Survival And Prosperity

Quote For The Week

In the 40 years I’ve been working as an economist and investor, I have never seen such a disconnect between the asset market and the economic reality… Asset markets are in the sky and the economy of the ordinary people is in the dumps, where their real incomes adjusted for inflation are going down and asset markets are going up.

Something will break very bad.

-”Doctor Doom” Marc Faber, Swiss-born investment adviser/fund manager and publisher of the monthly investment newsletter The Gloom Boom & Doom Report, 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 (among other calls), in an interview published on The Globe and Mail (Canada) website on May 8, 2013

Tags: Marc Faber

Marc Faber: ‘I Would Be Very Careful Being Overweight Equities’

On Wednesday, The Globe and Mail (Canada) published an interview it conducted with “Doctor Doom” Marc Faber, a Swiss-born investment who publishes the monthly investment newsletter The Gloom Boom & Doom Report. Dr. Faber, who became famous for advising clients to get out of the U.S. stock market one week before the October 1987 crash, has been warning for some time now about another 1987-like correction in the stock market. When I last blogged about “Doctor Doom” back in March 13, he had this to say about the nice run in equities:

I believe it will end badly this year.

The Canadian publication alluded to this and asked what could precede such an event. Dr. Faber warned:

Something could come along, geopolitically or otherwise. I would be very careful being overweight equities. I still have 25 per cent in equities and 25 per cent in corporate bonds.

The article added:

He said he feels “deeply uncomfortable” with that much allocation to equities, but also doesn’t want to shut stocks out entirely given the possibility they could still rise significantly before a correction.

Faber, who also predicted the ongoing bull market in gold, revealed that his maximum allocation to gold at the time of the interview was 25 percent of assets.

By Christopher E. Hill, Editor
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:

“Master of doom Marc Faber is feeling gloomy about Canada.” The Globe and Mail. 8 May 2013. (http://www.theglobeandmail.com/globe-investor/inside-the-market/master-of-doom-marc-faber-is-feeling-gloomy-about-canada/article11788240/). 11 May 2013.

Tags: corporate bonds, gold, Marc Faber

Marc Faber On Stock Market Run: ‘I Believe It Will End Badly This Year’

“Doctor Doom” Marc Faber appeared on CNBC’s Closing Bell last Thursday. Dr. Faber, who became famous for advising clients to get out of the U.S. stock market one week before the October 1987 crash, shared his thoughts on the record run for equities. The Swiss-born investment adviser warned viewers:

You have recently, I think, Stan Druckenmiller, on the program. He’s a very thoughtful person, and I share his views “it will end badly.” But unlike Stan, I believe it will end badly this year.

“Marc Faber: ‘It Will End Badly This Year’”
YouTube Video

By Christopher E. Hill, Editor
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.)

Tags: Marc Faber, Stanley Druckenmiller

David Rosenberg: Gold Heading To $3,000 An Ounce

I haven’t talked about David Rosenberg, Gluskin Sheff’s Chief Economist and Strategist too much on this blog. But back when I was running Boom2Bust.com, I would mention him on a regular basis. On February 9, 2011, I wrote:

For those of you not familiar with Mr. Rosenberg, back in 2007 he was one of the first economists to warn investors of the “Great Recession.” I started following Rosenberg when he was still Chief North American Economist at Bank of America-Merrill Lynch in New York. CNN Money said this of the economist last year:

Rosenberg, who left an eight-year career at Merrill Lynch to become chief economist at Gluskin Sheff last May, is one of Wall Street’s best-regarded financial experts. His on-the-ball predictions have landed him on Institutional Investors’ list of All-Star researchers for years.

Yep. Rosenberg was one of the original “crash prophets.”

And these days, he’s really bullish on gold.

Jonathan Burton posted the following on MarketWatch’s blog The Tell last night:

Forget the Dow. If you really want to make some money, buy gold, says David Rosenberg. Gold is heading to $3,000 an ounce, the chief economist & strategist at investment firm Gluskin Sheff + Associates said Tuesday in a speech at a CFA Institute of Chicago conference.

$3,000 an ounce. Significantly higher from where his old employers see the yellow metal going in the next couple years. Jan Harvey reported on the Reuters website yesterday:

Even Bank of America Merrill Lynch, which remains broadly positive on gold, cut its forecasts this week. While still expecting prices to rise strongly next year to an average of $1,838 an ounce, it sees prices turning lower in 2015.

“The importance of investors, coupled with the lack of investor buying, has led to concerns that non-commercial market participants in general have reassessed the rationale of holding gold in a portfolio,” the bank said, reducing its 2013 and 2014 forecasts and cutting its 2015 price view to $1,675 from $1,900.

Still, there’s a reason why Rosenberg was the only economist recognized for his accurate economic projections in Fortune Magazine’s “Best and Worst of Wall Street 2011” and was ranked most accurate forecaster for 2011 by MSNBC. Back in that February 2011 post of mine I called attention to what I called a “must-read” article by him in the Globe and Mail (Canada) in which he wrote:

The United States is in a radical money-easing environment, in which the Fed is keeping interest rates artificially low while pumping money into the economy. This type of policy breeds speculative rallies. It inevitably results in boom-bust cycles such as the ones we saw in 1999-2002, 2006-09 and today. This is no time for short memories.

At best, the Fed has managed to create an illusion of prosperity, but it won’t last. And that should surprise no one who has followed the Fed’s activities over the past couple of years.

“Keeping interest rates artificially low.” “Pumping money into the economy.” “Speculative rallies.”

Any of this sound familiar to readers? It should, as other more-visible “prophets” (Faber, Rogers, Schiff, to name a few) are warning about such events now in 2013.

I leave you with this from Rosenberg’s Globe and Mail piece:

This is no time for short memories.

You can read Burton’s entire Rosenberg gold price call post on The Tell here.

By Christopher E. Hill, Editor
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)

Sources:

Harvey, Jan. “More banks peel away from bullish consensus on gold.” Reuters. 5 Mar. 2013. (http://www.reuters.com/article/2013/03/05/gold-forecasts-idUSL6N0BXJ1620130305). 6 Mar. 2013.

Rosenberg, David. “Fed’s illusion of prosperity bound to vanish.” Globe and Mail. 8 Feb. 2011. (http://www.theglobeandmail.com/globe-investor/feds-illusion-of-prosperity-bound-to-vanish/article1899546/). 6 Mar. 2013.

Tags: Bank of America-Merrill Lynch, David Rosenberg, gold, gold price, Jim Rogers, Marc Faber, money printing, Peter Schiff

Marc Faber Says Stocks Overbought, Bonds ‘Extremely Oversold’

“Doctor Doom” Marc Faber appeared on CNBC’s Fast Money last Thursday. Dr. Faber, who became famous for advising clients to get out of the U.S. stock market one week before the October 1987 crash, shared his thoughts about another 1987-like correction in the stock market. He told viewers:

I don’t think that’s yet there. But I think we have made an intermediate top. And it could be a longer-term top. I don’t think the market is 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 that in the meantime bonds, which are extremely oversold, could rebound.

The Swiss-born investment advisor and fund manager added:

But I think that the market has now become quite overbought. And that there is very significant or overextended bullish sentiment. Everybody says, “Sell bonds, buy equities.” And when everybody thinks alike, one has to be careful.

“Marc Faber: ‘Market Has Peaked Out’”
CNBC Video

By Christopher E. Hill, Editor
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.)

Tags: Marc Faber

Marc Faber Talks Stocks, Sees Opportunities In European Telecoms

Swiss-born investment advisor and fund manager Marc Faber is widely-known for shocking the Pollyannas on Wall Street. However, the publisher of the monthly investment newsletter The Gloom Boom & Doom Report has toned it down lately and has instead been discussing U.S. and foreign equities in various media outlets. Dr. Faber was on the phone with the Yahoo! Finance show Breakout this past Wednesday and told viewers:

What is happening with all central banks is that they have been essentially printing money. In other words, they’ve been increasing the quantity of money through asset purchases and expanding the balance sheet. And I suppose it won’t be that easy to find an exit strategy… they will continue to essentially print money in the years to come. Now could it be for a while they reduce the asset purchases or stop altogether? Yes, that’s a possibility…. But if the stock market went up very strongly as occurred in ’87, and the real economy does not participate- and as you know this recovery since June 2009 has bypassed, say, the majority of America- and if this happens, it would be a major embarrassment for the Federal Reserve.

The head of Marc Faber Limited shared this little nugget on the show:

I think there are some opportunities in European telecom stocks at the present time.

On Monday, Dr. Faber was also on India’s CNBC-TV18. Here is what he had to say about global equities on the show Bazaar:

My scenario for 2013 is this. Either the markets will make a peak relatively soon which will not be exceeded, or we have a correction of a month or two and then another strong rally into August such as we had in ’87 when the Dow Jones between January ’87 and August ’87 increased by 41 percent and then lost 40 percent in two months…

The more likely scenario is in my view actually a strong rally into the summer, but first a correction, and then this rally and then more significant tops in 2013 which will not be exceeded for a while.

You can watch Dr. Faber on Breakout here and on Bazaar here.

By Christopher E. Hill, Editor
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.)

Tags: central banks, foreign stocks, Marc Faber, money printing, telecommunications, U.S. stock

Billionaire Investors Divided On Gold As Demand Hits Record Value Level In 2012

We’re on a roll today. Consider it make-up material for yesterday. Anyway, let’s turn our attention over to money. “Real” money like gold, that is. The precious metal had another solid year in 2012. From a press release today issued by the London-based World Gold Council, the gold industry’s market development organization:

2012 sees gold demand hit record value level

Q4 2012 up 4% year-on-year as India, China and central banks drive demand

In value terms, gold demand in 2012 was US$236.4bn – an all-time high. Gold demand in value terms for the final quarter of the year was 6% higher year-on-year at US$66.2bn, marking the highest ever Q4 total.

Global gold demand in Q4 2012 was 1,195.9 tonnes(t), up 4% on the same quarter in 2011. In Q4 2012, the average gold price reached a record level of US$1,721.8/oz, up 1% on the previous record average price in Q3 2011. The average price during 2012 was US$1,669.0/oz, up 6% from US$1,571.5/oz in 2011.

The key findings from the report are as follows:

• Whilst Indian full year demand was down 12% on the previous year, the market performed strongly in the final quarter with total demand at 261.9t, an increase of 41% on the same period last year. Both jewellery and investment demand reached their highest levels for six quarters. Demand for jewellery was up 35% year-on-year to reach 153.0t, and strong retail demand led to 108.9t of investment buying. In India the prospect of duty increases, which came in to force in January 2013, may have added to strong buying in the final quarter to beat the anticipated price rises.
• Chinese demand was flat year-on–year, reflecting the impact of economic slowdown. However looking at Q4, total demand was up 1% on the previous quarter to 202.5t. Jewellery demand was137.0t up 1% on Q4 2011 and investment demand was 65.5t, up 2% on the previous year. These increases may reflect the fact that the economic slowdown in China appears to have been shorter than expected.
• Central bank buying for the full year rose by 17% compared to 2011, totalling 534.6t, the highest level since 1964. Central bank purchases stood at 145.0t in Q4, up 29% on the corresponding quarter in the previous year, making this the eighth consecutive quarter in which central banks have been net purchasers of gold.
• Global investment in ETFs in 2012 was up significantly by 51% on the preceding year, though Q4 was down 16% to 88.1t when compared with the high levels recorded in Q3 2012.

“Gold Demand Trends: Full year and Q4 2012″
WGC Video

However, the price of gold hasn’t glimmered too much lately. Debarati Roy and Phoebe Sedgman reported on the Bloomberg website this evening:

Billionaire investors George Soros and Louis Moore Bacon cut their stakes in exchange-traded products backed by gold last quarter as futures dropped the most in more than eight years. John Paulson maintained his holding.

Soros Fund Management LLC reduced its investment in the SPDR Gold Trust, the biggest fund backed by the metal, 55 percent to 600,000 shares as of Dec. 31 from three months earlier, a U.S. Securities and Exchange Commission filing showed yesterday. Bacon’s Moore Capital Management LP sold its entire stake in the SPDR fund and lowered holdings in the Sprott Physical Gold Trust. Paulson & Co., the largest investor in SPDR, kept its stake at 21.8 million shares.

Roy and Sedgman noted gold prices fell 5.5 percent in the fourth quarter of last year, the most since the second quarter of 2004. Renewed optimism in the U.S. economy was the reason given by a number of observers cited in the piece.

Now, why is it that the “crash prophets” who saw the 2008 global economic crisis and “Great Recession” coming, such as Marc Faber, Jim Rogers, and Peter Schiff, are sounding the alarm about more hard times ahead of us, while those finance- and investing-types who never saw the financial storm approaching until it bit them and their clients in the rear-end are the same ones now predicting “all’s well” for the U.S. economy? Are they not aware of the financial manipulation that’s been required to get us this short-term, artificial prosperity?

My guess is that it registers, but they’re incapable of seeing the big picture.

All I know is this. While I’ll keep an open mind, I’m inclined to cast my lot with those guys who correctly-called the “Panic of ‘08” and have a knack of being correct on a consistent basis.

You can read the entire WGC press release on their website here.

By Christopher E. Hill, Editor
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)

Source:

Roy, Debarati and Sedgman, Phoebe. “Billionaires Soros, Bacon Cut Gold Holdings on Decline.” Bloomberg. 14 Feb. 2013. (http://www.bloomberg.com/news/2013-02-14/billionaires-soros-bacon-reduce-gold-holdings-as-prices-slump.html). 14 Feb. 2013.

Tags: central banks, China, George Soros, gold, gold demand, gold jewelry, gold prices, India, Jim Rogers, John Paulson, Louis Moore Bacon, Marc Faber, Peter Schiff, SPDR Gold Trust, Sprott Physical Gold Trust, WGC, World Gold Council

Marc Faber: Gold Is A Must-Have Investment

Back in mid-January, I blogged about a piece on the Chicago-based Commodity HQ website that claimed “Doctor Doom” Marc Faber buys gold every single month. Yeah, the publisher of the monthly investment newsletter The Gloom Boom & Doom Report is that sold on the precious metal. And this past Tuesday, the Swiss-born investment advisor and fund manager told attendees at the Mining Indaba forum in Cape Town, South Africa, that holding some investments in gold and other precious metals was extremely important. Paul Garvey reported on The Australian website Wednesday:

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.”

When I read this part of the article, I actually tabulated those percentages, saw that they added up to 125 percent, shook my head, added up the numbers again, shrugged, then continued on.

Then I saw the next line.

What a knucklehead I am.

And who could have thought someone the financial media has nicknamed “Doctor Doom” could be so funny?

Garvey continued:

Jokes aside, he said holding some investments 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.”

(Editor’s note: Italics added for emphasis)

Lost value? How about all fiat currencies throughout history have eventually ended up being worthless.

By Christopher E. Hill, Editor
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:

Garvey, Paul. “Don’t bank on China demand, says contrarian Marc Faber.” The Australian. 6 Feb. 2013. (http://www.theaustralian.com.au/business/mining-energy/dont-bank-on-china-demand-says-contrarian-marc-faber/story-e6frg9df-1226571547996). 8 Feb. 2013.

Tags: cash, Marc Faber, money printing, real estate

Peter Schiff: Stock Market Rally ‘An Illusion’

Marc Faber. Jim Rogers. Peter Schiff.

Three “crash prophets” who correctly predicted the 2008 financial crisis in the United States.

I’ve already blogged today about what Faber and Rogers think of rising U.S. stock prices- and what they suspect is behind it.

How about Schiff, the CEO/Chief Global Strategist of Euro Pacific Capital and CEO of Euro Pacific Precious Metals, LLC?

From his February 1 entry on the The Schiff Report YouTube video blog:

Well the Dow Jones closed above 14,000 today. That’s something it hasn’t done since November 2007. Of course, the media is going to make a big deal about Dow 14,000, the economy is coming back, the markets are coming back.

But, of course, all of this is an illusion created by inflation.

When you debase your currency- when you have inflated dollars that you use to measure stock prices- of course stock prices are going to go up. The price of everything is going up. The government denies there’s inflation. But prices prove it. As if we even need that. The money supply going up is the sheer definition of inflation. And we’re creating a lot of money. And prices are responding by rising, and stock prices are no exception.

But remember, the last time the Dow Jones was at 14,000 back in ’07, gold was about $700 an ounce. Today, gold’s about $1,600 an ounce. So the Dow would have to double from here, and it still wouldn’t be where it was in terms of real money five-and-a-half years ago.

So this rally is an illusion.

But the people on Wall Street don’t even want to acknowledge that.

And going forward? Schiff pointed out:

We’re already at 0 percent interest rates, we’re already at 8 percent unemployment- 14 percent if you use the U-6 number. And that’s as good as it gets during a recovery. And now we’re already trending down.

And I think if the Federal Reserve wants to slow down the rise in interest rates- which we know it does- it’s going to have to accelerate the QE. I don’t think $85 billion of money printing is enough to keep interest rates from rising. And so they’re going to have to print even more. That means the dollar is going lower. Commodity prices going higher. Looks what’s happened to oil prices- they’re almost at $98 a barrel. Look at Brent- Brent Crude is really up. It’s almost at a $20 premium now over North Sea. Gold prices have been stable, but I think gold’s about to take off. I think on Wall Street they’re rationalizing. They’re selling gold and selling gold stocks because they claim that the crisis is over, there’s nothing to worry about anymore, Europe isn’t falling apart, the U.S. economy is getting better, so there’s no reason to own gold. And so you sell gold and you sell your gold stocks. But they don’t understand. People weren’t buying gold because of the European crisis or because of even the U.S. financial crisis. They were buying gold long before those crises began. Look at how gold was doing from 2000 to 2007, 2008. It did better before the crisis than it did during the crisis because the real crisis that worries the gold buyer is a currency crisis. People aren’t buying gold because they’re worried about political uncertainty. They’re buying gold because the politicians are printing too much money. Well, the cheap money policies that were in place prior to the 2008 financial crisis are still here, only, it’s worse. It’s more excessive. The monetary policy is easier. Rates are lower. Central banks are printing money even faster. So, instead of there being no more reasons to buy gold, the reasons have never been better. There have never been more reasons to buy gold, it’s just that Wall Street doesn’t understand this yet. But they will.

“Dow 14,000, GDP, Jobs, Fed, inflation, treasuries, & gold.”
YouTube Video

By Christopher E. Hill, Editor
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.)

Tags: central banks, crude oil, crude oil prices, currency crisis, gold, gold stocks, Jim Rogers, Marc Faber, money printing, Peter Schiff, QE, quantitative easing, U-6, U.S. dollar, unemployment

Marc Faber: Higher Stock Market Goes ‘More Likely We Will Have A Nice Crash, A Big Time Crash’

Enough of my local scene. Let’s talk money.

Before the weekend, the economic Pollyannas were letting their hair down and celebrating big time. This was partly due to the Dow Jones Industrial Index crossing 14,000 last week- something that hasn’t happened since October 2007. Enter “Doctor Doom” Marc Faber. The Swiss-born investment advisor and fund manager sat down with Bernie Lo (Bernie’s a hoot- was devastated when my satellite TV provider yanked CNBC World) last Thursday on CNBC Asia’s The Call and warned viewers:

When you print money, the money doesn’t flow evenly in an economy. It flows to some people or to some sectors first, and in this case, it flowed into equities, and until about five months ago, bonds… But I think that the stock market is not that cheap any longer… The stock market is discounting a lot of the good news…

I believe that markets will punish central banks at some stage, through an accident…

Either the bonds market will collapse- bonds have been actually very weak considering the unlimited QE of the Federal Reserve. The other thing is that stocks could go into a bubble stage, but that the economy actually doesn’t respond very much.

(Editor’s note: Italics added for emphasis)

“Marc Faber: Markets Will Punish Central Banks, 30.1.2013.”
YouTube Video

The editor/publisher of the monthly investment newsletter The Gloom Boom & Doom Report had another dire warning for CNBC Asia viewers which didn’t make it into the above video footage. Katie Holliday, a CNBC Asia writer, wrote on the CNBC website last Thursday:

“For the first time in four years, since the lows in March 2009, I love this market because the higher it goes the more likely we will have a nice crash, a big time crash,” he said.

(Editor’s note: Italics added for emphasis)

Dr. Faber made a name for himself in financial/investing circles for reportedly advising clients to get out of the U.S. stock market one week before the October 1987 crash.

By Christopher E. Hill, Editor
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:

Holliday, Katie. “Markets Will Punish Central Banks: Marc Faber.” CNBC. 31 Jan. 2013. (http://www.cnbc.com/id/100421977). 5 Feb. 2013.

Tags: Bernie Lo, central banks, Marc Faber, money printing, QE, quatitative easing