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One Of Main Reasons To Own Gold — Cyber Attacks: Marc Faber

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(Kitco News) - Cyber attacks are currently one of the biggest threats facing our society today, which is why it is critical for all investors to have exposure to gold, said Marc Faber, editor and publisher of the Gloom, Boom & Doom Report.

Faber doesn’t think any country is “foolish” enough to invade the U.S., noting that the biggest vulnerability that remains is a possible disruption of services such as the Internet or electricity in a big city like New York.

“Invasions are out of the question,” Faber, known as Dr. Doom for his often pessimistic views, told Hard Assets Alliance in a recent Metal Masters interview. “The vulnerability of societies is less wars that are fought with tanks. Say someone could switch the electricity or the internet off in New York. If you switch off the internet, what would happen?”

It is critical times like that which make gold’s value undeniable, he explained. “In these times, you want to have access to something physical that is a recognized medium of exchange.”

In case of alternative digital currencies, the concept comes short, Faber pointed out, noting that without the internet, the owner of the cryptocurrency cannot access it.

“Bitcoin and other cryptocurrencies have one advantage. If a person has 100 kg of gold, moving it can every difficult. But, with bitcoin, you can buy it in China, liquidate in [another country.] That might be the reason why cryptocurrencies have performed so well,” Faber said.

Dr. Doom stated that he prefers to hold onto gold, adding that he still buys the yellow metal every month, while admitting that most of the gold he owns was acquired below $300 an ounce price tag.

“In the 90s I started to buy gold every month. It is good to have a diversified asset outside the banking system that is not financially related. That is why I bought and accumulated gold,” he said. “I still buy some every month — physical gold — and I store it in a safety deposit box.”

Gold’s performance has not disappointed and when compared to Nasdaq’s action, for example, gold has done much better since 1999, he said.

One of the main drivers of gold prices in the current system is continuous printing of money, according to Faber.

“The problem with money printing is that the money flows are not evenly distributed between all assets and all consumer prices. Education costs, for example, always go up more than salaries. People are then squeezed and affordability becomes an issue,” he explained. “Fifty percent of American people have no assets. They don't benefit from money printing because their cost of living keeps going up more than the CPI would indicate.”

Faber maintained that the so-called hour of truth is coming and cash might become worthless even before that time arrives, pointing to manipulated markets and unchecked power of the central banks.

“The current system has very manipulated markets,” he said. “It is incredible to me that democracies would assign so much power to the central bankers. The central bankers today are the most powerful people in the world. They can manipulate currencies, bonds ... The current policies of central banks can only end in disaster.”

He advised for all investors to diversify: “By being in equities, in gold and having some exposure to bonds and real estate, you have some diversification. Idea is that you also have diversification geographically. And then you can hope that when the hour of truth occurs, you will only lose 50% of your assets, when your neighbor loses everything. So relatively speaking, you would have done very well.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.