Some years ago I started to get interested about the World economic situation and gold´s important role in the economy. It did not take long till I ended up in some gold bugs websites.
Gloom Boom and Doom
Of those three “gold bugs” the one I like the most was Marc Faber.
Jim Rogers was too bullish in commodities in my opinion (1) and Schiff was too centered in the American economy and the dollar. Schiff was bearish against the dollar concerning the rest of the currencies of the World, and in my opinion, the problem with that is that the vast majority of World currencies are as bad as the dollar if not worse.
Marc Faber global economy
On the contrary, Marc Faber, seemed to have a more global vision, and, despite being-long term bullish on gold (2) he was aware that it could go down significantly any time (as it finally did).
I remember perfectly how Faber was correct (as well as Rogers and Schiff) in the 2007/2008 bearish market, being short in the stock market.
He must have made good profits those years.
Those days I remember one of his best predictions. In the terrible days of early 2009, when it seemed that the bear market had no end, Faber started to say that it was very likely that the market has bottomed out, and that the market was oversold.
He thought that central banks would reverse the bear market with their QE programs. What followed from march 2009 was one of the most impressive bull markets in the history of the American markets –in terms of rise relative to the years.
From that moment on, Faber was even bullish in stocks in different sectors and countries.
He always favored investing in exotic and “undervalued” countries.
Marc Faber diversification
Faber loves diversification.
He never recommends have all the assets in the same category, neither stocks, nor gold, commodities, bonds, real state.
His investing style is, in some ways, similar to that of André Kostolany or Jim Rogers, being what many call a contrarian investor who is not interested in the short swings of market (3).
His investments are for the very long term. He says he will never sell his gold.
Faber is famous for his numerous radio and television appearances, being part of many CNBC and Bloomberg interviews.
He is also very active in the alternative media, mainly in gold bugs and contrarian circles.
He is always warning us that, eventually there will be a complete collapse of the economy.
One of his main characteristics when he appears on TV is the way he speaks, with his Swiss accent, among his peculiar sense of humor. His English is quite easy to understand, even for those who do not speak it very well.
Marc Faber interviews
When he is interviewed, he usually laughs quite a lot.
He always does when he says that the United States will ultimately collapse. Every time he says it, the hosts laugh as well. Some of them probably think that the guy is insane. Some of them do not believe Faber when he says: “The United States will eventually collapse and go to war”.
In his last appearances Faber reminds us that the markets – above all the Americans – are extremely overvalued, and he is considering short positions in some sectors.
He also says that one of the most depressed sectors in the stock markets, the metals one, is probably one of the best long term investments, but not without risk.
He considers that junior gold miners (GDXJ), which quote 85% below their peak, are a good long term investment.
He is usually interested in sectors that nobody cares about, or where the majority do not favor. Nowadays everybody is bullish in the stock markets and bearish in gold and metals. And, it has been like that for four years now.
His theory is that, some day contrarian bets will pay off.
Marc Faber gold
He considers that being long in gold at this moment is like a long term short position on banks.
He knows, for instance that GDXJ may even fall more than 50% (in fact, a lot more if gold falls below $900), but eventually, when the price of gold skyrockets to $2.000 or more, GDXJ will easily go to $200, almost ten times more than now.
Anyway, that is not a position where Faber goes “all in”. He knows that it is like a leveraged position in gold and I do not think he is betting a significant portion of his portfolio in it. I think GDXJ is part of a much bigger portfolio for Faber.
Everybody who is interested in economy and this seemingly never-ending crisis should watch Faber interviews from time to time. I do it myself occasionally. I quite enjoy when he mocks governments and the hosts seem puzzled.
Marc Faber government shutdown
However, Faber once said that “it is very dangerous to be right when governments are wrong”. He is aware that the risk of confiscation is always there.
- Commodities have performed very poorly last years. Some of them have completely collapsed. Rogers was recommending commodities all the previous years.
- He once said that he would never sell his gold, and that he was not a short term trader. He said that brokers loved short term traders and that it was not usually a good business for the traders.
- In one of his last interviews he recognized that he barely changed his portfolio any year, and therefore he was not a good customer of brokers.