Oil prices decline is due to global economic weakness

There are many explanations for the weakness in Oil including some theories that Saudi Arabia wanted to weaken Russia, or the Shale oil production in the US or Iran and so forth. 

But my view is the sharp decline in Oil prices signals a weakening global economy. Now in the last few days I have received from brokerage firms, banks and so forth. They all think next years economy in the world will be stronger than 2014. This would not be my view given, (a) the low yields on government bonds, that would seem to suggest to me there are still some growth issues in the global economy and the sharp fall in the industrial commodity prices would also suggest to me the economy will be weaker than expected. And I'm living in Asia, I can see we are not in a recession but there is very little growth at the present time. 

Marc Faber upbeat on Hong Kong shares compared to US

I think that most stock markets in the world are correlated to the US market. I believe that if the US S&P500 drops 10 percent, 200 points for sure other markets will also go down. 

But is it possible that because of the weak economy in China the Chinese also print money which is a possibility. If they did that, the Yuan would weaken. [The Chinese Stocks] have been essentially under-performing the US since 2006 and so my belief is that if China decided to print money and currency weakened , money would flow into equities. 

The other reason I am reasonably positive is the valuations in Hong Kong is relatively depressed, because you can buy property companies that sell at a discount of 40 to 50 percent of Net Asset Value. Now the Net Asset value may not be correct as property prices in Hong Kong could decline as they have over the last 12 months. But still you have some cushion of security. Moreover Hong Kong shares have a relatively high dividend yield compared to other markets. 

So if someone says I'm very bullish on the US stock market, I would rather own Hong Kong shares instead of S&P because they have better value.

Current generation not as fortunate as previous

These people [current generation] will not enjoy the compounding impact that I enjoyed having started to work in 1970 when bond yields were 6% and they went to 15% and so forth. 

So during that period of time wealth was accumulating very rapidly plus we had a huge boom in real estate and in equities and bonds between 1980 and 2007. That is not going to happen again.

Marc Faber on Christmas and humor

Christmas is a time for reflection. It must also be a time for humor and laughter. 

Bill Cosby opined that, “Through humor, you can soften some of the worst blows that life delivers. And once you find laughter, no matter how painful your situation might be, you can survive it,” 

Chamfort wrote that, “The most wasted day of all is that on which we have not laughed,” 

Seneca observed that, “It better befits a man to laugh at life than to lament it,” 

Ludwig Wittgenstein thought that, “Humor is not a mood but a way of looking at the world” whereas Ellen Glasgow pronounced that, “First I was an idealist (that was early - fools are born, not made...); next I was a realist; now I am a pessimist, and, by Jove! if things get much worse I'll become a humorist.”  

World being inflated by money printing

We are in a world that is driven by money printing and, in general, I believe the standards of living for many people in the Western world will continue to decline as they have declined over the last 20 years, if we look at median income in real terms. 

How the world will look in 5 or 10 you and I and nobody knows, although some people think they know. 

So my advice is to be diversified. Hold some real estate, stocks, bonds and gold and you have to also diversify your assets geographically – don't hold everything in the US. Hold some outside the US as well; hold some outside Germany, outside Switzerland. You have to be diversified. Then you have to hope for the best. 

Emerging economies vs Emerging Sectors of the economy

I believe that what I called in the late '70s and early '80s, along with other people like Barton Biggs and Antoine van Agtmael, what we call emerging markets now, many emerging markets are no longer emerging; they're advanced economies, like South Korea, Taiwan, Hong Kong, Singapore. Now we have new emerging economies like Kazakhstan, parts of the former Soviet Union, African countries, Mongolia, Myanmar, Cambodia, Laos and so forth. 

So I'm sure there is some merit of investing in these regions. There is also what I have experienced, a significant execution risk. In other words, people go in there and they buy stuff and then they don't take much money because they're being cheated out or promoters of the projects make the money and not the investors. But in general, the concept appeals to me.

I would also say, we have to broaden the concept of emerging markets to emerging industries. You make much more money in investing in biotech and in the Internet and social media stocks in the last few years. It's not a recommendation to do it at the current level of stock prices. But I'm saying in the last three or four years you made much more money in emerging sectors of the economy than investing in Laos and Cambodia and Mongolia.

Negative employee vs Apathetic employee

Jeremy McCarthy who is Group Director of Spa at the Mandarin Oriental Group asks his students, “What is worse, a negative employee or an apathetic one?”

McCarthy explains: “Of course, there is no right or wrong answer to this question, and it invariably sparks an interesting discussion. Some will recognize that an apathetic employee can be a drain on the system as they collect a paycheck but contribute minimally to the goals of the organization. Most of my students will say the negative employee is worse, citing, ‘one bad apple can spoil the bunch’ or other fears of the contagious nature of negativity.

But in their new book, The Upside of Your Darkside, psychology researchers Todd Kashdan and Robert Biswas-Diener say, ‘you need an anxious person on your team,’ because they serve as the ‘canary in the mine shaft,’ alerting you to problems before your more optimistic team members even become aware of them. You need someone who will tell you when you are making a mistake.”

I really like McCarthy’s short essay because he displays a very positive attitude towards “negativity” instead of endorsing “negativity toward negativity.”  

Bank Muscat to host Marc Faber in Oman

Bank Muscat is hosting Dr Marc Faber, renowned economist and investment analyst on December 04, 2014.

Dr Faber will share his insights on the state of the world economy and financial markets at a series of seminars organised by the bank’s treasury and capital markets division.

The event will be attended by high-profile dignitaries from the government and top corporate clients.

Present system is not good enough

I believe that the idea of democracy that came up, say, more prevalently in the 18th century and then was implemented with the American Constitution and so forth.

I think that in 500 years or so people will look back and say, how could people have been so stupid to think that a democracy would work? Because everybody wants to take as much as he can from the cake and through the voting machine and through all kinds of tricks and so forth, the politicians always promise more than they can deliver. If they tell the people the truth they're not going to be elected. So I'm very pessimistic about the present system.

Money printing leads to higher asset prices and makes it harder for most people to afford

The Federal Reserve, each time there was a problem they flooded the system with liquidity, starting essentially with LTCM crisis in 1998, the Dot-Com crash after March 2000 and the Housing bubble after 2006. 

So I suppose that they would again try to support asset prices. As you know one of the problems of this expansion which by historical standards very moderate in terms of momentum and it hasn't really trickled down to large segments of the population. 

One of the problem is that because of the expansionary monetary policies and asset purchases, numerous assets are not affordable by the majority of the people. So if the Fed decides to print money to support asset markets, the impact may be negative on the economy because the prices would start to rise. 

Gold and Silver miners sector is deflated

Marc Faber with Jackie of CNBC

If you look at a broad number of asset prices - Bonds, Equities, Real Estate, Art Prices, Collectibles, Commodities, in general the prices are elevated. Ofcourse yes I am aware that Gold has corrected but in general asset prices are higher than they were Ten years ago. 

Real income in the United States for households are down, in other words prices have gone up more than wages. 

Now the only asset class that relatively and absolutely depressed are Gold mining shares and Silver mining shares. Even large Mining groups such as Barrick and Newmont mining have tumbled and at distressed levels. And as a contrarian or as a value investor you would have to say, these are not momentum stocks and they are building a base. Here I find some reasonably good values compared to other asset classes. 

People who work in financial sector tend to support central bank policies

It is common for people in the financial sector to be central bank cheerleaders who applaud Keynesian interventions with fiscal measures (as long as they don’t involve increasing taxes on the affluent members of society) and, in particular, with monetary policies as long as these are expansionary and lift financial asset prices. 

Central banks intentionally creating bubbles in markets

There are many reasons the Western economies are slowing down. One is government spending. Between 1870 and 1910, nowhere in Europe or in the U.S. was it above 15% of the economy. Now, U.S. government spending, including states and municipalities, is at around 40% of gross domestic product (GDP). In France, government spending is 57% of GDP. 

The larger the government becomes, the less economic growth there will be. So Dr. Greenspan and I agree on the problem, but who financed all these entitlements? I believe the central banks with their artificially low interest rates are deliberately creating bubbles even though in a bubble, the majority loses, and the minority makes a lot of money. 

Marc Faber says Japanese money printing has helped global stock markets

Two years ago, I was of the view that it would be healthy for the market to have a 20 percent correction and that's what I've expected. And many stocks have actually had 20 percent corrections over the last two years. But as I said, a limited number of stocks have driven up the indices. Now of course the indices significantly higher, let me remind you ... in three years, we've almost doubled. If you really believe that in the next few years, every three years the market will double, then go and buy shares because I don't believe that.






Marc Faber on the Japanese Yen and how its weakness has helped stock markets around the world. Marc also talks about dangers of the markets, and the potential for inflation in the future.

Bond yields are un-attractive compared to the past

Frequently, banks will charge you more in fees than you make in interest. 

Ten-year government bond yields in Europe are even lower than in the U.S. In Switzerland, 0.46% is the maximum you’ll earn every year for the next 10 years if you hold such bonds to maturity. 

Today’s investors won’t enjoy the effects of compounding that I enjoyed, having started my career in 1970 when yields were 6%, on their way to 15%.

Japan running a ponzi scheme

Well I think they’re [Japan] engaged in a Ponzi scheme in the sense that all the government bonds that the Treasury issues are being bought by the Bank of Japan.

I think the good news is – for Japan is that most countries are engaged in a Ponzi scheme and it will not end well. But as Carlo Ponzi proved, it can take a long time until the whole system collapses.

Current investing opportunities could be the following

Prices for corn, wheat, soybeans, palm oil, and so forth have collapsed by 50%. Palm-oil prices are closely correlated with soybean prices. Palm-oil-plantation companies also have lost a lot of value, and some look attractive. There’s IOI in Malaysia and Wilmar International. The stocks are depressed. IOI has a 4% dividend yield in a relatively strong currency, the Malaysian ringgit. Wilmar yields 2%. That’s more than the bond yield in Singapore.

India also offers opportunity. Its stock market is up 30% this year in dollar terms. It could rally another 15% next year.

Government unwilling to embrace new ideas

According to Lucy Kellaway, the higher people climbed within an organization the “dimmer” they were becoming. In my opinion, whether people “get dimmer the higher they went in the organization” depends very much on the culture and compensation packages of the organization. In dynamic organizations, which offer challenging opportunities and significant rewards, good people tend to stay on.

Kellaway also suggests that, “It may not be true that the partners are miles dimmer than the graduates” but that, “It is just that the two can’t talk to each other, and so are blind to each other’s strengths.”

My friends and I are all very happy when younger people with different skill sets than we have, teach us how to improve our efficiency with new methods and procedures, and new ideas and technologies. In the fund management industry, it is important to employ younger people who know more about social media, mobile phone applications, and electronic games than we do. So, overall I am not all that negative about corporations’ ability to take advantage of young people’s new skills and blending them with the experience and the knowledge of the employees who have been with the organization for a long time in order to progress and continuously adapt to changes.  

But, where I am more skeptical about the willingness of organizations to endorse new ideas and employ people with completely different perspective is in the academia and at central banks. 

In particular at central banks and in economics today, the Keynesian teaching are so entrenched that any other economic thought such as Austrian Economics is immediately dismissed as “a brain worm that has infected large swathes of our financial industry and general public.” 



VIA Gloomboomdoom Monthly Market Commentary November 2014 Issue

Children in China, Russia, East Europe to have a higher living standard than their parents

The good news is that in the countries that opened up after the breakdown of socialist economies in China, the Soviet Union, and Eastern Europe, and in India, the current generation will earn much more than its parents, and have a better standard of living.

via Barrons

Marc Faber on Gold price manipulation

We had a huge bull market in gold that outperformed just about any other investment between 1999 and September 2011. We're now three years into a correction phase. Can gold drop below $1,000 first before it goes up meaningfully? It's possible. Because as you know, there has been some manipulation in the gold market. 

However, gold will go higher over time.

Big government, bigger problems

One of the reasons we have weak growth in the Western world, and in the U.S., and in Japan, is because of government interventions with fiscal policies. Spending-supported by money printing-has led to an ever-expanding government as a percent of the economy. And the bigger the government is, the slower economic growth will be. The extreme is when the government controls everything in the economy, such as under the socialist/communist planning system.

Marc Faber: Fed wont raise rates for a long time

Janet Yellen is first fed chairwoman

It [The Fed] won't raise interest rates for a long time. Certainly not in real terms. It's possible that it'll end QE4 and that the asset purchases come to an end. But only temporarily..... When it introduced QE1, my view was that it would go to QE99. And I still maintain that view.

Marc Faber calls for portfolio diversification

The trade and current account deficit of the U.S. has been coming down because the balance in the energy trade has improved a lot. The U.S. is almost oil self-sufficient. It's become the largest crude oil producer in the world.

And even though the U.S. economy is not doing particularly well, it's in a slightly better position than the European economy. Thus, there are some reasons the dollar should be stronger.

That said, based on sentiment figures, everybody is now bullish on the U.S. dollar. Usually when you have this kind of consensus, what can happen is a powerful contra-move. In other words, the dollar could weaken for a while. That would be good for stocks and precious metals.

Additionally, if the Fed finds that the dollar is too strong, it can print money. But you just don't know what these academics will eventually decide to do. That's why I recommend investors have a diversified portfolio, because nobody knows what the world will look like five years from now.

I want to be my own central bank

Nobody knows what the mad professors in the central banks will do. They can go and buy baseball cards and collectibles and stocks and everything under the sun. They will never know when they are out of bullets because they grossly overestimate their intelligence,

I would no longer trust central banks. I want to be my own central bank and have gold and silver stored in a safe place. Certainly not in the U.S.

Marc Faber says Gold is insurance that is safe

Gold - the yellow metal

I always say that people should own some physical gold and store it outside the United States. This is an insurance policy that will pay off one time big in the future. I don't know when, I don't care when, but it is a safe investment and is an insurance and is part of a total portfolio that consists of Equities, Bonds, Cash, Real Estate and Precious metals.

Stock market is at risk due to damages done to technicals

The likelihood that we have something more serious now is quite high. There has been considerable technical damage in the market, with approximately half of Nasdaq and Russell 2000 shares already down 20 percent or more from their highs. Combine that with the fact that Treasury bond yields have again declined meaningfully, and it suggests the economy is not on a very sound footing.

We are in a period of elevated prices. From real estate to equities to bonds, there is a lot of excess. Going forward, the return on these assets will be very disappointing.

Marc Faber was right on China weakness

Concerning global economy, I was saying a year ago in my view the Chinese economy was slowing down to 4 percent. Now recently the economic statistics that were released Electricity Consumption down year on year, Rail Road Traffic down year on year. The Shanghai government reported industrial production down year on year, and Exports down year on year. The other Asian countries to which I traveled are mostly flat, no more growth.

Reaons for Hong Kong protests are the following...

We have these student demonstrations. In my view it is less about democracy and more about the chief executive of Hong Kong being very unpopular with young people and also with other people in Hong Kong. 

And it is also a social background in the sense that Hong Kong became very prosperous between 1950 and about 10 years ago. Years in which GDP per capita increased enormously and over the last 10-15 years real in other words inflation adjusted per capita incomes have been declining.

I believe the outcome will be some sort of compromise where by the chief executive would probably resign.

Marc Faber cites weakness in markets world wide

I think it’s quite funny because everywhere you go, up to a little while ago, there was great optimism about this recovering the global economy when in fact Europe is not recovering and in fact it is slowing down. In Asia and in other emerging economies we have a very meaningful slowdown in economic activity.

I wouldn’t call all the emerging economies being in recession yet, but it’s just very little growth in present time in real terms and in some cases it has been a downturn, a meaningful downturn, like say in retail sales in Hong Kong or in Singapore…so I don’t believe that the global economy is healing, all that was in the context of massive interventions with fiscal and monetary measures by the authorizes.

America blackmailed Switzerland and other countries

What worries me is this continuous blackmailing of countries by the America. Like the Swiss, they have to divulge the account names of Americans who had accounts in Switzerland and so forth. I think the Swiss government did a lousy job. They should have refused to divulge this information. 

Anyways there was enough pressure and the pressure rose because Swiss companies have large holdings in America. The Americans said, you don't disclose us the names, we close down your shop in America and the banking lobby of course obliged. 

Emerging markets have outperformed S&P500

I was expecting now a correction for 2 years. We have gone up in a straight line from October 2011 to here. We are 3 years into this bull market where we didn't have more than a 10 percent correction.

This year has been irregular. Some indices like the S&P500 are up a modest 6 percent. Rusell 2000 has been down 4 percent. 50 percent of Nasdaq stocks are down 20 percent or more from their recent highs. In Asia you have markets like the Philippines, Indonesia, Vietnam, India, Thailand, Pakistan, that are all up between 20 percent and 28 percent. So when people tell me that the S&P have been such a great place to be, I have to laugh because Emerging Markets in Asia at least have done fantastically well.

Marc Faber on bubbles and inflation

In 1927 - 1928 a lot of people, including Paul Warburg and Bernard Baruch, warned of a bubble and it went on another two years. It can go on for quite some time. 

When I compare the prices people paid for homes for Rothko,  Warhol and Picassos in the 1970s and early 1980s, for Hampton properties, for Greenwich Village in New York properties and what they pay today, there has been colossal asset inflation. 

Now, for the people that inherit these things it's all well and good, and for the people who own them. But if you are 20 years old and you went to college and you have student debt, I think a lot of these things are less affordable than when I was a trainee in 1970 at White Weld in New York.

So I think this has contributed to a lot of misgivings. 

Government policies affecting labor participation

In general, I believe that people instinctively want to work, and I am also convinced that people who work are happier than people who have no jobs. However, I also see every day people who would be perfectly fit to work – in some cases with special skills – that actually prefer not working and instead opt out to receive some benefits from the government.

High unemployment and a declining labor force participation rate in the Western world has numerous causes including affluence, changing attitudes from “personal responsibility” to “entitlements,” and especially because of the government’s generosity. 

It is evident that with increasing Government transfer payments, a decline in salaries and wages as a percentage of the economy and a contraction in the civilian labor force participation rate occurred.


VIA GloomBoomDoom

High property prices driving people out of New York, London

I just read a report that a very high proportion of New York high-end properties are empty 70% of the time. So the foreigners that come here can loan their money because through the property market and through the arts market you can get a loan for anything you want – not through bank accounts where you have to as a client prove that you're honest – which is a joke because the banks should prove to you that they are honest, which would be very difficult, as we have seen from the many fines they've had to pay. 

But anyway, a lot of the properties are empty. So the people who live in London and New York who have been driven out by high prices now have to go and live somewhere else and have to travel a long way to work, pay the transportation costs and so forth. For the majority of people the standards of living are going down not up.

The single biggest risk to gold is the government

Well, first of all we had the gold bull market from 1999 to 2011 and we’ve been in depression since then. If I compare the credit growth, monetary growth and asset growth among central banks and the whole banking wealth accumulation that we had in the last fifteen years, I don’t think that gold is terribly expensive. I hold physical gold for the reason that one day I may not be able to remit money from one country to another. I don’t know when this final systemic collapse that I am foreseeing will occur but all I can say is that in monetary, inflationary times, when inflation is measured properly, in real terms: stocks usually don’t do particularly well but gold does.

Nobody knows how the world will look like in five years’ time. I don’t think that gold investment is the best over the long run, because it doesn’t generate cash flows and doesn’t “grow”. But I think it makes sense to hold it for diversification. My business depends on financial markets, so I own stocks, bonds etc. Most of it is in “paper” and I want to be diversified out of paper into something that is not the liability of someone else. In the bank account, I depend on the bank. If I own corporate bonds, I depend on the corporation to pay me back. In the case of physical gold, I don’t depend on anyone to pay me back, but I do rely on well-established property rights. 

All governments now largely consist of bureaucrat socialists that are anti-wealth – and this also goes for the Swiss bureaucrats. If a proposal to collect all the gold from banks and Swiss owners of gold comes up, they are likely to follow through. I think that the collection of one’s gold by the bureaucrats is the largest risk we have today.

Yellen, Greenspan, Bernanke could be judged badly by future history books

I think that future historians will have a very negative view about the great experiment to boost economic activity with monetary measures via creating asset inflation. I think this view will be very badly discredited. Now, we have to understand it will take some time for this to happen because you have the neo-Keynesians, these are the people like Martin Wolf at the Financial Times and Mr. Paul Krugman at the New York Times and Mr. Rosengren at the Boston Fed and Larry Summers, who, if there is a failure in the asset markets or in the economy and so forth, will say the reason the policies didn't work is because we didn't do enough. That may go on for quite some time but I can tell you that I see more and more people, young people, who no longer consider the Austrian economic theory to be heresy. And it isn't heresy. 

It's essentially common sense, a historical approach to economics. I think that eventually, future economic history books will condemn Mr. Greenspan, Mr. Bernanke and Ms. Yellen very badly.

And I will make sure it will happen during my lifetime. I'm not saying this because of any animosity in terms of my having suffered from their system. As I told you, I'm in the financial system. I'm an asset owner. I would never have had the assets I have today without money printing. I just look at the world as an economist and from the point of view of fairness, and I don't think the present system is in the long run desirable. We have a new aristocracy, largely a smart aristocracy – the hedge fund managers and so forth – but in terms of culture, a lot to be desired.

Parents generation richer than kids generation

When you print money it benefits few people. Those with assets such as property and stocks get richer, while the rest see their cost of living rise while their wages do not go up commensurately.

I believe we are in the midst of the generation that for the first time in Europe, US and Japan will die poorer than their parents. 

China real estate could still have hard landing

I think that there is a very high chance for a hard landing in the real estate sector, because we have a gigantic credit bubble. Usually these are created during the periods when credit expands at a faster pace than the economy and are followed by some kind of hardship. I do not rule out that government interventions can postpone the problem. They will bring about new misallocations of capital and maybe even make things worse. However, because China is so large I think that many sectors can still thrive in an environment where, for example, the real estate market collapses, so I do not think that the impact will be that strong.

We’ve seen what happened before with the bailout of Mexico in 1994 and the Asian crisis in 1997. If Mexico had failed at the time, we may have had a more significant setback in emerging economies in the mid-1990s, but we wouldn’t have had the depression that followed in 1998. So in my view, government intervention can postpone the problem but it may also make the situation actually worse by not letting the market clear as soon as some signs of problems appear. If, for example, LTCM hadn’t been bailed out, I
don’t think the whole system would have collapsed. Some people would have lost money, I guess Goldman Sachs and the counterparties of LTCM, but it would not have been a threat to the global financial system. 

But this is what’s being presented to the public by the interventionists, who argue: ‘Had we not intervened, the whole world would have collapsed’

Rich to get creamed one day and Inflation measures

What has happened this year is true, gasoline prices from their highs have come down, oil prices are down from their highs. Also corn, wheat and soybeans are down. Agricultural commodities are nearing a low. They wont stay at these levels for very long.

The fact is this simply. You take oil, its at $92 today its still up substantially from the level it was at 1999 where it was at $12. Food prices are way up. Everything is more expensive. 

Now there are different ways to measure inflation. The BLS calculates its own way and other people have different ways where they show the cost of living of average family is much higher. One thing is very clear, consumption in the US by historical standards has not recovered much. Why ?

The purchasing power of people, they get their salaries, compensation, and 
their cost of living has gone up more than their salaries. They are getting squeezed. That's why retailing is not doing particularly well.

Now I admit in the US and elsewhere we have a dual economy, we have the economy of the rich, they live in San Francisco, in New Port Beach, Aspen, Palm Beach, Mayfair in London, Chelsea and so forth, and then we have the economy of the average person, its a very different thing but the rich will get creamed one day specially in Europe with wealth taxes. 

High inflation in Asian countries

Inflation comes in many different varieties. For example, I was attending a CSLA conference and CSLA compiled in the year 2009 a basket of different goods and services in Singapore. And as of today that basket is 85 percent more expensive than in 2009. 
So the money printing in Europe and in the US does not necessarily have to lead to inflation in US and Europe for the time being, but it has led to huge price increases here in Asia in countries like India, China, Vietnam, Singapore, Hong Kong where we have record prices for properties and as property prices have gone up a lot, the shops have to demand higher prices in order to maintain their margin and make profit and so consumer goods have also gone up a lot in price.

So there is inflation in the system. 

In the US I just read, that in Chicago the city retirees next year will pay 40 percent more in health care premiums. So these are all symptoms of underlying inflation. 

Marc Faber predicts rising rates to hit asset prices

I think the beauty of today unlike 1999 until March 2000 when we had the tech bubble; at that time the majority of old economy stocks were cheap, commodities were in-expensive, today the good news is we have a bubble in everything everywhere and with very few exceptions. And eventually there will be a problem when these asset markets begin to perform poorly. 

The question is what will be the catalyst, it could be a rising interest rates not engineered by the Fed, because I think they will keep the interest rates at Zero on the Fed funds rate for a very long time. 

Bond markets, something very unusual, French government bonds were yielding last week 1.3 percent. Spanish, Italian bonds as much as US 10 year treasuries. We could essentially have a break in bond markets at some point. We also could have a strong dollar. A strong dollar has already happened in the last two months signifies that international liquidity is tightening and when that happens its usually not good for asset markets.

Dont follow the herd if you want to buy low and sell high

My regular readers must have realized by now that I am not a great protagonist of “Big Government” with all its agencies (including the Fed) since it is thwarting economic growth. One of the reasons is that once government becomes excessively large, its laws and regulations also become extremely complex and hence cumbersome. 

With few exceptions hedge funds have under-performed most indices including gold and longer-term Treasury notes in 2014. Particularly disappointing was the performance of “Global Macro Hedge Funds” and “Equity Long/Short Hedge Funds.” 

Finally, veteran investor Kahn observed that, “I would recommend that private investors tune out the prevailing views they hear on the radio, television and the internet. They are not helpful. People say 'buy low, sell high’, but you cannot do this if you are following the herd. You must have the discipline and temperament to resist your impulses.”

I think most investors tend to forget these very simple principles, which will over time lead to a satisfactory performance.



via gloomboomdoom.com

Geopolitical issues will affect global trade negatively

I think that geopolitical issues will become more important. At the present time what is dominating the geopolitical discussions is what is happening in the North of Iraq, in the Gaza Strip and in Syria but it will spread out to Saudi Arabia, because don't forget Saudi Arabia has a huge border with Iraq. 

Also it will spread out into Turkey and then it will obviously not be favorable for global trade. 

The other issue not frequently discussed is the increase in tensions in South East Asia. China is a huge power, it needs resources, it will have to make sure resources will always flow to China - Iron, Ore, Copper. And the US has had this pivot to Asia which they declared two years ago. Now they have a closer defence agreement with Philipines and Australia, which if you are Chinese is a hostile move. 

Evidence of monetary policies failing

I think we are in a late stage rally and we are probably not going to get a correction but a bear market that will be 20 to 30 percent at some point.

Nobody knows for sure [when the stock market decline will start] but I suppose the credit market will weaken. The high yield market, the junk bond market which has already weakened, the earnings may disappoint. We had essentially, very poor sales from McDonald's. 

Now, McDonald's is a very good indicator of the global economy. If McDonald's doesn't increase its sales, it tells you that the monetary policies have largely failed in the sense that prices are going up more than disposable income, and so people have less purchasing power. So I think we are going to go down in October, November and there will be a rebound and there will be no new highs . It would be my view.

In the end we will have a collapse in markets

Eventually we’ll have a collapse or deflationary bust in asset markets. That’s inevitable. Printing money can postpone such a collapse but eventually the bust will occur. Every inflation, whether consumer price inflation or asset inflation, eventually comes to an end. 

Marc Faber would rather buy Gold vs Bitcoin

I know people who are very positive about Bitcoin, and I think its a currency that has a lot of future. But there will be competing bitcoins. 

And I personally when it comes to having some money into an asset or into cash that cannot be multiplied, I prefer a precious metal such as gold, silver, platinum, palladium. 

But ofcourse you have to store it in the right place, not in the US. The best is probably a safe deposit box in Singapore or Hong Kong or in your safe in Asia.

Asian economies to grow at slower pace compared to past

China is unlike any other country. It is twice the size of Europe and the US combined in terms of population. So it is a huge empire and giant economy. 

My view is that the economy is not growing at the rate the government claims it is. The economy is growing at maximum 4% per annum, because when you look at export and import statistics of countries like South Korea, Taiwan, Hong Kong, Singapore, Thailand, Malaysia, and their trade figures with China, you will find it is not growing or is hardly growing. 

Under the interventionists in China there will obviously be monetary easing, fiscal spending and so forth, like anywhere else. And so, they can maybe postpone the problems but in general, I would say the remarkable thing about the last twelve, fifteen years is that in the case of metals, Chinese consumption has grown from 12% of world consumption in year 2000 to now 47% and this Chinese consumption of industrial commodities was just 2 or 3% in 1990. So we’ve had this huge expansion in Chinese appetite for resources. 

My view is that China’s demand for raw materials will not collapse, but it will not grow at the same rate anymore or hardly grow at all, except for oil. Their demand for oil will obviously grow in the long-term. But for the industrial commodities, it will slow down meaningfully. And so the impact on other emerging economies where we have hardly any growth at the present time, will be felt. As is the case in the West, real growth will be very difficult for many Asian economies.

This bull market is ageing

The market hasn't had more than 11 percent correction since October 2011. A bull market frequently goes on for longer than expected. The current bull market is very old, we have been going up since March 2009. 

This bull market is more than Five years old. The one thing I can say is we are in an ageing bull market, and the economic recovery has lasted longer than the typical recovery or expansion phase over the last 100 years. Now can the bull market go on for a while because of additional money printing...possible... but in my view for asset prices to go up, the Federal Reserve actually has to increase the asset purchases and not taper and that is quite difficult politically to do.

Markets not making sense and unpredictable

All the central bankers are money printers and the problem with the easy monetary policies in the US was that it essentially propelled the Euro to artificially high levels. Because the Euro economy is not doing well, the Euro zone economy is in recession and contracting. 

And so you have these movements that are very unpredictable. And if you look at the performance of macro hedge funds, they are all poor, because a lot of things do not make any sense.

Marc Faber says Markets are mispriced

We've had relatively low volatility in bonds and in equities and in currencies and I think in the next 6 to 12 months will be characterized by far more volatility. 

What we had since essentially early April was the Euro strength and since then the Euro has been weakening and then until July we had Yen strength and now its weakening. And bond prices have continued to go up. Its interesting that at the present time, Spanish government 10 year bonds yield less than US treasury. Spanish bond yield 2.25 percent and US 10 year note yields 2.4 percent. I believe all the markets are grossly mis-priced because some people say intervention, I say central banks have manipulated interest rates to artificially low levels and so you have this complacency in the market place. 

We are more than 5 years in the bull market. Can the market go up another 10 percent or so, yes its possible. Since August 7th, up to today the S&P is up roughly 100 points, at this rate(in one month), the S&P in the next 12 months will be up 1200 points. I dont think its very likely. And if there is a strong blow up phase, it will be followed by an equal sharp downturn.

via Bloomberg interview

Evidence of US Dollar decline signified by Russia-China deal

The US supported the opposition in Ukraine thinking that Russia will do nothing. 

But Crimea is strategically important to Russia since it gives their fleet access to the Mediterranean and the Middle East. And so, by supporting the opposition in Ukraine, the Americans essentially removed a democratically elected president. He may have been incompetent, but he was democratically elected nevertheless. That’s democracy! In democracy you have incompetent people at the top. 

The Americans also thought they can push the Russians a bit further by trying to lure Ukraine into NATO. That was a step too far and so the Russians reacted by signing a gas deal with China! The significance of this deal lies in that the payment will no longer be made in Dollars but in local currency, the Ruble or Yuan. I think this is symptomatic of an empire, the US, in decline and a global currency in decline as well. 

Don’t forget, until WWI, the world currency was the British Pound and its importance diminished afterwards. And now we have a gradual lessening importance of the US Dollar. 

Marc Faber on democracy and big government

Generally, in small societies, democracy is more successful than in large societies. 

In countries like India or the United States, the federal government has become so large that they take decisions that are not necessarily in the interest of the individual. This is different from Switzerland, where we have municipalities, “Gemeinden”, and states, “Cantons”, with a lot of decentralized power, which I find very desirable. 


Basically, over the last, I would say, 100 years, the Keynesians and the
Neo-Keynesians thereafter propagated their view that the larger the
government and the more the interventions the better a society becomes.
They have managed to discredit the Austrian School of Economics. As a
result, society in general has turned into an entitlement society where we
have an insurance policy for everything and the government is expected to
pay the bills. And so, the freedom of the individual is undermined. But with
freedom comes responsibility, personal responsibility. This has been pushed
aside and people don’t realize that they can’t be free if they don’t take on
responsibility. Adam Smith said the government should be in charge of a
well-structured legal system, low taxes and defense and nothing else! 

Instead, we have more and more socialism and state planning, which 
diminishes people’s freedom. I believe we need to have a huge change in society to make people understand that if you want to have freedom you also have to take on personal responsibility.

India stocks doing reasonably well

I just looked at the statistics of the revenue per shares of companies and in India we have a situation where revenue per shares has been rising significantly more than in other emerging economies in the last few years. 

Now at the same time we have in India, pressure on corporate margins, profit margins, and if there is an environment where profit margins can improve, corporate profits could rebound very strongly. And so its conceivable that the stock markets in India, which have been one the best performing markets in the world year to date, that this performance continues for a while.

Size of government matters to economic growth

I have to say that in the US, no matter who is the president of the United States, to reform congress and the lobbyists and the lobbyists and the curropt system and the cronies is incredibly difficult. So you have essentially governments around the world and bureucrasies that are very difficult to reform. And I have to point out that the period between 1970 - 1910 in Europe and US was characterized by very strong growth certainly in real income terms and that was the period the government made up for maximum 15 % of the economy. So the larger the government becomes the lesser economic growth there is. 

If someone asked me how do you really stimulate growth in the global economy, I would say that Government spending has to be cut meaningfully and the economy has to be free from the chain of that he buerecracy the government imposes on them.

Best place to store gold is Asia- Marc Faber

I wouldn't store it[Gold] in the US. I would rather store it in Singapore or in Hong Kong or maybe you bury it somewhere. 

But as I mentioned earlier, I think the tendency is going to be for politicians that have completely failed and utterly failed to essentially blame rich people for wealth inequality and then they will go to the people, to the masses, and say, "You know what? What we have to do is take away their gold. These are the people who damaged your economy. Let's take away their gold." 

And in the US they may do that, and in the ECB in Europe. The horrible politicians in Brussels and the US government are one in the same. They will go to the Europeans and say, "If we do it, why don't you also do it?" and Draghi and all these characters will say, "Yeah, good idea." 

And then they'll knock on the door of the Swiss and the Swiss, who have no backbone anymore – except their soccer team, who consists of foreigners, not Swiss, all born overseas or children of foreigners in Switzerland – the politicians and the Greens and the Socialists will say, "Yeah, good idea. Take the gold from the rich people." So my view is it's probably best to hold gold in Asia and Singapore and Hong Kong where there is a culture of private property and a culture of gold. 

Younger households finding it harder to afford to buy homes

I think one of the problems of the current monetary policies is that asset prices have risen very rapidly, notably in stocks in US and bond prices. The bond market, credit market is inflated and the stock market is inflated, and because of the strong housing price recovery in the US younger people cant afford to buy homes. 

The monetary policies by boosting asset prices have lowered the affordability of assets. In future returns from all kinds of assets real estate, stocks, bond, even commodities will be relatively low.

US Dollar slowly losing its importance to rest of the world

The dollar is still going to be for some time the most important currency because I can travel with $1000 in cash or as I do, usually $10,000, and I can go into any shop, nightclub, bar, anywhere in the world, and pay with dollars. So it's still the accepted currency.

But increasingly, as world trade is more and more between emerging economies with each other. The world trade used to be, say 50 years ago, between the poor world, the emerging economies, the Europe and the US, and then it went up somewhere else. But nowadays more and more countries say – trade of China with Africa is now $200 billion. It's twice the size of trade between Africa and America. So over time, all this trade will be carried in other currencies than the US dollar. And the US policy makers and the incompetent people at the State Department managed to antagonize Mr. Putin with the Ukrainian uprising, which they supported. Now, this has backfired. Mr. Putin went and made a gas pipeline deal with China and the payments will not be settled in US dollars.

So gradually, yes, the importance of the US dollar is going to diminish as gradually the importance of the US economy – and I'm stressing this, relative to the rest of the world – is diminishing. In the '50s and the '60s the US was the dominant economy. It is still, according to their accounting methods, the largest economy but say car sales in China are as large as in the US and you have, of course, many more Internet users in China than in the US and there are many more computers in China than the US and so on. So in many sectors the US economy is no longer the largest. But all I'm saying is relative to the rest of the world, the US, in terms of military power and in terms of economic power, has lost out.

Why Marc Faber may be right on market decline this time

I was recently asked by some commentator, why would the market go down? And I was at a meeting of economists and, whereas in 2009 all of them were very bearish, S&P 400 and this and that – I have to say, at the time I said the market is so incredibly oversold, in my view it will go up. Then in 2012, March to June, when the European markets were at the low and the euro was very weak – some European markets in March to May 2012 were lower than they had been in March 2009. But between March 2009 and March 2012, the S&P had more than doubled but the European markets had gone up and then collapsed somewhere lower than in 2009, such as Portugal, Greece, Spain, Italy, France. I told them, now is the time to put some money in Europe. All of them were very bearish.

So this group of economists, very intelligent, all academics who know much more about economics – or at least the Keynesian economics theories – than I do, and now they're suddenly all very bullish. That tells me something. I agree with Jeremy Grantham and John Hussman: Statistically seen and from an evaluation point of view, the market will have low returns over the next ten years.

Now, can the market go up another 30% before it falls 80%? Yes. Possible. But it can also start to go down relatively soon. I think the second half of this year will be a big disappointment for many people.

Marc Faber explains why the Market rallied higher last week and where it is heading next

We had a significant correction in many shares, and the markets on a very short-term basis were extremely oversold with only 20 percent of shares above the 50 day moving average. 

Now a rebound is underway in my opinion. But I doubt we will make new highs, and if we make new highs, maybe just with the very limited number of shares, because the technical damage is quite significant.

Market Collapse is next instead of a correction

I still hold 10-year Treasuries notes. I'm not of the view that it's a good investment. They are yielding 2.6% at the present time for 10 years so the maximum you can earn is 2.6% for the next ten years. I think it's a disastrous investment but maybe other investments like the S&P, the NASDAQ, the Russell 2000 are even worse and so I hold some 10-year Treasury notes as a hedge against the market decline. 

I've been predicting – wrongly so, I admit – a correction for a long time. But now I don't believe there will be a correction. Next train station is a collapse. 

Markets trade up or down together

All markets are correlated. If the S&P drops 20% I don't see many markets going up. 

If you print money you will get symptoms of inflation and one of the symptoms of inflation is rising asset markets. It can also be rising consumer prices, rising wages and so on. Because we have an absence of foreign exchange controls and we have a globalized economy, the US may print money and there is more inflation in the US in terms of consumer price increases than what the Fed is suggesting. But at the same time, the larger inflation has been in emerging economies and even larger bubbles have occurred there. 

My view is that to boost economic activity by boosting asset prices is a horrendous – and I repeat, horrendous – mistake because it's been established by numerous economies starting with Copernicus and David Hume and Irving Fisher that asset bubbles impoverished the majority to the benefit of the few 

Marc Faber: Gold to outperform S&P500, Nasdaq markets and US Dollar

My inclination is to believe that the central banks eventually will have to make a choice. They have created asset bubbles. At the same time, the economy has hardly recovered. 

What will happen when the asset bubbles burst again, say the stock market goes down 20%, the property market goes down and so forth? What will be in the mind of the Federal Reserve and other central banks? 

What will be in their minds is more money printing will do less damage than no money printing. And so the asset purchases, the QE 1, 2, 3, 4 will go on to what I predicted in 2009: It will go to QE 99. And as a result of that, not only the US dollar but all currencies will lose in value against some assets, irregularly at times. Real estate will go up at times. At times commodities will go up at times. Stocks and bonds will go up at times. But my inclination is to think that when this all happens and even before – because the market is a discounting mechanism – is that gold and silver will again appreciate against the US dollar.

Marc Faber still likes the yellow metal

Gold has done well since year 2000

And don't forget – and I have to stress this – the media is all over the fact that gold hasn't performed well, in September of this year, for the past three years and silver equally. But they never mention that between '99 and 2001, all precious metals significantly outperformed stocks and even today, precious metals between 2000 and today have significantly outperformed stocks. But the media paints people that own gold as kind of out of this world, out of touch. 

In my view, the recent gold rally has occurred amidst very negative sentiment. I get so many research reports from all over the world, from banks, investment advisers, gold bugs and so forth. 

General mood on Gold

By and large in this rally the mood has stayed negative. I think we made a major low over the last two years around $1180 to $1200 on the gold price and around $20 on the silver price, and I don't recommend people to put all their money into gold – but maybe they should; the question is, where would they keep it? Certainly not in the US – but in general I would say now is probably quite a good time to buy some gold and silver, and I believe that from here on gold and silver will outperform the S&P 500, the Nasdaq and the Russell 2000. It's my view.

Gold Silver are relatively attractive still

Now, if we have a complete breakdown of the monetary system then maybe everything goes down and then stocks may go down 80% and gold only 40% or 50%. I'm just saying, relatively speaking in my view, gold and silver, platinum, palladium are quite attractive and I recommend people to have at least some exposure to precious metals in physical form.







VIA http://thedailybell.com/exclusive-interviews/35527/Anthony-Wile-Marc-Faber-on-Commodity-Cycles-Monopoly-Central-Banking-and-the-Wealth-Redistribution-Craze

Rich people not at fault for wealth unequality

We have a two-tier economy. We have an economy of well-to-do people from which I have benefited because I'm in the financial sector. My asset value has gone up, I benefit from rising asset prices because I own shares and I'm on the board of companies that own shares, fund management companies and so forth, but I'm not happy about the fact that the typical household and the working class worldwide is not doing well. 

And what will eventually happen and has begun to happen – and I have written about this already five, six years ago – when you have rising wealth inequality, eventually you have politicians that will not assume personal responsibility for the rising wealth inequality that is largely fostered by monetary policies by central banks, notably the Federal Reserve. They will then go to the public, like Bill de Blasio, and say, "Look, if you are not doing well it's the fault of the rich people. The rich people are ripping you off."

The rich people aren't ripping off anyone. They just took advantage of a situation that was given to them by the Federal Reserve. 

And so these politicians will go to the people and say, "What we have to do is to punish the rich and let's introduce a massive wealth tax,".

[Thomas] Piketty, who has studied – and I do not disagree that he's done serious work; it's not exactly correct but he's done serious work about wealth inequality. When wealth inequality grows too much you have either significant social reforms, social strife or revolutions. And in Europe and everywhere I hear more and more talk about taxing the rich and that is going to happen. It's not going to help. 

Redistribution of wealth eventually ends up in redistributing poverty.


VIA http://thedailybell.com/exclusive-interviews/35527/Anthony-Wile-Marc-Faber-on-Commodity-Cycles-Monopoly-Central-Banking-and-the-Wealth-Redistribution-Craze

Marc Faber on Chang Mai

I lived for 30 years in Hong Kong starting 1973. Then in 2002 we moved to Chang Mai in the north of Thailand, in the so called Golden Triangle. 

We are in an agricultural part of Thailand. Its quite interesting because the agricultural sector around the world has done quite well. And Chang Mai is experiencing some kind of a boom. 

A lot of people from Bangkok they come here because the climate is much nicer than Bangkok and buy a second home.

Marc Faber: Silver vs Gold

I have lots of friends who are much more positive about Silver than Gold. 

But I keep my gold in safe deposit boxes. They wouldn't be big enough for silver.

A lot of assets could be worthless in the future

We could have some kind of deflationary bust, we could also have some kind of inflationary bust.

If the inflationary bust occurs, then it will be followed by deflation. If we have a deflationary bust, it will be followed by high inflation. It doesn't really matter, the end result will be a further impoverishment of the middle class and the lower 40 percent of income recipients of in the western world. They will not participate in the money printing and boom and busts. They will be impoverished. Then the social mood will be very bad.

The government irrespective Democrats or Republicans, they want to protect their friends, their Lobbyists, they will go to war, and the whole thing will collapse one day. There will be a reset and during that reset a lot of assets will be worthless, like the whole derivatives market will cease to exists.

Marc Faber: 30 percent correction by September 2014

I think that we will make a peak sometime within the next 30 [Thirty] to 60 [Sixty] days and then we go down meaningfully [20 to 30 percent correction]. 

Don't forget many stocks are already down 10 percent. Home-builders are down roughly 15 percent. Airlines have just dropped 10 percent and you have lots of individual stocks such as Twitter and Yelp that are down 30 - 40 percent already. So we are not in a uniformly strong market. The Russell 2000, which represents 2000 companies is down 2 percent for the year.

Luxury properties, stocks, bonds have benefited from Money Printing [VIDEO]

Marc Faber criticizes the fed and states his like for Hong Kong shares. 


[Watch above Video]

Paper money cannot protect its true value, hold some gold

With practically Zero percent interest rates and cost of living increases of about Ten percent per annum, paper money at zero interest rates loses its purchasing power.

One of the functions of paper money is to be a store of value. [Hence] I have argued again and again that investors should hold some assets in precious metals as an alternative to cash

The Fed will not change its monetary policies

It’s pointless to talk to Fed members about economics because they are academics who believe in money printing. 

Some of them believe they didn’t print enough, and so with these kinds of people, it is like running to the pope. What do you want to tell them? It’s pointless to spend time with these people trying to convince them that their monetary policies have been very destructive. They bailed out Mexico in 1994, and there was an EM bubble until 1997. They then bailed out LTCM (Long-Term Capital Management), which gave a signal to leverage up. Then they had the Nasdaq bubble, then they printed again and had the housing bubble. 

David Hume(an economist) and Irving Fisher( an economist) said bubbles are very destructive to the majority of market participants. They lose money, the minority makes money. The Fed doesn't see it that way so it is pointless to talk to these people. 

US Dollar crisis can occur under the following scenario

I believe that the following scenario could actually lead to a dollar crisis. Let us assume that the stock market continues to go up and the economy does not respond much, but prices begin to rise and so rents, insurance costs, medical costs, food costs and energy costs rise.

The Fed will at that time have to choose if they increase interest rates and tighten monetary conditions in order to combat inflation, or continue to ease and print money in order to avoid asset markets from declining. At that point, there could be a crisis of confidence in the US dollar which would then weaken the US dollar considerably.

Fed should include Food and Energy prices in inflation data

In the US, the Federal Reserve bases its monetary policies on core inflation that excludes food and energy prices, but the reality is that people live and have to eat. And they need transportation, and transportation costs something.

Walmart indicator shows consumer sales are not growing

Wal-Mart shares peaked out in February and since then, the stock has been moving sideways. As as an economic indicator, Wal-Mart is a very good say symptom of what is happening to the consumer and if their sales are flat or down, or Coca-Cola’s  in the U.S., it tells you something about the consumer. 

Gold, Silver, Coal mining shares attractive

Gold and silver mining stocks are very depressed relative to the rates of the market and in absolute terms, in terms of valuations. So that sector is quite attractive.

I also think that coal shares have been oversold and they are now at a reasonably good value, but other than that, I do not see any particular value from a long-term perspective.

Now if you tell me that the market can go up another 10%, that may be the case, but it does not make for good value. Therefore if I look at the total return that I can expect from US shares over the next 5 to 10 years, it will be very disappointing. I would rather buy emerging market shares, which in terms of valuations are reasonably priced.

Why now could be a good time to buy Gold

At the beginning of the year, we were at $1200 [on gold] and then we rallied to $1393 and since then, we have had a correction again to around $1200 and now we have rallied again.

My sense is that this latest rally has been accompanied by a lot of skepticism among investors and a lot of negative sentiment. In other words, people are not buying the bull market yet and this is a good sign. I would be accumulating gold from here onward down to around $1250.

Marc Faber bullish on oil and commodities

My view regarding oil is similar to that on other commodities. We had a huge increase in crisis after 1999 when crude rose from $12 a barrel to over $100 a barrel and a peak was made in July 2008 at $147. It came down again and then rallied again.

In general, regarding crude and other commodities, the cost of exploration and extraction has gone up and I do not foresee a meaningful decline. Now, can the oil price temporarily drop to $80 a barrel?

That is a possibility, but in general, unless the oil price is above $80 to $100, exploration will be curtailed. So my outlook for oil is rather positive, especially given the geopolitical situation that we are faced with.

Asset markets are bursting, this may just be beginning [Video]

"I think it's a colossal bubble in all asset prices, and eventually it will burst, and maybe it has begun to burst already."

Marc Faber issues Bear market warning and admits his previous mistake

Obviously I've been wrong in the sense that I expected a correction to occur over the last two years, and it hasn't happened since October 2011, when the S&P was at 1,074. We've gone up in a straight line, without a larger correction than 11 percent, and I think we're not going to have a correction, but we're going to have a bear market.

Three reasons markets will under-perform

I don't believe that the global economy is strengthening; I rather think the global economy is weakening. There are other issues that may put the weight on the markets that will push prices lower. 

A, I think that we have in the White House, a very poor president, and that may lead to some political issues in the U.S. domestically. 

B, we have numerous political issues to consider, 

And C, we could have, potentially, a much higher oil price." 

Value of money depreciating over the years

In 1970, I started with a salary of $1295 a month, plus I had a living allowance of $300. But with that you could live quite well... not with luxury. I had a nice one bedroom apartment on 52nd Street East Side and we could go skiing on the weekends and on summers we went to the Hamptons for fun. 

Im just saying the value of money has depreciated dramatically over time.

Gold storage safer in Asia according to Marc Faber

I'm worried that one day if the US does the same as in 1933, mainly seize the gold. They didnt expropriate it, they paid for it after they revalued the price of Gold. If that happened again, they would go to the European's and to the Swiss governments and say you have to do the same, and probably they would oblige. But in Asia I dont the Americans would do that. So I keep some gold in Asia and the bulk is still in Switzerland but I am thinking of moving it more and more to Asia.