Faber: Gold Permanently Over $1,000
Here’s a interesting take: Marc Faber says that Gold has permanently eclipsed the $1,000 level:
“Gold won’t fall below $1,000 an ounce again after rising 27 percent this year to a record as central banks print money to help fund budget deficits, said Marc Faber, publisher of the Gloom, Boom & Doom report.
The precious metal rose to all-time highs in New York and London today as the dollar weakened. The Dollar Index, a gauge of value against six other currencies, has declined 7.9 percent this year and today fell to a 15-month low. News last week of bullion purchases by the Indian and Sri Lankan governments raised speculation that other countries would follow suit.
“We will not see less than the $1,000 level again,” Faber said at a conference today in London. “Central banks are all the same. They are printers. Gold is maybe cheaper today than in 2001, given the interest rates. You have to own physical gold.”
China will keep buying resources including gold, he said.
I have no idea if that will be the case — never say never — but it sure makes for interesting cocktail party chatter . . .
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With this post, I add the category “Gold & Precious Metals”Source:
Gold Price Won’t Drop Below $1,000 an Ounce Again, Faber Says
Zijing Wu
Bloomberg, Nov. 11 2009
http://www.bloomberg.com/apps/news?pid=20603037&sid=az6qQ8ZuXg9M
November 12th, 2009 at 7:22 am
Can you say Gold Bubble? This feels like Oil at $140 a barrel.
November 12th, 2009 at 7:24 am
Of course gold can pull back below $1K/oz. The dollar could also rally to new all-time highs. It’s just not very likely. Like Dow 10,000, the fact that a round number has been exceeded means nothing if you discount the superstition attached to round numbers. It is also interesting to note that gold is nowhere near its historical high in real terms — the latest “high” is nominal.
I can say this for certain: Gold will always have value somewhere, to someone (or better yet, anywhere/everywhere to anyone/everyone).
It’s interesting to note that all players involved in the issuance of fiat scrip (it is, after all, nothing but), hold gold (and as you note, some are increasing their holdings) as an assets. That fact alone should clearly demonstrate its relative value as a store of wealth.
November 12th, 2009 at 7:38 am
I’m sure Dr. Faber will be delighted when learning of his new name… [BR: Heh heh -- I'll fix]
Karl Marx: “For the bureaucrat, the world is a mere object to be manipulated by him. ”
Groucho Marx: “Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies. “
November 12th, 2009 at 7:41 am
Citigroup credit card story. 25 years, never late, 7k limit……..charge 1100 bucks for some carpet, get denied……….hmmmm…….got flagged for possible fraud, now never charge more than 100 bucks at a pop, of course every 2-3 years a big purchase, ac unit etc., never any problems, happened twice yesterday, also for some furniture, yet, they had no problem with 50 bucks for lunch, lol, i guess the crooks can’t get carpet but can eat well………….i’d say the whole thing was weird…….man when that cc get’s denied, them sales folks look at you like, ahhhhhhhh, you’re the problem we are all in this mess…….now of course around 4 oclock get an electronic phone call, “if these charges are real, press 1″ , i don’t blame them for the diligence, it was just weird there was no way to get it rectified on the spot, and then they allowed other charges, that’sa life
November 12th, 2009 at 7:45 am
Well, I think we are now in a somewhat different form of stagflation. No, not exactly like the Arthur Burns/Jimmy Carter variety, but something different. The stag part is wages and reimbursements. To see work weeks at 33 hours and huge jumps in productivity…when this is thought about it is deflation and in this Mish and others have it right. But the inflation is coming in the price of gold and other needed commodities, as well as the price of energy, and the huge increases in taxes to the individual. This is the stagflation of the individual and small business owner here in the United States, not the multinational corporation or the mindless spending of our national government. These two entities get more of a pass this time, at least until it gets to the 9th inning of this farce. People keep saying “Gold can’t keep going up”…well if the hollowing of the dollar continues, that action may well continue to get a reaction in the price of commodities and energy.
B in T
November 12th, 2009 at 8:02 am
From Mish’s website:
Email From Dr. Mike Vasovski
“Dear Mish
Since learning about Congressman Ron Paul in early 2007 as a result of hearing him in the debates, I am now fully convinced that a commodity back/sound money currency is the only way for us to prosper and remain free Americans.
I am fully invested in American Eagle gold coins in my IRA retirement accounts, a fact that can be checked at FEC.gov under my personal disclosure statement. I practice what I preach.”
…this is about his endorsement of sound money candidates for the 2010 election. It is not whether this guy is a gold bug or not, but it is about what seems to be the upside-downing of America. Not long ago, people who put their entire retirement in gold would be laughingly called “lifetime workers”…now there is more than a small chance this fellow has taken a radical solution as a conservative response to government policy….
…Worth thinking about…
B in T
November 12th, 2009 at 8:06 am
[...] morning, here’s what I read from Dr. Marc Faber: “Gold won’t fall below $1,000 an ounce again after rising 27 percent this year to a record as [...]
November 12th, 2009 at 8:16 am
Though not a gold bug per se, I would recommend (to people that bother to ask) at least 10 – 30% of ones portfolio be in gold/silver or other precious metals. What I keep seeing in my travels, is a general distrust in our government and monetary system. Gold and silver (in ones hands) tends to give people a feeling of worth and value – as it has been for thousands of years.
November 12th, 2009 at 8:20 am
“Gold won’t fall below $1,000 an ounce again…” Faber
This ranks right up there with real estate never goes down; derivatives are good; debts don’t matter, Reagan proved that….
and various other stupid comments.
As a gold owner and investor for years, IMHO gold will go higher long term. But to say it won’t go below $1,000 ranks right up there with all time stupid comments.
November 12th, 2009 at 8:29 am
gold, silver and platinum have significant volatility, the miners even more so…with that -the numbers speak for themselves – against major currencies – from James Turk – this is not a change in trend, this is an 8, now 9-year trend
Gold % Annual Change
USD AUD CAD CNY EUR INR JPY CHF GBP
2001 2.5% 11.3% 8.8% 2.5% 8.1% 5.8% 17.4% 5.0% 5.4%
2002 24.7% 13.5% 23.7% 24.8% 5.9% 24.0% 13.0% 3.9% 12.7%
2003 19.6% -10.5% -2.2% 19.5% -0.5% 13.5% 7.9% 7.0% 7.9%
2004 5.2% 1.4% -2.0% 5.2% -2.1% 0.0% 0.9% -3.0% -2.0%
2005 18.2% 25.6% 14.5% 15.2% 35.1% 22.8% 35.7% 36.2% 31.8%
2006 22.8% 14.4% 22.8% 18.8% 10.2% 20.5% 24.0% 13.9% 7.8%
2007 31.4% 18.6% 10.4% 23.0% 17.9% 17.5% 24.7% 21.5% 29.2%
2008 5.8% 32.5% 32.4% -1.1% 11.9% 30.4% -14.9% 0.2% 44.3%
Annual Average 16.3% 13.3% 13.6% 13.5% 10.8% 16.8% 13.6% 10.6% 17.1%
31-Oct-2009 17.7% -8.7% 4.0% 17.8% 11.3% 13.7% 16.7% 13.1% 4.8%
Silver % Annual Change
USD AUD CAD CNY EUR INR JPY CHF GBP
2001 -0.1% 8.5% 6.1% -0.1% 5.3% 3.1% 14.4% 2.3% 2.7%
2002 4.8% -4.6% 4.0% 4.9% -11.0% 4.3% -5.0% -12.6% -5.3%
2003 24.0% -7.3% 1.4% 23.9% 3.2% 17.7% 11.9% 11.0% 11.9%
2004 14.3% 10.2% 6.5% 14.3% 6.4% 8.6% 9.6% 5.4% 6.5%
2005 29.6% 37.7% 25.5% 26.3% 48.1% 34.6% 48.8% 49.3% 44.4%
2006 45.3% 35.3% 45.3% 40.5% 30.4% 42.6% 46.7% 34.8% 27.5%
2007 15.4% 4.1% -3.1% 8.0% 3.5% 3.2% 9.5% 6.7% 13.5%
2008 -23.8% -4.7% -4.7% -28.9% -19.5% -6.2% -38.8% -27.9% 3.8%
Annual Average 13.7% 9.9% 10.1% 11.1% 8.3% 13.5% 12.1% 8.6% 13.1%
31-Oct-2009 44.2% 11.8% 27.4% 44.3% 36.3% 39.2% 42.9% 38.6% 28.4%
November 12th, 2009 at 8:35 am
If he thinks gold has reached a permanently high plateau, Marc Faber must have some special insight into the growth in Indian weddings.
November 12th, 2009 at 8:41 am
OT, what to do with unsold mcmansions? empty house parties, hire cops at security guards http://bit.ly/3Ektk3
November 12th, 2009 at 8:59 am
Gold Bubble? That’s ridiculous, I mean gold is just 10% above its’ all-time high. Has anyone looked at supply and demand fundamentals for gold? Anyone read Paul Tudor Jones’ gold analysis, what will likely go down as the seminal piece for this next leg of the gold bull run? Regardless of what the media and government wonks think, paper money is just that, paper – and paper burns. With the amount of debt and unfunded obligations outstanding, there will be trillions more of those paper/electronic dollars created over the next 10-20 years. In addition, emerging market central banks have their currency reserves woefully overweighted to paper currencies, particularly dollars – on average they have about 3% in gold while western central banks have approx 35% of reserves in gold. Sure, gold might very well have sharp and violent corrections, but the Indian Central Bank along with the breakout about $1033 sets a pretty solid floor. Is it going to $2000 tomorrow? I doubt it but I suspect that it is going to go a lot higher, a lot faster than the mainstream thinks. Has anyone been calling copper in a bubble? Copper went from $1.25/lb to over $3.00/lb… Now everything that rallies is a bubble…
November 12th, 2009 at 9:01 am
B in T
I cannot see any way around the scenario where commodities inflate while wages and discretionary incomes stagnate. The USA is no longer the center of the global economic universe. Growth will go elsewhere and once global growth ignites, commodity prices will rise but our high structural unemployment rate will keep wage hikes subdued. The average Joe will be paying more for anything that is traded globally. Thus food, gas, electricity (coal), things made of metals. They will all go up relative to the value of the dollar on the global exchange.
It will take many more quarters of productivity growth to offset these declines in living standards. Even then, it looks as though the benefits will accrue more to profits than to wages, and thus more to investors and not to workers. Glad I am not having to start out in this world. It is going to be tough on our children.
November 12th, 2009 at 9:09 am
Yes, and with all forms of government deciding that property taxes are the pot of gold at the end of the rainbow, why would anyone in this environment want to get back into property in a big way? Gold makes sense, even if it is a distorted sense from what we’ve known in the past.
November 12th, 2009 at 9:11 am
B in T – It’s called a reduced standard of living for Americans. We have over-consumed for years and the damage has been done to our currency – that’s the exact thesis that Jim Rogers, Marc Faber and Peter Schiff have posited for investing in commodities and Asia NOW – to maintain your purchasing power…
November 12th, 2009 at 9:11 am
http://online.wsj.com/article/SB125798515916944341.html?mod=WSJ_hpp_MIDDLTopStories
NOVEMBER 12, 2009.Returning Workers Face Steep Pay Cuts
Many Bouncing Back From Layoffs Struggle to Recoup Earning Power as Wage Erosion Threatens to Slow Economic Recovery
November 12th, 2009 at 9:13 am
If you look at the price action, gold does not look like it is in a bubble. It looked more like a bubble in 2005 and last year when it was ripping off $40+ single day moves. Look at the chart – do you see a parabolic blow off top forming or a steady rise in price typical of a bull market? Even with the strong gains over the past few months I still see the later. People have been bad mouthing gold for years and over that span, how have equities worked out for you? Here’s a hint – if you have been wrong about gold over the past few years you have forfeited your right to predict where it is going. Faber has a pretty good track record so he is allowed to pontificate. Will gold go below $1,000 an ounce again? Maybe, and if it does I will just buy more.
November 12th, 2009 at 9:13 am
Just think of gold as a neutral currency that can’t be rapidly produced and you get a better understanding why big money (Central Banks, Hedge Funds, etc.. hold gold).
November 12th, 2009 at 9:17 am
I guess the good doctor is more positive on gold’s outlook than he was last week.
Last Friday, Faber was quoted by the Business Intelligence-Middle East staff as saying:
“Even gold may be due for a short term correction, he says.
‘I should also mention some concerns (for now of short-term nature) I have about commodity prices including gold. A large number of commodities including oil, the CRB Index, and gold broke out on the upside in early October,’ Faber said.
‘I would regard a failure to hold above the ‘upside breakout points’ in the period directly ahead with great caution. In the case of gold a decline below US$1,000 would likely lead to further more meaningful weakness, possibly down to between US$800 and US$900,’ Faber added.”
“Marc Faber Concerned About Gold, Commodity Prices”
http://www.investorazzi.com/2009/11/06/marc-faber-concerned-about-gold-commodity-prices/
November 12th, 2009 at 9:22 am
boom2bust – I read that in Faber’s GBD. Keep in mind, that was before the Indian Central Bank bought IMF gold at $1,045/oz….
November 12th, 2009 at 9:27 am
One could argue that gold is just starting to breakout… There’s a long way before it’s a bubble, imho. Once the IMF sells all its gold and everyday people start screaming that “gold can never go down,” then it’s a bubble. Right now, most people are content with selling their old gold jewelry for 20 cents on the dollar. Not bubblelicious behavior, I would say.
HCF
November 12th, 2009 at 9:30 am
NOVEMBER 12, 2009.Returning Workers Face Steep Pay Cuts
Think how much worse it could be if Lloyd wasn’t doing “God’s work”. That man deserves a bonus!
November 12th, 2009 at 9:34 am
This looks like a pretty strong trend, to me:
http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx
November 12th, 2009 at 9:36 am
Sorry, the link doesn’t work. Gold is exactly where it should be (I actually think it’s somewhat undervalued), all things considered.
November 12th, 2009 at 9:42 am
more on the house party. it’s funny how the AJC, gov’t officials, cops all focused on permit angle. “the bus drivers had quit” http://bit.ly/1pd537
this is an upscale area of Atlanta, inside the perimeter http://bit.ly/4szxnq
November 12th, 2009 at 9:55 am
@farmera1: That was THE first thing that came to my mind as well. We really don’t ever learn, do we?
November 12th, 2009 at 9:56 am
http://finance.yahoo.com/news/Geithner-stresses-strong-rb-2700264215.html?x=0&sec=topStories&pos=8&asset=&ccode=
Geithner stresses strong dollar’s global role
…Liar, liar, pants on fire….
..Santa is watching Timmmaaayyy, and I see a little nerd with coal and switches in his stocking this Christmas….
November 12th, 2009 at 10:02 am
The next time there is a public perception that there is money to be made somewhere else (like the stock market in the late 1990s), people will cash out of gold and into the moneymaker; the price will fall.
November 12th, 2009 at 10:12 am
@wally: That could be next week, tomorrow, or even a few hours from now.
November 12th, 2009 at 10:32 am
“I am fully invested in American Eagle gold coins in my IRA retirement accounts”
Maybe I’m naive but at what firms can you hold gold coins in your IRA?
November 12th, 2009 at 10:37 am
“You have to own physical gold”
With the markups to buy bullion at Harrods running around 14%, and I presume a like number on the sale, and the USD rate of decay running at 7.9% YTD, it certainly appears to me that it takes almost 3 years just to break even on owning physical gold. Coins have an even worse markup.
In 3 years a lot can happen. The USD can collapse or the US of Bananamerica could collapse and be replaced by a fiscally sound form of goobermint (after defaulting on all the outstanding Treasury debt). Not saying that either of those WILL happen, only that they CAN happen.
Also, it seems to me that in these times of increasingly hungry local, state, and federal tax revenue, if there does come to be a substantial volume of gold vs dollars trade in Ye Olde Bananamerica, it seems obvious that a hefty tax on exchanges between gold and dollars, combined with fines, forfeitures, and jail time for those attempting to use gold in place of USD as a medium of economic exchange would be the proverbial gold-pipe cinch.
The only practical use I can see for physical gold is to hoard it as insurance against a complete collapse of society, complete with roving bands of cannibals and thieves. Ammo and bottled water (or one of those nifty ceramic water filters) would be better insurance against that possibility.
Trading gold in ETFs futures, or mining stocks has a much lower markup, and should be a viable way to stave off the decline of the USD. But no more so than any other commodity.
Personally, I’m seeking futures contracts on honesty and integrity, two commodities that are obviously decreasing in availability. People tell me you that one can buy anything in D.C., until I ask them about purchasing honesty and integrity.
November 12th, 2009 at 10:37 am
tsk tsk
Wondered that too, as well as the wisdom of an all-in position. Not many would recommend a 100% position in gold. Unless that’s not what he meant by “fully invested.” But it’s sure how I interpreted it.
November 12th, 2009 at 10:53 am
Faber’s a trader like most of us, probably talking his book. Pros: Technicals look good, Chinese are/could be driving price higher, nowhere near inflation adjusted high.
November 12th, 2009 at 11:30 am
http://www.scribd.com/doc/22417671/GOLD-5000-11-11-09
CN- I am glad that at least one person is with me on the cannibalization of ‘Mericuh. Remember people, avoid looking too delicious!
“as insurance”. Martin Armstrong’s latest essay argues some similar-gold as a hedge against incompetent government and corrupt politicians: http://www.scribd.com/doc/22417671/GOLD-5000-11-11-09
“The only practical use I can see for physical gold is to hoard it as insurance against a complete collapse of society, complete with roving bands of cannibals and thieves. Ammo and bottled water (or one of those nifty ceramic water filters) would be better insurance against that possibility.”
My view has been that gold miners (gotta know how to pick ‘em) are a better choice in these perilous times. Read incakolanews and consider subscribing. The author is an extraordinary ‘baqueano’.
He is the one that drew my attention to Ventana Gold (VEN.to) which I first mentioned here on July 31, 2009. July 31st it closed at 5.24 cad and is trading @ 11.30+ today. I have mentioned DMM.to. His approach is FA. And he likes pie.
That being said, note please that some group has launched a junior goldminer ETF (US cos mostly) which may be a toppy signal. That probably means that all the yummiest parts of the pie have been gobbled up. So make sure you aren’t buying the crust.
November 12th, 2009 at 11:40 am
You can purchase and hold gold bullion through a self directed IRA – http://en.wikipedia.org/wiki/Self-Directed_IRA
==============
With the markups to buy bullion at Harrods running around 14%, and I presume a like number on the sale, and the USD rate of decay running at 7.9% YTD, it certainly appears to me that it takes almost 3 years just to break even on owning physical gold. Coins have an even worse markup.
That’s cool, you are entitled to think what you want, but don’t kid yourself into thinking this argument has any relationship with reality or the basis for why people own physical gold.
If you care to learn and not just hate, FOFOA for example is but one of many excellent blogs that can introduce you to an understanding of gold. Either way, best wishes and good luck.
November 12th, 2009 at 11:43 am
Well, I am going to predict that the Fed will never lower interest rates to zero. Think what problems that could cause, and we all learned our lesson from Greenspan.
…Er, just a second. I’m getting a fax from Washington…..
……..let me get back to everyone….later. There is some information I may have missed….
B in T
November 12th, 2009 at 11:52 am
gstream- voce tinha razao! GFA vai pra caralho sem tocar 40…
November 12th, 2009 at 12:02 pm
Hi tsk tsk,
How do i buy physical gold in retirement accounts and 401k.
November 12th, 2009 at 12:31 pm
Boy, the gold bugs sure are a cranky lot. Very defensive about their metal.
November 12th, 2009 at 12:34 pm
If you can lift your safety deposit box you don’t have enough gold.
November 12th, 2009 at 12:47 pm
It’s very personal, almost like defending their child.
November 12th, 2009 at 12:48 pm
http://www.cnbc.com/id/33884045
Given the firm’s anticipated profits and supersize bonuses, which have touched off public furor, it is no surprise that Goldman [GS 179.75 -0.10 (-0.06%) ] said recently it would increase its charitable giving. It has set aside $200 million to nearly double the size of its main foundation.
Long before the financial crisis erupted, though, there were calls for even more, and those calls have stepped up in recent months. John C. Whitehead, the retired co-chairman of Goldman Sachs and former head of its foundation, said in a May 2007 interview with Bloomberg News that the pay levels on Wall Street were “shocking” and that he had tried unsuccessfully to persuade Goldman to give $1 billion to charity.
But the money allotted for its foundation is dwarfed by the sums that will be doled out to its bankers. In the first nine months of this year, the firm set aside about $17 billion for bonuses and other compensation.
November 12th, 2009 at 12:51 pm
Listening to Clark Howard the other day. He said his show is being inundated with calls asking about investing in gold. Retail is getting interested, which screams MARKET TOP.
November 12th, 2009 at 3:27 pm
Talk about a contrary indicator!
All it would take would be some symbolic gestures towards fiscal sanity by the Obama administration, and the bubble will burst on a dollar rebound.
One may think about dumping gold at this point for a correction.
November 12th, 2009 at 4:35 pm
Market top occurs when retail is well-invested, not just interested. Will take more time, I’d say early 2010 will be blowoff time. Feb-March timeframe.
“Listening to Clark Howard the other day. He said his show is being inundated with calls asking about investing in gold. Retail is getting interested, which screams MARKET TOP.”
November 12th, 2009 at 5:26 pm
I have been an advocate of gold as an investment for many years. I allocated the greatest part of my savings to gold in 2003 when it traded below $350 an ounce, and I can’t say I regret that decision. I believe gold is still in a bull market, however now may not be a fantastic entry point:
http://raphaelkahan.blogspot.com/2009/11/gold-is-overbought.html
November 12th, 2009 at 5:57 pm
I wish people wouldn’t they shit like that about an investment. It scares off the weak hands & emboldens the shorts. Does he have a crystal ball or what?
November 12th, 2009 at 6:25 pm
Never say Never…………………………
Faber stepped on it last week.
He stated the Dollar was as useless as Wallpaper, and done for.
2-3 days later, He said he’s see’s it going UP quite a bit.
Just shows you, even the wealthiest,most savvy make errors…………
His comment, while I disagree, does hold a margin of saftety.
With our National Debt figures, and CB’s openly snagging Gold reserves(and at Mkt rates), it does lend some degree of saftey to his comment.
With 600 Trillion in derivatives floating around, there are lot’s of HUGE (bad) surprises still to come……….
I am not looking forward to them………..
November 13th, 2009 at 2:09 am
Faber isn’t one to just throw a statement out there. He was humbled early in his career by doing that. For him to say something like this means that the chance for gold to do this is statistically very very unlikely in his opinion. And for those of you who thinks he is a bubble enraged fool, he warned that oil was in a bubble shortly before it collapsed.
November 13th, 2009 at 6:16 am
[...] Faber: Gold Permanently Over $1,000 – Ritholtz Sphere: Related Content [...]
November 14th, 2009 at 11:44 pm
“Faber’s a trader like most of us, probably talking his book. Pros: Technicals look good, Chinese are/could be driving price higher, nowhere near inflation adjusted high.”
I recall Faber making a very simple call in 1999. He said that the safest bet over the next decade and half would be to be shorting the Dow and buying gold because the Dow/Gold ratio would fall from more than 40 to less than one.