Matthew Boesler
Marc Faber, who authors the Gloom Boom & Doom newsletter, is usually pretty bearish on stocks and bullish on gold.
Lately, though, gold doesn’t seem like it can catch a bid.
“Despite the continued reverberations regarding the Cyprus bailout and its involvement of bank deposits, gold struggled to maintain the positive momentum created in the first two weeks of March and instead now looks very likely to move lower, towards $1580/oz,” wrote Deutsche Bank commodities analyst Xiao Fu in a note this morning.
So, what does Faber have to say about it?
This morning, on Bloomberg Surveillance with Tom Keene and Alix Steel, Dr. Doom was asked why gold wasn’t holding up.
Here’s his explanation:
When you print money, the money does not flow evenly into the economic system. It stays essentially in the financial service industry and among people that have access to these funds, mostly well-to-do people. It does not go to the worker. I just mentioned that it doesn’t flow evenly into the system.
Now from time to time it will lift the NASDAQ like between 1997 and March 2000. Then it lifted home prices in the U.S. until 2007. Then it lifted the commodity prices in 2008 until July 2008 when the global economy was already in recession. More recently it has lifted selected emerging economies, stock markets in Indonesia, Philippines, Thailand, up four times from 2009 lows and now the U.S.
So we are creating bubbles and bubbles and bubbles. This bubble will come to an end. My concern is that we are going to have a systemic crisis where it is going to be very difficult to hide. Even in gold, it will be difficult to hide.
Faber is, of course, still bearish on U.S. stocks. He told Bloomberg that he sees “considerable downside risk” in the market.
http://www.businessinsider.com/faber-gold-wont-be-a-place-to-hide-2013-3
I agree with Mark Faber. All ready the investors that bought gold at $2,000 an ounce are takin it in the shorts. Gold market is just another speculative bubble. Greed and fear by the inside traders and speculators on the commodities futures exchanges. Very little physical gold is being traded. Most of the gold that is bought and sold is on margin. It is a highly leveraged. An investor can buy a $10,000 contract in gold for as little as $1,000 dollars. It is a high risk market and is for the profesional and not the uninformed. The market moves in ticks or a 1/10 of a point. In a matter of seconds or minutes there can be a margin call to put up more money up front depending on which way you placed your bets, either long or short. This is a market for the big boys and not the little boys that are not professionals. You can only invest what you can afford to lose. The NYMEX is the biggest legalized gambling casino in the world. A few years ago I saw a man that was investing in commodities futures on the commodities futures exchange behind JC Penney. Some time later I saw him walking down the side walk with his head hanging. I asked him what was the matter. He told me that he had lost $500,000. I met him previously when I was visiting with a friend of mine in the commodities futures exchange. I wasn’t an investor, only an observer. I told the broker I didn’t wan’t to get rich, I only wanted to keep the money I had. End of story