Marc Faber, editor of the “Gloom, Boom & Doom Report,” recently stated that gold is his preferred asset class for the upcoming ten years. Earlier this year, he recommended that investors purchase some gold each month for the rest of their lives. This time, Faber went so far as to make his statements at an Abu Dhabi meeting of the CPA Association.
According to Goldseek.com, Mr. Faber stated that it is unlikely that extreme deflation will occur under the U.S. Federal Reserve leadership of Ben Bernanke. He even compared Mr. Bernanke’s commitment to anti-deflation strategies to “Mein Kampf,” Adolf Hitler’s ideology that was unfortunately not believed until too late. Investors are exposed to more dangers from holding bonds and cash than holding equities, says Mr. Faber.
His advice to long-term investors is to purchase equities and gold, specifically gold and resource shares that are globally diverse. He also recommends investments in frontier and emerging markets because they will experience more positive growth in the next two decades than will developed markets. However, the talk was not all sunshine and roses because as Mr. Faber admits, he is the “most pessimistic of forecasters.”
An impending Chinese crisis was the approaching thundercloud described by Mr. Faber. He believes that future inflation will lead to the replacement of the dollar with another unit of currency. During that time, individuals who hold bonds and cash will lose their shirts. China is already taking steps to combat this situation by encouraging its citizens to purchase silver and gold. In addition, the country is promoting the financing of bullion acquisitions by its banks.
As China pays premiums to import raw ore for discounted or contract milling within the country, U.S. law enforcement agencies are attempting to shut down a cash for gold shadow industry. This market revolves around thieves who steal gold jewelry and sell it to cash for gold shops to get quick payment. According to police within some cities, the increase in thefts and burglaries seems to track the growing number of cash for gold shops in this country.
Source: Crawshaw, Julie. Moneynews.com. Faber: Gold Is My Asset Pick for the Next 10 Years.
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