Gold Run Not Over: Marc Faber

22 April 2010, 02:17 p.m. EST
By John Dourekas
Of Kitco News


Hong Kong (Kitco News) -- The rising price of gold is far from over since paper money will continue to lose value, according to Marc Faber, editor and publisher of The Gloom, Boom & Doom Report.

“If you have $100 today, you buy that much less in terms of a basket of goods and services then you did ten years ago – paper money has already lost a lot of value and in my view it will continue to lose value.  The price of gold will adjust on the upside according to the loss of the purchasing power of money,” Faber said in an exclusive interview with Kitco News. 

Still bullish on gold, Faber views precious metals as currencies, not commodities. He said that precious metals are currently his currencies of choice. Currently, stronger currencies such as the Canadian and Australian Dollar are still vulnerable to a slowdown in the Chinese economy, he said on the sidelines of the World MoneyShow in Hong Kong.   

Faber said that he continues to buy the yellow metal, “If someone is rich they should buy a ton every month. “

He also said that everyone should buy gold because of the low US interest rates, “At zero percent interest, I don’t see why someone would not have part of their money in gold and silver.”

Faber said that "as far as the eye can see, interest rates under Bernanke will stay at zero and below."   He noted that the current Vice Chairman of the Fed , "Janet Yellen, another totally, ignorant economist, removed from any reality, said herself six months ago, ‘if I could implement interest rates below zero, I would do it.’ So now you know what the policy in the US will be,” Faber said.
He also said that if gold prices substantially rise one day, there could be expropriation. “The Americans could force the Europeans to do the same – once they have all the gold in the world they would re-value it at $10,000 an ounce," Faber said.

Goldman Sachs: Politically Motivated Ordeal

Faber does not think the SEC charges against Goldman Sachs will have a very significant impact on the markets since the accusations are “purely politically motivated.”

“Obama has lost the trust of the people; his approval rating is worse than Bush at this stage in the presidency.  When people are dissatisfied in a democracy - you go after a minority to target – in the case of America you go after Goldman Sachs because it is the symbol of Wall Street and excessive money creation and there is also a tone of anti-Semitism there.”

He added, “Mr. Obama will do everything he can to get re-elected and that may involve some very bad decisions. He is like a roman emperor; he just gives out bread to the mob and produces games and circuses.”

Overall, Faber has little hope for financial reform in the U.S. “The U.S. should have less regulation and not more regulation – that is the origin and cause of the crisis.”

Market Manipulation

On the subject of market manipulation talk, Faber said that if market manipulation exists then it is good for gold buyers since it keeps the price down.

"If you have manipulation to keep the price down, it eventually goes ballistic. So, all the people that are bitching about the manipulation of silver and gold should be happy that it is manipulated because it still gives them an opportunity to buy it at a depressed priced,” Faber said.

Faber said he suspects that there may have been some efforts by Central Banks to keep the price down but wouldn’t go as far to call that manipulation. 

“If someone talks about manipulation, well,  I think the whole world through government intervention has become manipulated so it is very difficult to make forecasts,” said Faber. 

China Bubble?

Is China headed for a bubble? “For sure,” said Faber. “The symptoms are there. It is a bubble when something goes substantially above the trend, when there is excessive credit gross and when there is excessive speculation. All these elements are in China,” said Faber who predicted the Japan and NASDAQ bubble collapse.

“If everything is so great in China, why is the Chinese stock market lower today than it was in August in 2009?” he asked. Faber pointed at Wednesday's weak signals in large steel companies such as Rio Tinto and Freeport McRoan. The demand for industrial commodities will be quite vulnerable with the China slowdown, he said.

Greek Tragedy

A Greek bailout is bad news for the euro, said Faber. “It increases the liabilities of the government and I really think Greece will go bust. What does Greece produce? Olive oil and tourism. This is not sufficient to bail out Greece.”

--By John Dourekas of Kitco News,