Friday, February 25, 2011

Hold gold, silver if there is war: Marc Faber

BANGKOK (Commodity Online): It is wise to hold gold and silver and invest in precious metals during times of war and when geopolitical tensions and economic crisis hit countries around the world, says noted investment advisor Marc Faber.

Faber, who is famous for his prediction of the US stock market crash in 1987, said that commodities, especially gold and silver will be the wise investment options for people in the wake of rising inflation and troubled economies around the world.

Faber, who is the publisher and editor of Gloom, Boom & Doom Report, said that if there is a war, gold and silver would be desirable investments to hold.

“There will be times like the 1990s until 2008 when gold outperformed stocks and vice versa in 2009. But the key is flexibility. We don't know how the world will look in 10 years' time,” he told an investors’ gathering in Bangkok.

Faber said that treasury bills and deposits will no longer be a sure bet against market volatility.

According to Faber, the US Federal Reserve will continue to keep its interest rate below the inflation rate to avoid worsening impacts from the collapse of the credit market, which had expanded to three times the US GDP.

“The US will want to keep a low interest rate and expand the money supply to ease the public debt that stands at four times the size of its economy," he said.

Saying that gold and silver would continue to provide upside gains in the future, Faber said increasing demand for oil in emerging Asian economies and recovering US demand could lead to increasing geopolitical tensions in the Middle East and other oil-producing regions, contributing to upside gains for commodity prices and precious metals.

He also said that the US dollar could rebound in the next few months, but in the long term it would depreciate as the Fed is likely to expand its money-printing measures beyond the $600 billion already announced up to the middle of this year.