the alarm again.

Here’s what each of these “crash prophets” have been saying lately (the following statements have all been blogged about previously on Survival And Prosperity).

Swiss-born investor and money manager Marc Faber warned CNBC Squawk Box viewers on September 19, 2014:

Today, the good news is we have a bubble in everything, everywhere- with very few exceptions. And, eventually, there will be a problem when these asset markets begin to perform poorly. The question is- what will be the catalyst? It could be a rise in interest rates not engineered by the Fed, because I think they’ll keep interests rates at zero on the Fed funds rate for a very long time… We could have essentially a break in bond markets at some point. We also could have a strong dollar. A strong dollar has already happened in the last two months signifies that international liquidity is tightening. And when that happens, usually it’s not very good for asset markets.

“A bubble in everything, everywhere.” Reminds me of what British-born investment strategist Jeremy Grantham said right before the asset bubbles popped during the “Panic of ’08.” Speaking of Grantham, he penned in his November 2014 quarterly investment letter entitled “Bubble Watch Update”:

I am still a believer that the Fed will engineer a fully-fledged bubble (S&P 500 over 2250) before a very serious decline…

My personal fond hope and expectation is still for a market that runs deep into bubble territory (which starts, as mentioned earlier, at 2250 on the S&P 500 on our data) before crashing as it always does. Hopefully by then, but depending on what the rest of the world’s equities do, our holdings of global equities will be down to 20% or less. Usually the bubble excitement – which seems inevitably to be led by U.S. markets – starts about now, entering the sweet spot of the Presidential Cycle’s year three, but occasionally, as you have probably discovered the hard way already, history can be a snare and not a help.

(Editor’s note: Bold added for emphasis)

“Fully-fledged bubble (S&P 500 over 2250) before a very serious decline…”

The S&P 500 stands at 2,058 this Sunday- only 192 points away from Grantham’s bubble “target.”

There’s also investor, financial commentator, and author Jim Rogers, who was talking U.S. equities on RT’s Boom Bust on December 26, 2014, when he remarked:

I know the bear market will come… The next bear market, Erin, is going to be much worse than the last one because the debt has gone through the roof. Debt worldwide, including the U.S., has skyrocketed, and we’re all going to have to pay a terrible price for all this money printing and all this debt.

(Editor’s note: Bold added for emphasis)

Finally, there’s Euro Pacific Capital’s Peter Schiff, who argued on The Schiff Report YouTube video blog on Halloween 2014:

When this illusion collapses, this fantasy of a U.S. economic recovery- because everybody believes there’s no recession anywhere in sight, that we’re years away from a U.S. recession- when in fact, another recession is right around the corner. And in fact, it will be worse than the recession that we had in 2008, 2009, if the Fed does not come in with QE 4…

I expect Janet Yellen to react to this coming recession the way Ben Bernanke reacted to the last one. The way Alan Greenspan reacted to the last one. Because that’s the only playbook we’ve got. And remember, when this recession starts, they can’t start with rate cuts. Rates are at zero. You can’t cut from zero. All they can do is revamp QE. And believe me, it’s going to have to be a lot bigger than QE 3. QE 4 is going to have to be bigger than QE 3 for the same reason QE 3 had to be bigger than QE 2- the economy builds up a tolerance. The more addicted to QE, the more QE you need to get any kind of result. And this last result was minimal in the real economy. I mean, yes- the Fed was able to get the stock market to go up, but the real economy never experienced any real economic growth. The average American is worse off today than when QE began. By far. Incomes are down. Real employment is down. Net worth is down. Poverty is up. Government dependency is up. The cost of living is up. Nothing has improved, except maybe the level of optimism on Wall Street…

This crisis is not really going to be about a credit crisis. Not private credit. It’s going to be about debt. Sovereign credit. It’s going to be about the dollar. A currency crisis. A sovereign crisis. Which is going to be very different than the crisis we had in 2008. It’s a crisis of an excess of QE. Of an overdose of QE. That’s the one that’s coming. That’s the one that we have to prepare for. That’s the one that I have been warning about since the beginning…

Schiff, who’s also a financial commentator and author, has been the most vocal of the four in warning of economic pain dead-ahead of us.

Jim Rogers talking the day after Christmas about the coming bear market alerted me to the fact that all these “crash prophets” whom I regularly-follow on this blog are now sounding the alarm at the same time. To summarize their recent warnings:

Marc Faber- “A bubble in everything, everywhere.” Actually, I believe he still likes Asia and Asian emerging economies.
Jeremy Grantham- “I am still a believer that the Fed will engineer a fully-fledged bubble (S&P 500 over 2250) before a very serious decline.”
Jim Rogers- “The next bear market… is going to be much worse than the last one because the debt has gone through the roof.”
Peter Schiff- “An overdose of QE. That’s the one that’s coming. That’s the one that we have to prepare for. That’s the one that I have been warning about since the beginning.”

At the start of 2015, it will be interesting to see how the next couple of years play out, for I believe Americans will get the chance to experience quite a bit of the above in that time period- whether they want to or not.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Marc Faber Shares 2015 Outlook, Talks Bonds, Stocks, Precious Metals

Yesterday, Swiss-born investment advisor/money manager Marc Faber appeared on Bloomberg Television’s In the Loop. Speaking with Brendan Greeley, Betty Liu, and Erik Schatzker, the publisher of the monthly investment newsletter The Gloom Boom & Doom Report shared his outlook for 2015. Dr. Faber told viewers:

I’m saying that we will have a lot of volatility and a lot of surprises, that’s why I keep on recommending diversification. And I just like to mention that hedge funds in 2014 and active money managers had a bad year. Almost 90 percent of active managers underperformed the S&P 500. And hedge funds, by-and-large, the average is up about 1 percent. But the portfolio that has actually done well is the All Weather portfolio of Bridgewater Associates, because they diversified- they were also in bonds…

So I’m diversified. I still think that the sentiment about stocks in the U.S. is much too bullish, much too optimistic… I think the Treasury market is not such a bad alternative given my view that the global economy is actually slowing down, and given the low yields you have in Japan and Europe.

(Editor’s note: Bold added for emphasis)

Famous for advising clients to get out of the U.S. stock market one week before the October 1987 crash and for calling the 2008 global economic crisis, Dr. Faber told the Bloomberg audience that when it comes to stocks, he prefers to invest in Asia and emerging economies of Asia than in the U.S.

The “crash prophet” added one more thing. Faber said:

I tell you, I prefer physical precious metals stored outside the U.S. But if you cannot own physical precious metals, I believe that whereas the sentiment about the stock market is bullish, and about investments in general, and whereas I believe that most assets are in kind of a bubble- we have a credit bubble- I have to say that sentiment about precious metals is incredibly negative. And all these experts are predicting gold price to drop to $700. Well understood, these are experts that never owned a single ounce of gold in their lives. So they missed the five-fold increase since 1999. But they all know that the price of gold will go to $800- they’re right about it with a lot of authority. And they also say these are people that never gave a gold jewelry to their girlfriends and saw the smile of these beautiful girls after they received the jewelry.

(Editor’s note: Bold added for emphasis)


“Marc Faber: Diversify Amid Volatility, Surprises in 2015”
Bloomberg TV Video

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Marc Faber: Young Americans Will Earn Less, Have Less Wealth Than Their Parents

I wrote on Survival And Prosperity a couple years ago:

Back in 2006 when I was working at a suburban fire department, a battalion chief came into my office, saw the local paper on my desk, and asked, “Did you read that piece about how kids these days might be the first generation who won’t be better off than their parents?” I replied, “Yeah, it was depressing.” The fire officer confided, “That stuff scares me. I’m worried they might be right about that.” I’d be concerned too, especially if I were the parent of a couple of young kids like this chief was.

Fast forward almost nine years after that discussion took place. Swiss-born investment advisor/money manager Marc Faber was interviewed by Barron’s last week. The publisher of the monthly investment newsletter The Gloom Boom & Doom Report talked with editor Jack Otter about a number of financial topics, including how younger people in Western societies will be less well-off than their parents. From their exchange:

OTTER: You always find new ways to depress me. And today you told me that for the first time in 200 years of history, we will bequeath to our children less wealth than their parents had.
FABER: Yes. I meant that with respect to Western societies and Japan, where essentially the younger people, today’s generation, will earn less than their parents. And they will have less wealth than their parents, inflation-adjusted, because we will have wealth taxes, we’ll have more estate taxes, and we have essentially declining real median incomes in the Western world and Japan. But the good news is that we have essentially have in the countries that opened up post-breakdown of the socialist, communist ideology- China, Soviet Union, Eastern Europe, and so forth, and India, of course- we have entire generations that will earn much more and have a much better standard of living than their parents had.

On India, “Doctor Doom”- as the financial media likes to call him- thinks that India’s stock market could rise by 15 percent in 2015.


“Dr. Doom Offers 2 Stocks Picks, But Gloomy Outlook”
Barron’s Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Boston Globe: We Need Financial ‘Doomsayers’ Like Jeremy Grantham

“Legendary value investor Jeremy Grantham, chairman of the global investment management firm Grantham Mayo Van Otterloo (GMO), said in a recent letter to shareholders we are now witnessing the first global bubble in history, covering all asset classes. ‘From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure and the junkiest bonds to mundane blue chips; it’s bubble time!’ Grantham adds, ‘Everyone, everywhere is reinforcing one another. Wherever you travel you will hear it confirmed that ‘they don’t make any more land,’ and that ‘with these growth rates and low interest rates, equity markets must keep rising,’ and ‘private equity will continue to drive the markets.'”

-Christopher E. Hill, Boom2Bust.com, June 14, 2007

Regular readers of Survival And Prosperity know I blog regularly about “crash prophets” Marc Faber, Jeremy Grantham, Jim Rogers, and Peter Schiff- individuals well-known in financial/investing circles who correctly-predicted the global economic crisis that reared its ugly head back in 2008.

Why do I like reading and writing about their investment activities/recommendations?

From this blog’s “About” page:

“Vice President Dick Cheney says that his boss, President George W. Bush, has no need to apologize to the American people for not doing more to head off the financial calamity, saying no one saw the crisis coming.

During an interview Thursday with The Associated Press in his West Wing office, Cheney defended the administration’s performance on an economy that is growing weaker daily and which recently collapsed in spectacular fashion. Cheney said that ‘nobody anywhere was smart enough to figure it out.'”

-Associated Press, January 8, 2009

(Editor’s note: Bold added for emphasis)

Who are the “Crash Prophets?”

Contrary to the former Vice President’s assertions, a small number of individuals did see the current economic crisis coming. Among them were prominent investors, advisors, and money managers who, despite being ridiculed by their so-called “peers,” bravely warned others that a financial storm was coming. Perhaps their now-discredited colleagues should have known better, for these same persons also have impressive track records when it comes to calling the markets. Today, the “Crash Prophets” are positioning their or their clients’ money and continue to share their insights for what they see is more financial turbulence ahead.

Others are also now recognizing the worth of what the “crash prophets” have to say. Writing about British-born investment strategist Jeremy Grantham and his latest quarterly investment letter (I blogged about it here on November 20), columnist Carlo Rotella for The Boston Globe penned the following on the paper’s website on November 22:

Grantham’s ice-bath clarity, coming from a self-described fat cat, gives me some faint hope that the currently infantile conversation about economics and the planet being conducted by our money-handlers and elected leaders, many of them awash in the oil money that lubricates our political system, might someday advance beyond the notion that we can’t do anything about the long term for fear of inhibiting short-term growth.

Clear, forceful, disciplined thinking like Grantham’s seems obvious when you read it, but it makes much of what everybody else is saying on the same subject seem twisted and bizarre. Grantham’s quarterly letters, wry and measured in tone and solidly based on well-presented data, feel like an antidote to the magical thinking purveyed by Congress and hysterically optimistic stock-pickers.

Grantham’s long-view investment philosophy centers on the principle that prices eventually revert to the mean, and his bemused view of human nature centers on a similar reversion to the behavioral mean. We want to hear good news and assume that present conditions will persist, we tend to be bad with numbers and uncertainty, and we take comfort in short-term-oriented herd behavior of the sort that characterizes the financial industry. We need doomsayers like Grantham to counteract these tendencies.

Yes, we do need “doomsayers” like Jeremy Grantham to counteract the Pollyannish tendencies of many Americans.

Do they actually believe the same people who brought us the 2008 financial crisis and so-called “Great Recession” were actually able to “fix” that mess?

I, for one, hope to be fairly “insulated” from the Pollyannas when the balloon finally goes up, because I’ve seen how this crowd reacts WTSHTF. And it ain’t pretty.

By the way, did I mention Dick Cheney was a former client of Grantham’s?

“Nobody anywhere was smart enough to figure it out.”

Rotella’s November 22 piece- “Why we need financial doomsayers”- is a good read (don’t expect much investment intel although Grantham’s U.S. stock bubble-crash warning is touched on), which you can view in its entirety on the Globe website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Marc Faber Declares ‘I Want To Own Some Gold Because I Don’t Trust The Financial System Anymore’

Swiss-born investment advisor/money manager Marc Faber was on the Bloomberg Television show Street Smart last week. The publisher of the monthly investment newsletter The Gloom Boom & Doom Report talked with host Trish Regan about a number of financial topics, including gold. From their exchange:

REGAN: I know you have been bullish on gold for pretty much forever, Marc. But now we’re in a situation where gold is at a 4-year low. Goldman now predicting $1,050 an ounce. SocGen saying 1,000 bucks. Where do you see gold finishing the year?
FABER: I would say Goldman Sachs is very good at predicting lower prices when they want to buy something. But that aside, I would say, yes- we are down from $1,900 to $1,160 or something like this, and it’s been a miserable performance since 2011. However, from the ’99 lows we’re still up more than four times. So, I just looked at performance tables over 10 years and 15 years- gold hasn’t done that badly. Has done actually better than stocks. Now I personally, I think that we may still go lower- it’s possible, I’m not a prophet. But I’m telling you- I want to own some gold because I don’t trust the financial system anymore. I think the whole thing is going to collapse one day. And then I’ll be happy to have some assets. But of course the custody is important. I wouldn’t hold my gold at the Federal Reserve because they will lend it out. I wouldn’t hold my gold in the U.S. at all.


“More Americans ‘Can’t Afford’ to Buy Homes, Faber Says”
(Gold discussion begins at 7:30)
Bloomberg Television Video

This isn’t the first time Dr. Faber has warned about storing gold in the United States. He told CNBC’s Amanda Drury on August 16, 2013:

I have a preference for physical gold held in a safe deposit box outside the United States and preferably in Asia, for a variety of reasons.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Marc Faber, Peter Schiff Issue Another Bubble Warning

“I think we are in a gigantic financial asset bubble.”

-Marc Faber on Bloomberg Television’s Street Smart, January 14, 2014

“We have an entire economy that is supported on a foundation of bubbles.”

-Peter Schiff in a MoneyShow Las Vegas presentation, May 12, 2014

These days, the U.S. economic landscape feels a lot like 2007- if you ask me. There’s a tremendous amount of bullish sentiment out there from rising asset prices. Likewise, a number of threats are simmering in the economy and larger financial system- as was the situation seven years ago.

And just like in 2007, “crash prophets” Marc Faber and Peter Schiff are again sounding the alarm on asset bubbles.

Remember- while most other financial types were predicting clear sailing ahead back then for the U.S. economy and housing market, Faber and Schiff correctly-forecast the bursting of the U.S. housing bubble and the financial crisis that reared its ugly head by the autumn of 2008.

Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital, wrote the following on his company’s website Wednesday:

The truth is the Fed knows the economy needs zero percent rates to stay afloat, which is why they have yet to pull the trigger. The last serious Fed campaign to raise interest rates led to the bursting of the housing bubble in 2006 and the financial crisis that followed in 2008. This occurred despite the slow and predictable manner in which the rates were raised, by 25 basis points every six weeks for two years (a kind of reverse tapering). At the time, Greenspan knew that the housing market and the economy had become dependent on low interest rates, and he did not want to deliver a shock to fragile markets with an abrupt normalization. But his measured and gradual approach only added more air to the real estate bubble, producing an even greater crisis than what might have occurred had he tightened more quickly.

The Fed is making an even graver mistake now if it thinks the economy can handle a measured reduction in QE. Similar to Greenspan, Bernanke understood that asset prices and the economy had become dependent on QE, and he hoped that by slowly tapering QE the economy and the markets could withstand the transition. But I believe these bets will lose just as big as Greenspan’s. The end of QE will prick the current bubbles in stocks, real estate, and bonds, just as higher rates pricked the housing bubble in 2006. And as was the case with the measured rate hikes, the tapering process will only add to the severity of the inevitable bust

According to “Doctor Doom” Marc Faber, the extent of the bubbles goes even further than what Schiff identified. Appearing on CNBC’s Squawk Box earlier today, the publisher of the monthly investment newsletter The Gloom Boom & Doom Report warned viewers:

Today, the good news is we have a bubble in everything, everywhere- with very few exceptions. And, eventually, there will be a problem when these asset markets begin to perform poorly. The question is- what will be the catalyst? It could be a rise in interest rates not engineered by the Fed, because I think they’ll keep interests rates at zero on the Fed funds rate for a very long time… We could have essentially a break in bond markets at some point. We also could have a strong dollar. A strong dollar has already happened in the last two months signifies that international liquidity is tightening. And when that happens, usually it’s not very good for asset markets.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

Source:

Schiff, Peter. “A New Fed Playbook for the New Normal.” Euro Pacific Capital. 17 Sep. 2014. (http://www.europac.net/commentaries/new_fed_playbook_new_normal). 19 Sep. 2014.

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Marc Faber: ‘The Gold Market Has Bottomed-Out’

Well-known investment advisor/money manager Marc Faber was on the FOX Business show Opening Bell last Wednesday. Speaking by phone, the publisher of the monthly investment newsletter The Gloom Boom & Doom Report was asked by host Maria Bartiromo about the geopolitical instability going on and investing in such an environment. From their exchange:

BARTIROMO: Mark, what do you think? What would you be doing right now as an investor?
FABER: Well, basically, I always own some shares. Most of my shareholdings are in Asia… In Asia, the Indian market is up 22 percent year-to-date. The Thai market is up 20 percent in dollar terms. Jakarta is up 24 percent. Philippines up 18 percent. Karachi up 17. Ho Chi Min up 17.
BARTIROMO: So you want to continue to stay exposed to Asia then and not the U.S.?
FABER: Yes. Yes. I worry about the geopolitical tensions, and they have an impact on Vietnam. But I think all the Asian countries are so China-centric that there won’t be a military conflict. There’ll be rattling and disputes and so forth. But the U.S. doesn’t have the power to really wage a war in Asia. That we have to be very clear about.
BARTIROMO: Mark, very quickly, the bottom line on the U.S.- do you think we’re going to see a sell-off this year?
FABER: Yes.
BARTIROMO: How significant?
FABER: As I told you before, I would own some gold, because I think the gold market has bottomed-out. Year-to-date, the junior gold mining index is up 40 percent.


“How geopolitical issues could derail the markets”
FOX Business Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Marc Faber On Stocks: ‘A Rebound Is Underway’

Swiss-born investment advisor and money manager Marc Faber is uncharacteristically bullish these days. “Doctor Doom” told CNBC Squawk Box viewers this morning:

Now, a rebound is underway, in my opinion. But, I doubt we’ll make new highs…

In general, I think we’ve moved into a very low growth environment. And given the inflated asset markets- real estate, equities, and bonds- I think the future returns will be very low.


“Perma-bear Marc Faber: We’re seeing a rebound”
CNBC Video

The other week, the publisher of the monthly investment newsletter The Gloom Boom & Doom Report told a CNBC Halftime Report audience:

I rather think that we’ll make a peak sometime between the next 30 to 60 days and then go down meaningfully.

If Dr. Faber doubts new highs will be reached in this rebound, did the peak already come and go, somewhat earlier than originally expected?. It kinds of sounds that way.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Monday, August 11th, 2014 Bonds, Crash Prophets, Housing, Investing, Stocks No Comments

Marc Faber: Stocks To Peak Between Next 30 To 60 Days, Followed By 20 To 30 Percent Drop

Here’s what “Doctor Doom” Marc Faber had to say last week- in case you didn’t hear- about where he thought stocks were heading. From an exchange with the Swiss-born investment advisor/money manager and Scott Wapner on CNBC’s Halftime Report Monday:

FABER: I was looking for a correction, but now I rather think that we’ll make a peak sometime between the next 30 to 60 days and then go down meaningfully.

WAPNER: What’s meaningfully?

FABER: Well, 20 to 30 percent.

(Editor’s note: Bold added for emphasis)

“Marc Faber: Market will peak, then go down 20%-30%”
CNBC Video

Later on, when the publisher of the monthly investment newsletter The Gloom Boom & Doom Report was asked about which areas he would put money into right now, Faber responded:

Well, I would buy essentially Hong Kong shares, because I think that the Chinese stock market is breaking out on the upside, and that will lift all the Hong Kong shares. So that is a trade I would do at the present time.

(Editor’s note: Bold added for emphasis)

The head of Marc Faber Limited correctly-called the rise of China in the last decade.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Sunday, August 3rd, 2014 Asia, Crash Prophets, Investing, Stocks No Comments

Marc Faber: ‘I Will Never Sell My Gold And I Buy Every Month’

More recently, Swiss-born investor advisor/fund manager Marc Faber has been making headlines about his thoughts on equities. So I’ve been curious to hear what the publisher of the monthly investment newsletter The Gloom Boom & Doom Report has to say these days about precious metals. In particular, gold.

Dr. Faber appeared on the Bloomberg Television show Street Smart yesterday. From an exchange with host Trish Regan:

BLOOMBERG: Do you continue to invest in gold because of concerns about central banks?

FABER: Yes. I will never sell my gold and I buy every month some gold. I think it may still go down somewhat. But I wouldn’t be short gold.


“Marc Faber: I Will Never Sell My Gold”
(Gold discussion begins around 8:10)
Bloomberg Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Marc Faber: ‘Next Step’ Is For Stocks, Bonds To ‘Go Down At The Same Time’

Swiss-born investment advisor/fund manager Marc Faber, who became famous for advising clients to get out of the U.S. stock market one week before the October 1987 crash and for predicting the 2008 global financial crisis, was on the phone with CNBC’s Squawk Box yesterday morning. Dr. Faber warned viewers:

I don’t think that the economy is recovering at all. We have in emerging economies a slowdown, export growth is non-existent, and now- and I have been writing about this now for the last two years- we have geopolitical problems A, in Ukraine and B, in East China Sea…

(Editor’s note: Bold added for emphasis)

The publisher of the monthly investment newsletter The Gloom Boom & Doom Report added this about stocks and bonds:

Since the beginning of the year, the stock market has basically done nothing… but long-term bonds are up 12 percent in terms of total return. Now I believe the next step will be that both stocks and bonds will go down at the same time

(Editor’s note: Bold added for emphasis)


“Dr. Doom’s big bear parade”
CNBC Video

So what does “Doctor Doom” recommend then?:

I don’t see any assets that are terribly attractive. Now, the most under-appreciated asset is cash. Nobody likes cash. Now, on cash, for the next 10 years you will earn precisely zero. In fact, you will lose money, because Mrs. Yellen- she’s a money printer like all the others- and she will make sure that the dollar continues to depreciate in real terms. For the next 6 months, maybe cash is the most attractive… For the next 6 months, opportunities will come along all the time

(Editor’s note: Bold added for emphasis)


“Faber: Cash most underappreciated asset”
CNBC Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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