Thursday, December 22, 2011

Marc Faber vs Jim Rogers

Marc Faber and Singapore’s Jim Rogers disagree on commodity prices and China. Read below their take on these markets.

Marc Faber: “Well if we define a bubble as a period of excessive growth and artificially low interest rates, then China had a huge bubble. Usually bubbles are not deflated by a soft landing, but by a hard landing and this concerns me, actually, much more than the European  situation.”

If China’s rapid growth slows “meaningfully” or crashes, “it will have a huge impact on the demand from China for raw materials, for commodities,” according to Faber, which “will impact Australia, Africa, the Middle-East and Latin America” and could create a “vicious spiral on the downside” to one of the  only few outperforming sectors of the world economy—commodities.


Jim Rogers: “Corrections are the normal way of all markets. Marc still does not understand China. There are going to be several hard landings in the next few years, but China’s will be less hard overall than others such as Greece, U.S., et al,” and Mr Rogers added that he believes China’s economy will undergo some busts in some sectors but will be offset by booms in other sectors.

Rogers also cited the super bull market for gold, which crashed in price by 50 percent in 1974 following a six-fold move in the  price of the yellow metal to $200 from its pegged price of $35 per the ounce in  1971.  After reaching as low as nearly $100 following the crash, the gold price continued its bull market with a 750 percent gain during that six-year  period.