– “Whole Financial System Will One Day Implode” – Marc Faber
– “I feel like I’m on the Titanic …”
– Arguing over the best assets akin to re-arranging deck chairs on Titanic
– Investors need escape plan and “safety boat”
– Forget Fed rate hike, Fed QE 4 is coming
– Diversify and hold “commodities, precious metals”
Speaking on CNBC’s Squawk Box, he likened the global economy to the Titanic.
Dr. Faber believes that arguing over which assets are best in the current environment is akin to re-arranging deck chairs on the ill-fated Titanic. Only last month, Stephen King – chief economist with HSBC – made the same analogy.
“When I look at the whole financial sector … I feel like on the Titanic. We’re fighting about deck chairs -which assets are performing best and we’re fighting over the best tables in the ballroom – but I think it’s worthwhile to have your ownsafety boat and have your own ladder that will lead you to your safety boat because I think the problem is that the whole financial system one day will implode.”
Such a move would likely have negative consequences for confidence in central banks and paper currencies across the globe. Then, people may come to realise that the central banks are not omnipotent after all and that currency debasement is set to continue and even intensify.
Investors and savers need an escape plan. The safety boat which Dr. Faber has in mind entails a highly diversified portfolio.
Among the basket of assets he proposes are a 25% allocation to stocks, a 25% allocation to property, 30-year U.S. Treasuries and precious metals.
“I have advised my investors and also on this program that you have to have a diversification and that you should hold around 25% in stocks, 25% in real estate” … “And I would also hold some commodities, precious metals.”
Faber remains long gold – but he prefers physical gold coins and bars and opts for storage in Singapore.
Today’s AM LBMA Gold Price was USD 1,178.25, EUR 1,049.57 and GBP 760.01 per ounce.
Friday’s AM LBMA Gold Price was USD 1,179.25, EUR 1,055.68 and GBP 761.27 per ounce.
Gold fell $0.50 or 0.04 percent Friday to $1,181.00 an ounce. Silver slipped $0.10 or 0.62 percent to $15.94 an ounce. Gold rose 0.86 percent for the week, while silver fell 0.99 percent over the 5 trading days.
Gold in Singapore for immediate delivery was up 0.3 percent to $1,184.28 an ounce near the end of the day, while gold bullion in Switzerland came under pressure and fell 0.6% to $1,177.40 an ounce.
Gold in Asian trading saw safe haven bids push gold higher after Greece failed to agree to a deal with its creditors. However, prices then came under pressure despite falling stock markets and declining risk appetite.
U.S. Fed officials are still undecided as to when to raise interest rates. At the Fed’s previous meeting they removed all date references in its forward guidance and noted that the economic weakness may be “transitory” in nature. By alluding to this the Fed is now dependent on published economic data and a rate increase could happen at any future meeting. The wording of the policy statement released this Wednesday will be interesting.
Greece left last minute crisis talks with its creditors after 45 minutes of negotiations. Prime Minister Alexis Tsipras arrived with no new initiatives to the talks. nor did Greece’s creditors. Greece’s latest payment is 1.6 billion euros to the IMF by the end of June.
In late morning European trading gold is down 0.59 percent at $1,174.13 an ounce. Silver is off 0.40 percent at $15.88 an ounce, and platinum is also down 0.87 percent at $1,082.68 an ounce.
Marc Faber Macro & Stock Views
- Short the Australian Dollar on Rebounds
- Hold Diversified Portfolio
- Bullish Chinese Stocks
- Emergings Markets are Better Value Than Developed
- Higher Volaility
as of January 2015
Read more: Marc Faber
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