Friday, December 30, 2011

Marc Faber Bearish

"I am convinced the whole derivatives market will cease to exit. Will become zero. And when it happens I don't know: you can postpone the problems with monetary measures for a long time but you can't solve them... Greece should have defaulted - it would have sent a message that not all derivatives are equal because it depends on the counterparty."

 And on the long-term future: "I am ultra bearish. I think most people will be lucky if they still have 50% of their money in 5 years time. You have to have diversification - some real estate in the countryside, some gold and some equities because if you think it through, say Germany 1900 to today, we had WWI, we had hyperinflation, WWII, cash holders and bondholders they lost everything 3 times, but if you owned equities you'd be ok. In equities in general you will not lose it all, it may not be a good investment, unless you put it all in one company and it goes bankrupt." As for gold: "I am worried that one day the government will take it away." As for the one thing he hates the most? No surprise here -government bonds.

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.

Friday, December 23, 2011

Perma-Bear Marc Faber: U.S. Equities Not Terribly Expensive - Wall St.Cheat Sheet

Marc Faber, publisher of the Gloom, Boom & Doom Report spoke to Bloomberg TV and said that U.S. equities are not “terribly expensive” and that he thinks the euro will survive.

Faber on his latest report:

“It’s actually quite gloomy but if you’re very gloomy what do you invest in: Treasuries, Italian bonds or commodities or equities?  I happen to think U.S. equities are not terribly expensive, so relatively speaking to other assets, they may for a while actually do quite well.”

On the market now:

“Right now, the market is in neutral territory. It was very oversold on October 4th when the S&P dropped to 1,074. Now around 1260, the upside in my opinion will be between 1,280 and 1,350 because there’s a lot of supply around that area. But if there is some good news coming out of Europe, and good news would simply mean postponing the problems for another few years with some kind of money printing operation, either by that ECB or IMF or EFSF, [that] lift stock prices higher.”

“[Postponing problems] is not good news, but it is better news than if the whole eurozone falls apart. It gives some time to maybe find better solutions. I doubt they will be found, but with money printing you can hide a lot of things and you can postpone problems as we have seen in the U.S.”

On the outlook for the euro:

“I think the euro will survive, the question is in what form. It may survive without the weaker countries or it could survive theoretically just as a currency aside from local currencies. You would have in France and Italy and Spain and Greece, local currencies and…the dollar. So, I could travel anywhere in Europe and still pay in euros.”

On whether he’d rather own euros or dollars:

“I have a very special stock tip for you. The symbol is g-o-l-d (NYSEARCA:GLD). That is what I prefer to hold. Both the euro and the dollar are long-term undesirable currencies, especially given zero interest rates in the U.S. Equities to some extent become like cash because they become a store of value compared to cash at a zero interest-rates. Paintings become a store of value, stamps become a store of value.”

On emerging markets:

“There is close correlation between all markets in the world. This year, the U.S. has grossly outperformed the emerging markets   In Asia, we’re down between 15% and 25% in markets. In Eastern Europe, even more. The U.S. this year is a wonderful market relative to the rest of the world. ”

“I think this outperformance may go on for a while. Some emerging markets could rebound more strongly than the U.S. because they are more oversold. Like India, the currency is down 18% since July and the market is down 22%.  Currency adjusted, the market has been extremely weak and is oversold. It could rebound somewhat here, but forget about new highs. It’s not going to happen anytime soon.”

On China:

“The reason I’m not very keen on China at the present time [is because] we had a credit bubble, we still have artificially low interest rates and a huge fiscal deficit in orders words artificial stimulus. That’s coming to an end. Yes, the government can further stimulate and slash interest-rates again and reduce reserve requirements, but it will just postpone the problem and aggravate the problem in my opinion.”

“When you have an economy like China that becomes so big so quickly, you can have a more meaningful setback. If the U.S. economy grows at 3% or contracts that 3%, it has no impact on the price of copper to speak of….In the case of China, whether the economy grows at 10% or 5% as a huge impact on the demand for iron ore and copper and aluminum, steel and coal. The Chinese economy today has a much larger impact on the rest of the world than is generally perceived economically speaking.”

View the original article here

Thursday, December 22, 2011

No need for money exchange, greece can use drachma

Faber comments on Greece.
"It's going to be painful, very painful, But rather than to intervene into something that is not going to work in the long run … [intervention] is the wrong medicine." Mentalities in Greece, Portugal and Spain are totally different from that found in Germany, making forging and carrying out agreements difficult.

Greece could conduct transactions in drachma and euros or dollars. "The same is true in Latin America." says Faber. "I pay in dollars, I never exchange any money."




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.

Wednesday, December 21, 2011

Investors not shying away from solar power - San Francisco Chronicle


Stion, a new solar manufacturer in San Jose, has raised a total of $234.6 million from venture capitalists and other investors.

Solyndra notwithstanding, some investors are still willing to bet big money on solar power.

Google, for example, reported Tuesday that it will invest $94 million to help build four solar power plants near Sacramento.

And Stion, a San Jose startup that makes thin-film solar cells, said Tuesday that it has raised another $130 million in private investments, much of it from Korean private equity funds.

The high-profile bankruptcy of Fremont's Solyndra in September prompted intense scrutiny of all manner of solar companies and projects, particularly those involved in manufacturing. A flood of inexpensive solar cells pouring from new factories in China has undercut many American solar businesses, pushing several into bankruptcy.

But the plunge in solar-cell prices has been a boon to developers of solar power plants.

The four plants that Google will fund - along with investors Kohlberg Kravis Roberts & Co. - will be built by San Francisco's Recurrent Energy, a subsidiary of Sharp Corp. The plants will sell their electricity to the Sacramento Municipal Utility District and should begin operations next year. Three are already under construction.

"The declining cost of solar has really driven demand for us, in our business," said Arno Harris, Recurrent's CEO. "I would say unequivocally that there's a ton of interest in investing in these projects."

Google has already invested in solar-thermal power plants, which use mirrors to concentrate sunlight, generate steam and turn turbines. But the Recurrent project marks the first time the Internet search giant has invested in power plants that use photovoltaic panels, which generate electricity directly from sunlight.

Google's clean-energy investments have now topped $915 million. The company reported in November that it was pulling the plug on an ambitious four-year research effort to make renewable power cheaper than coal, but it has not stopped investing in the sector.

Stion, meanwhile, has now raised a total of $234.6 million from venture capitalists and other investors. The company will use some of the most recent funding to expand its solar-module manufacturing facility in Hattiesburg, Miss.

Stion also will create a subsidiary in Korea to build a factory there, supplying thin-film solar modules to growing markets in Asia. One of the lead investors in Stion's new financing round is Avaco, a Korean company that makes thin-film processing equipment.

"Solar has always been a global business, and this investment enables Stion to address market demand in Asia and beyond," said Chet Farris, Stion's CEO. "We have added world-class investors as well as a strategic partner with deep technical expertise."


Wednesday, December 14, 2011

Jim Rogers says Faber is Wrong About China

Jim Rogers thinks Marc Faber has got it wrong about China, when he says the country is possibly headed for a hard landing, which would lead to a devastating impact on commodities around the world.

"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," Rogers told CNBC in an email.Rogers says some parts of China's economy will have a "hard landing" but other parts will continue to boom. He says the commodity market will have a correction, but rebutted Faber's view that it would be devastating."Yes, there will be consolidations in the commodity bull market just as all markets have consolidations," he said. "In 1987, stocks declined 40-80 percent worldwide, but it was not the end of the secular bull market in stocks.

"Rogers said he was still long commodities, adding that gold went up 600 percent in the 1970s and then corrected by 50 percent scaring a lot of people. "It then continued its secular bull market and rose 850 percent. Corrections are the normal way of all markets."According to Faber, Rogers' bullish call on commodities is misplaced. "If I was always bullish about commodities and completely missed out on the crash in 2008, then obviously, having tied essentially my reputation to commodities, I'd continue to be bullish," Faber said.

But Rogers said Faber had got it wrong when it came to his call in 2008. "I proclaimed repeatedly far and wide that one should not buy commodities in the run up phase. I also explained that I was not selling mine since we were [and are] in a secular bull market," Rogers said."I explained that my shorts of Citibank, Fannie Mae, all the investment banks and homebuilders, plus my long position in the Japanese yen would protect me in any sell-offs. When one’s shorts decline 90-100 percent, it is a good year even when one’s longs decline," Rogers added.

According to Rogers, Faber is the one who has made many wrong calls, arguing that he "totally missed" the secular bull market in commodities that began in early 1999."Also back in those days, he and his friends proclaimed often that China was a mess and would continue to be so," Rogers said. "They all were wildly excited about Russia. Some of his friends even left China to start operations in Russia. We all know how that resulted."

Tuesday, December 13, 2011

Safe to close the EU– Marc Faber

Investment analyst and entrepreneur Marc Faber spoke with FOX Business Network’s (FBN) David Asman and Liz Claman about the European debt crisis and attempts by the European Union (E.U.) to restore fiscal austerity. Faber said the best course of action would be to “dissolve the EU” and he blamed “bureaucrats” for not keeping the “3% maximum fiscal deficit and government debt to GDP maximums” in order to remain fiscally sound. Faber said the EU should “let the countries default” and while it “is going to be painful” it is better than an intervention that “is not going to work in the long run.” Excerpts from the interview are below, courtesy of Fox Business Network
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On the whether the European Union was destined for failure:
“If they had kept the agreement 3% maximum fiscal deficit and government debt to GDP maximums, it could have worked. Why didn’t it work? What do these bureaucrats in Brussels do besides eating well and sleeping and sharpening their pencils? They are useless bureaucrats that brought about the financial crisis worldwide.”

On whether states in the European Union would be willing to give up their sovereignty to regain fiscal austerity:
“I doubt they are willing to do that. The best would be to dissolve the EU. Let the market sort this out. Let the countries default. It is going to be painful, but rather than intervene into something that is not going to work in the long run.”

On Germany rejecting the bailout proposal:
“Eventually they will come to some kind of compromise and there will be some kind of money printing.”


Faber Says He Bought Hang Seng Bank, Sun Hung Kai Properties

Marc Faber, publisher of the Gloom, Boom and Doom report, said he increased his investments in Hang Seng Bank Ltd. and Sun Hung Kai Properties Ltd. because their dividend yields will help them beat government bonds and cash.

“I happen to prefer to play China through some high- quality companies,” Faber said in an interview on Bloomberg Radio today. “They have reasonable dividend yields and they’re high-quality companies.”
Faber said global equities have fallen farther than warranted and he prefers Asian stocks even considering economic growth concerns in China. He bought Sun Hung Kai, Hong Kong’s biggest developer by market value, and Hang Seng Bank, the Hong Kong lender majority owned by HSBC Holdings Plc, because they may benefit from growth in the world’s second-largest economy.
Sun Hung Kai and Hang Seng Bank have an indicated gross dividend yields of 6.91 percent and 5.65 percent, respectively. The Hang Seng Index has a dividend yield of 3.81 percent, while the Standard & Poor’s 500 Index yields 2.27 percent.

“You’re better off by investing in equities than in government bonds and in cash for the next 10 years,” Faber said. “You have to live with volatility,” he said. “I’m not all that bearish about stocks.”

Marc Faber Fears Gold Confiscation From The Government

Dominique de Kevelioc de Bailleul: Aside from the cherished and entertaining Faberisms
deployed from  time to time in his fight to preserve the truth in front of television audiences  controlled by a media-based establishment propaganda machine, Marc Faber also demonstrates why he’s the go-to man for clarity and thoughtful insights in the  midst of today’s Orwellian headache.

Speaking with FinancialSense Newshour’s (FSN) James Puplava on Wednesday, Faber, the editor and publisher  of the Gloom Boom Doom Report discusses a range of topics, from geopolitics, to freedom  and tyranny, to his concerns of people living in an age of central bank monetary  cannons gone completely rogue.  He also touched on one of his favorite  asset classes, gold (NYSEARCA:GLD), and the  third-rail subject of interest to every gold bug: government confiscation. 

As far as how high the price of gold (NYSEARCA:IAU) can go, it depends upon who has control of the printing presses, according to  Faber.  Right now, he said, the power hungry in Washington won’t let gold bugs down,  as each sign of a lurking systemic collapse or stock  market meltdown has been propped up by the Fed.

“If I could show you a picture of Mr. Ben Bernanke and Mr. Obama, then I  would have to say that the upside is unlimited,” said Faber.

And the downside risk to gold (NYSEARCA:DZZ) rests on the shoulders of central bankers, as  well, as the Fed, and now the ECB, will go to any length to feed the global  financial system with creative and backdoor credit expansion mechanisms.

“In my view the downside exists if money printing by government is  insufficient to revive or maintain credit growth at this level and you have a credit collapse,” he said, and also noted that competing asset classes would  most likely fall more, thus retaining gold holders purchasing power during a bona fide deflationary collapse.

But, first, the globe will undergo roaring inflation, according to Faber, then, second, the Robert Prechter, Gary Schilling and David ‘Rosie’ Rosenberg  deflationary spiral scenario will play out.

“One day there will be a credit collapse, but I think we aren’t yet  there.  Before it happens they’re going to print,” Faber speculates.  “And when printing as it has done in the last 12 years in the U.S. leads to  discontent populations, because when you print money then only a few players in  the economy that benefit, not the majority of households.”

However, Faber warns that the gold market’s extremely volatile, a normal  symptom of a fiat-backed financial system inducing the public into  schizophrenia—of clinging to the familiarity of a 67-year-long financial system,  moving to periods of fearing total loss at the currency graveyard—will chase  investors out.

“A 30 percent correction or 40 percent correction cannot be ruled out, but as  I maintain, again and again, I’m not going to go and sell my gold,” Faber said  forcefully, as he explained that owning gold is should be viewed as the ultimate  insurance policy to cover financial calamity, a viewpoint shared by famed Dow Theory Letters’
Richard Russell—another periodic guest of FSN.
Whether the gold price is in  bubble territory, as a few prominent analysts claim, Faber doesn’t see it that  way, at all.  In fact, he said, very few people own it or talk about  it.  History clearly demonstrates that every bubble will suck in the very  last investor before collapsing under its own weight.

Besides, the powerful propaganda machine, which endlessly repeats the party  line of a system predicated on a fiat system of dollar hegemony, will not allow  cheerleaders of the gold bugs to expend too much airtime away from Wall Street  advertisers and obvious shills (to the trained eye) of CNBC, Bloomberg and other ‘mainstream’ media.

So far, the propaganda has only delayed the inevitable rush into gold—the  next and longest stage of the bull market.

“I have one concern about gold.  I was recently on Taiwan and South  Korea, at two large conferences, nobody owned any gold,” Faber said.  “Gold  is owned by a minority, even in the U.S..  Most people in the U.S. have no clue what an ounce of gold is or looks like and so forth.  The same in Europe.”

But as the ‘wealthy’ begin to acquire gold, the chasm between the ‘rich’ and  poor will widen substantially, not just between the 1 percent and the rest, but between the upper 10 percent and the growing-poorer middle class.  That’s  when the democratic process turns ugly, morphing from a society of rights to a nation ruled by a tyrannical banana republic political dynamic.  See FSN  interview, Ann Barnhardt: The Entire Futures/Options  Market Has Been Destroyed by the MF Global Collapse.
Or transcript.
Populist political leaders vying for votes from the masses will opt to score easy points with the 90 percent have-nots at the expense of the haves, with  draconian taxes on assets such as gold and silver held by the haves, not just through taxes on capital gains, but maybe even through a wealth tax on the holdings.

“This is what the tyranny of the masses can do,” Faber explains.

“You can make it, advertise it to the masses by just taking away from a few  people, he added.  “I’m worried most about is the case of gold, not the price; that I’m not worried . . . but I’m worried about the government taking it  away.”

The interview moves on to the discussion of the bull rally in gold and silver (NYSEARCA:SLV).   After 11 years of continuous gains in the price of gold, why, then, do so few  investors hold the metal?

Faber explains that there remains too many deflationists holding to their  thesis of a tumbling gold  price, though, as Faber suggests, there has been no factual evidence to  support the argument since the pop of the Nasdaq bubble of 1999.

What deflationists point to as proof of their contention, declining housing  prices and stock prices, are really manifestations of inflation moving out of  those asset classes into others, such as commodities,  precious metals and overseas assets, of all kinds.  Inflation, Faber has  stated in the past, doesn’t move all asset prices up simultaneously.

“I don’t hear about gold.  I lived through the last gold bubble between  1978 and January 1980.  The whole world, whether you were in the Middle  East or in Asia or Europe or in America was trading London gold, buying and  selling every day,” he recalls.  “This has not happened yet, and it hasn’t  happened.  Your friends, the deflationists, have been telling people that  gold will collapse to $200 an ounce for the last 10 years and that’s it was in a  bubble.

“[They] said it [gold] was in a bubble at $500; they said it at $600, and  they’re still maintaining it.  So a lot of people they don’t own it; they  bought it and sold it again.  But in the meantime, gold has moved into sold  hands.

“In my case, I’m not going to sell my gold unless I have to.  In other  words, everything else is bankrupt, bond market, stock  market, cash and real estate.”

Faber also points out, even though the price of gold appears to look like and  quack like a bubble duck, with the price of the yellow metal sporting gains of  700 percent since the year 2000, the monetary base and credit creation by the  Fed has been so large for so long, the gold price has much more room to move  higher to reach ‘fair value’.  See Goldmoney Founder James Turk’s analysis  on this very point: BER article, Goldmoney’s James Turk, $11,000 Gold Price
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“I can turnaround and say, look if I consider the price of gold, an average  price in mid-1980s, then we take $400 or $450, or whatever it is,” Faber  explains, “and we take the monetary base at that time; we take the international  reserve; we take into consideration that China hasn’t really begun in earnest to open up; and we haven’t had this wealth expansion in emerging economies, and so  forth and so on.  Then, I can maintain, well, actually the gold price is  not up; it’s just the price of money, or the value of money, has declined so  much against a stable anchor.  So I don’t think that we’re in a bubble  stage.”

For the newcomers to the gold market, Faber stresses, “Don’t buy it on  leverage.”

Reiterating his previous comments during the interview, Faber leaves the FSN  listener with his overriding observations of a U.S. government (other Westerner  countries, as well) that shows signs of eventually taking the next steps in its  fight to maintain a hopelessly broken political and financial system:  confiscation, not necessarily though a highly unlikely and dangerous  door-to-door search of proof of non-paid taxes on a citizen’s bullion stash, but  through confiscatory levels of taxation and possible criminal penalties to those  who daring to escape the Marxist or Fascist regime’s grip on power over its  population’s wealth.

“My only concern with the gold insurance is government will take it away,” Faber concluded.  “That is my only concern.  I’m not concerned about the price.

“I also have a concern generally speaking about our capitalistic system.  For sure people with assets, they will be taxed more heavily,  that’s for sure.”


Monday, December 12, 2011

US Not Terribly Expensive, Euro will Survive

“It’s actually quite gloomy but if you’re very gloomy what do you invest in: Treasuries, Italian bonds or commodities or equities?  I happen to think U.S. equities are not terribly expensive, so relatively speaking to other assets, they may for a while actually do quite well.”

I think the euro will survive, the question is in what form. It may survive without the weaker countries or it could survive theoretically just as a currency aside from local currencies. You would have in France and Italy and Spain and Greece, local currencies and…the dollar. So, I could travel anywhere in Europe and still pay in euros.

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.

Thursday, December 8, 2011

Marc Faber, Jim Rogers not selling gold, but it’s not all good news forbullion

Investment gurus Jim Rogers and Marc Faber in recent interviews seem to agree on the dynamics in the gold market. Rogers says he’s not selling his gold and Faber says there is no bubble. But that doesn’t mean bullion is not still in a correction phase.

Investment Week quoted legendary global investor Jim Rogers, co-founder of the Quantum Fund with George Soros now based in Singapore, on the outlook for gold on Monday:

“It has been correcting for the past three months so it is overdue for a stronger correction, but I have no idea by how much. It is very unusual for any asset to go up for 11 years in a row with no correction. I own gold and I am not selling my gold.

The price at which I buy will depend on the circumstances. If it is going down because the world is going bankrupt then it would need to be priced at $900 for me to buy it. If there is an artificial occurrence then maybe between $1,200 and $1,400. It depends on what is going on in the world.”
Last week Bloomberg interviewed Marc Faber, fund manager and author of the widely followed ‘The Gloom Boom & Doom Report’ based in Chang Mia, Thailand.
Faber tells how he recently asked a room full of Asian investors if they owned gold and only a one said yes, which signalled to him that gold was not in a bubble because “if [he] asked the same question about Yahoo! type of stocks ten years ago everybody would have put up their hands.”

Gold’s spike above $1,900 an ounce was a “huge move” and bullion was “still in a correction phase” although it has to be remembered that for the year gold is still up 20%. Faber commented on the record gold price in early September saying at the time “when you buy gold, it’s an insurance against systematic failure and problems in the financial markets.”

Thursday, December 1, 2011

Marc Faber Sees Signs Of A Major China Slowdown Everywhere He Looks In Asia

There's something that worries Marc Faber more than Europe: China. Faber warned of a China crash in an interview today with King World News.

He says the slowdown is evident from his home in Chiangmai, Thailand:

"In China, if the economy slows down meaningfully or if there is a crash, it will have a huge impact on the demand from China for raw materials, for commodities.  It will impact Australia, Africa, the Middle-East and Latin America...

"I’m sure the economy (of China) is softer than official statistics would suggest and probably the government will start to print money at some point.  So maybe stocks will rebound here because of money printing, but again, it won’t help the economy....

I live in Asia and all I can say is I observe a meaningful slowdown in business activity recently and increasing corporate earnings that disappoint...

“There’s a huge capital flight [from China], there’s no question about this.”

Marc Faber Tells Fox Business Not to “Expect Too Much” from the CurrentMarket Rally

The rally came from a very oversold level. We have a very strong support on the S&P between 1100-1150. And usually the December month is a strong month as well as January so we have seasonal strength and oversold conditions and we can rally, but I don’t think you should expect too much. I think we’ll get into overhead resistance when the S&P rallies another 5% or so between 1250-1300.

“The optimism arises from some sort of a bailout and monetization. But if you look at the market, OK it’s up, but gold is also up and oil is up. Like in the US, we monetized time and again and it’s just postponing the problem. In the end, crisis will eventually happen. The problem of the Western world is that there is too much debt and too many unfunded liabilities.”

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.