This
week we are kicking off the relaunch of Palisade Radio to mark our one
year anniversary and over 100,000 views to date. We have put together an
all star line up of industry experts that include Jim Rogers, Doug
Casey, Eric Sprott, Rick Rule, Frank Holmes, James Turk, and today on
the show with us is renowned investor Marc Faber.
When speaking about an imminent
stock market correction, Marc Faber argues that since the market hasn’t
had more than a 10% correction since 2011, it is likely that we will se
a 30-40% decline in the not to distant future.
Marc has witnessed many bull
markets and crashes in his career. Marc says that bull markets
frequently go on for longer than expected, but the current bull market
is already very old, and has been going up steeply since 2009 – in other
words, more than 5 years old. “The one thing I can say, is that we are
in a aging bull market, and the recovery has lasted longer than the
typical recovery phase over the past 100 years.”
We ask Marc if the Fed’s
current slowdown in tapering will be reversed in a stock market
correction? Marc points out that whenever there is a problem with
liquidity in the markets (1988, 2000, 2007), the Fed has stimulated the
economy by injecting liquidity, so it’s not unlikely that the Fed will
again try to support assets markets. The problem is when this goes on
long enough, numerous assets aren’t affordable for the majority of
people. The impact of this may be negative for the economy, because some
asset prices may rise disproportionally in comparison to other prices.
On the multi year low in mining
equities, Marc says that general assets are very high right now. And
the only asset class that in Marc’s view are beaten down now are the
gold and silver mining shares. When looking at the Dow Jones Index in
comparison to the GDXJ(junior gold mining stocks index), the
underperformance from the GDXJ has been colossal. As a contrarian or as a
value investor, Marc sees reasonable value in the gold mining stocks
right now. Government bonds and other assets are essentially inflated,
but the gold mining stocks are deflated.
Speaking on the influx on gold
into Asia… Marc thinks it’s an interesting situation, because in the
west we have rumors of central bank’s manipulation of the gold market to
keep the price depressed. Marc believes that these rumors are
insensible – the West should want to sell their gold at a high price,
not at a low price point.
Finally, in the last 20 years,
there has been a huge increase of wealth in Asia. The increase in gold
purchases in Asia, comes from a growing population, and a population
which is increasingly affluent. Marc says that in terms of the Asian
stock markets, they are relatively depressed in comparison to the US
stock markets, and there is better value there.
Dr Faber publishes a widely
read monthly investment newsletter “The Gloom Boom & Doom Report”
report which highlights unusual investment opportunities, and is the
author of several books including “ TOMORROW’S GOLD – Asia’s Age of
Discovery” which was first published in 2002 and highlights future
investment opportunities around the world. “ TOMORROW’S GOLD ” was for
several weeks on Amazon’s best seller list and is being translated into
Japanese, Chinese, Korean, Thai and German. Dr. Faber is also a regular
contributor to several leading financial publications around the world.
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