Faber Bullish On Gold

Comments Off on Faber Bullish On Gold 20 September 2011

Marc Faber has long been bullish on gold and silver for pretty much a decade. The writer of “Tomorrow’s Gold” along with the Gloom Boom Doom Report continues to be an outspoken critic of the expansionary monetary policies at the Federal Reserve.

Faber remains bullish on gold although he’s somewhat worried that the price could fall to the $1150/oz range. Faber is slightly concerned that there are some new gold bulls which have recently joined the chorus of criticism directed at Ben Bernanke.

Almost all of Marc Faber’s gold portfolio is locked in physical bullion. Faber has encouraged U.S. citizens to keep gold outside the U.S. Presumably he’s concerned with government confiscation of gold that happened in the Great Depression. This really is most probably an unwarranted fear because few U.S. citizens actually own gold. In the Great Depression, the U.S. was about the gold standard which means that average citizens held bullion. That is not the way it is today.

One other part of Marc Faber’s gold portfolio continues to be dedicated to mid-size producers such as Novagold (NG) and Gabriel Resources (GBU.TO). It also appears that Faber sees value in large gold producers including Gold Fields (GFI), Newmont Mining, (NEM), Barrick Gold (ABX).

Over the time that I have followed Marc Faber’s gold positions, I have not seen him recommend any of the junior exploration companies. For the most part, he is a conservative investor nearing retirement and he has been reticent in an attempt to find the burning matchstick type of speculations that are found in the junior exploration sector.

He has also strongly advised investors in order to avoid using leverage when playing the gold market. There may be violent corrections that can wipe out even savvy hedge fund managers. By way of example, he noted that in the 70’s some money managers were correctly bullish about the price of gold nevertheless they were wiped out when gold fell by 50%. Thus, these were struggling to be involved in the rest of the bull market.

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