Marc Faber: "Something Will Break Very Badly"

Tyler Durden's picture




 

During an interview with The Globe and Mail, 'Gloom, Boom, and Doom's Marc Faber unleashed some awful truthiness about gold "I buy gold every month", real estate "bubble territory", and the likelihood of a crash in smoke-and-mirrors-like asset markets.

Q: Is it a good time to buy gold?

Faber: Nobody knows whether it’s a good time to buy gold or not…as I have repeatedly said in my reports, I buy gold every month and on the recent decline I bought more at $1,400 and I have an order at $1,300 and one at $1,200 and one at $1,100 an ounce. But they were not filled, just the $1,400.

 

I will never sell my gold, as I repeatedly told people. .... My maximum allocation to gold at present time is 25 per cent of assets.”

Q: Mr. Faber, you have indicated you believe there will be a market crash this summer. Can you tell us what might precede such an event?

Faber: “What was the trigger of the ‘87 crash when markets fell 21 per cent in one day? What was the trigger of the Nasdaq crash in 2000? What was the trigger of Japanese crash of 1989? What was trigger of 2007 crash that brought global stocks down 50 per cent?

 

We don’t know these things ahead of time, but something will always move markets up and something will always move them down.

 

I would guess at the present time, given markets from the 2009 lows have in many cases increased by as much as 100 per cent, that they are no longer very cheap. .... Something could come along, geopolitically or otherwise. I would be very careful being overweight equities.

 

"In the 40 years I’ve been working as an economist and investor, I have never seen such a disconnect between the asset market and the economic reality... Asset markets are in the sky and the economy of the ordinary people is in the dumps, where their real incomes adjusted for inflation are going down and asset markets are going up...

 

Something will break very bad."

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Fri, 05/10/2013 - 17:36 | 3549778 traderjoe
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Fuck you Federal Reserve et all!

Fri, 05/10/2013 - 18:44 | 3549993 GVB
GVB's picture

You know, I don't want things to break apart, but the thing is: when you just know things will eventually break apart, then let it come down NOW. For me, this waiting and observing wrong policies are the most frustrating of it all. Bet more people share my opinion. Just let the diesel say BOOM. 

Fri, 05/10/2013 - 19:11 | 3550074 cynicalskeptic
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The problem is that most would prefer to kick the can as far as possible - dreading the melt-down that will only get worse the longer it takes to happen.

Sat, 05/11/2013 - 04:04 | 3550942 Peter Pan
Peter Pan's picture

If things break down at the present time, the people who will really suffer will be those with inflated balance sheets. The rest do not have any real balance sheets to speak of.

Those that are already scraping the bottom of the barrel will at least have the hope that the turmoil follwoing the collpase might produce some real change and some release from unpayable debt.

 

Sat, 05/11/2013 - 04:14 | 3550952 potlatch
potlatch's picture

that is exactly what those of usat the bottom called "hope and change".  I have no idea what anyone else thought it ever could mean.  Higher stock prices?  Higher real estate prices? 

 

There is reason the slogan was hope AND change.  The asset holders want hope without change.  We poor working people hope the system collapses and changes into something a bit less tilted toward being exciting for people with Harvard MBA's.  Because really, fuck them.

Sat, 05/11/2013 - 04:56 | 3550976 jbvtme
jbvtme's picture

now if walter white was the fed chairman...

Sat, 05/11/2013 - 11:41 | 3551384 The Black Bishop
The Black Bishop's picture

Just a difference in name I think. Seems the Bernank's customers are as addicted and strung out as those of Walter White. Breaking Bad indeed.

Sat, 05/11/2013 - 05:11 | 3550984 joak
joak's picture

But at some point, private debt is on the personal balance sheet. What will do the average people with a mortgage on an overpriced property ?

This is a question I'm wondering for long : in case of a currency collapse, or a financial meltdown, what will happen to loans ? In case of hyperinflation, what happens ? If someone has those answers, I'm eager to know (let's say, when Zimbabwe, to take a recent exemple, experinced hyperinflation, what happened to people having loans ?). I'm thinking of buying a property, and I wonder what's best : invest my savings in it, or take a loan and convert savings in gold and silver ?

Sat, 05/11/2013 - 05:19 | 3550991 Sandmann
Sandmann's picture

I have a different question. Since modern construction is cheap and uses cheap components such as forced-wood and houses are unlikely to be as durable as those in the past. How many 30 year mortgages can a dwelling carry before someone has to bite the bullet and demolish the property before the mortgage is paid off; losing both home and capital ?

Sat, 05/18/2013 - 11:29 | 3575768 Jonas Parker
Jonas Parker's picture

 Read Adam Fergusson's book "When Money Dies". All will be made clear to you.

Fri, 05/10/2013 - 19:11 | 3550075 Whalley World
Whalley World's picture

be careful what you wish for things could

Get Very Bad

Fri, 05/10/2013 - 19:18 | 3550090 GVB
GVB's picture

True, but I have plan B, you know what ECB & FED say about plan B ;)

i.e. No plan B

Sat, 05/11/2013 - 00:39 | 3550805 Lets Buy The Dip
Lets Buy The Dip's picture

I have a plan A, do not listen to faber and keep buying up this market, He is right about 0.1% of the time. Check out the market weekly chart on SPX here => BULLS KEEP KICKING BEARS IN THE NUT SACK OF UNDERSIDE SCROTUM...OUCH!  LOL

Sat, 05/11/2013 - 07:04 | 3551054 GVB
GVB's picture

OK, good. But. It's not that I adore people like faber and others. I do appreciate them for being around, I just prefer to not participate in a virtual world of computer trading where human interaction is a crime. I will stick to my point that "it" just doesn' look good at this point in time. No doom & gloom fan at all. Just being a realist. Also. Since nobody - to this point in time - can indicate the trigger(s) being responsible for 2008 and all other crashes, why would I want to be into all of this phony mess. No thanks. Do appreciate your point of view, however. It's (still) a free country ;)

Sat, 05/11/2013 - 07:28 | 3551070 mayhem_korner
mayhem_korner's picture

He is right about 0.1% of the time.

 

Apart from this being blatantly untrue, Cap'n Troll, let's revisit the wisdom of Mr. N.N. Taleb:

It's not the frequency with which you are right that matters, but the cumulative effect of your losses.

If Edward Smith and Max Pruss were here, they would tell you the same.  But they were on the wrong side of one of those 0.1% events.

Sat, 05/11/2013 - 10:35 | 3551259 OpTwoMistic
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How much is Faber worth?  You?

Sat, 05/11/2013 - 13:01 | 3551546 LongOfTooth
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I'm not disagreeing with you but imo we should keep in mind that asking how much Faber is worth is probably too general because that would include his income from his newletter.  I know of newsletter writers who aren't worth a damn as an investor but they can write one hell of a letter and that's how they make their money.

 

 

Sat, 05/11/2013 - 02:45 | 3550878 Wile-E-Coyote
Wile-E-Coyote's picture

The US government has a plan "B" buy lots and lots of bullets and body bags.

Sat, 05/11/2013 - 07:29 | 3551072 mayhem_korner
mayhem_korner's picture

 

 

I think instead of body bags its backhoes, bulldozers, and cement-mixers full of formaldehyde.

Sat, 05/11/2013 - 01:28 | 3550843 vulcanraven
vulcanraven's picture

Agreed.

Watching the play-by-play of the collapse has been exhausting.

Sat, 05/11/2013 - 03:40 | 3550920 Lore
Lore's picture

The most teeth-gnashingly frustrating part is that the factors and interactions and causal relationships are UNDERSTOOD. Good people have been warning about this for GENERATIONS. The reactions and repercussions are PREDICTABLE.  The cycle is ARTIFICIAL.  THIS WHOLE MESS IS TOTALLY UNNECESSARY AND AVOIDABLE.

Sat, 05/11/2013 - 09:20 | 3551185 ugmug
ugmug's picture

Where are all the 60's hippies, 70's druggies and 80's prancers, singing "The Fed Is Just Pissing In The Wind"...............

Sat, 05/11/2013 - 02:39 | 3550877 Bokkenrijder
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"...and so forth and so on..."

Fri, 05/10/2013 - 17:39 | 3549782 denverdolomte
denverdolomte's picture

Thanks for the foresight. I was blind now I can see the truth. This is about as humorous as the announcement that Bill Gates and Warren Buffet are going to give 95% of their wealth to philanthropy, meaning to their own foundations.

 

edit :: I am speaking tongue in cheek. yes shit really did go full retard and one never goes full retard.

Fri, 05/10/2013 - 17:42 | 3549797 freewolf7
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"Something could come along, geopolitically or otherwise."

Well, that narrows it down.

Fri, 05/10/2013 - 17:51 | 3549833 denverdolomte
denverdolomte's picture

Lol Right? Someone should send him a copy of Philosophiæ Naturalis Principia Mathematica by Sir Isaac Newton, take a picture of the moment when he gets that "Mind ='s Blown" look, to the thought of to every action there is an equal and adverse reaction. 

Fri, 05/10/2013 - 23:12 | 3550698 OutLookingIn
OutLookingIn's picture

"For every action there is an opposite and equal reaction."

"adverse" ??? unfavourable or harmful. Maybe you meant "averse" ??? unwilling.

In either case you are wrong. Trying to sound intelligent and being intelligent is plain to see!

When a fool opens their mouth and articulates, or attempts to, their stature is confirmed. 

Sat, 05/11/2013 - 03:42 | 3550927 Lore
Lore's picture

Being more constructive would reflect better on you.

Fri, 05/10/2013 - 18:01 | 3549866 Awakened Sheeple
Awakened Sheeple's picture

Faber does us a service by not specifically pointing out tail risks..

Fri, 05/10/2013 - 18:19 | 3549924 Spigot
Spigot's picture

I agree w/ you. It is not the 'event' so much as the fact the markets are so E'ffed up and fragile. Could end up being a McDonalds customer in China decides he does not want a burger, which leads to a chain reaction of cash flow shortfall, etc. People will pick 1 thing and say "that was it" and "that's what did it". Not the case at all but it makes a grand story.

There are a number of power blocks in competition throughout the world. For this "Universal QE" to work all of them have to do the same thing, relatively together. Prisoners Dilema kind of thing ... at some point someone breaks trust and then all hell breaks loose...

Someone, somewhere is contemplating their "get away" plan...

Fri, 05/10/2013 - 18:29 | 3549947 Awakened Sheeple
Awakened Sheeple's picture

Correct! Someone posted something a few days back about ZH being to blame for the rally in the markets because they helped create a legion of shorts for bulls to squeeze. And maybe to some degree that's true. But I have no doubt that ZH has helped the central planners, by alerting them to just how fragile the financial system really is. Bernake spoke about it today about how much more the Fed (cocksuckerz!) are doing to identify systemic market issues.

Noone knows for sure how the financial system will fail, but fail it will. We would not be here if we all didn't believe that. But how, noone knows. And i think Faber is spot on, because geopolitical events are probably the most unpredictable.

Fri, 05/10/2013 - 18:47 | 3550004 Spigot
Spigot's picture

"exogenous"

Sat, 05/11/2013 - 03:50 | 3550931 Lore
Lore's picture

ZH, a market mover?  Riight. Next someone will call alternative trading websites a threat to national security and.... Never mind.

"How, no-one knows." <-- Yeah. And like most other major events in recent years, there will be at least a dozen conflicting and overlapping and questionable narratives, only one or two of which will be approved, padded and neatly sanitized for posterity.

Fri, 05/10/2013 - 18:31 | 3549957 kaiserhoff
kaiserhoff's picture

Well said.

This has been going on so long, it's easy to forget the inherent nature of ponzies.  It takes more and more effort just to keep the fraud going.  It's not so much that "something will break" as I and many others have said.  It's more that everything will break down.  That's the nature of the beast when you try to repeal market forces.

Fri, 05/10/2013 - 18:50 | 3550013 Spigot
Spigot's picture

No human beings on earth can "manage" reality, it is an illusion to think so.

Fri, 05/10/2013 - 22:40 | 3550645 Cathartes Aura
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truth, especially given that there IS no single reality, merely points of interpretive viewing, varied with each individual's illusion.

 

Fri, 05/10/2013 - 21:05 | 3550387 Dugald
Dugald's picture

I'm reviewing the situation
Can a fellow be a villain all his life?
All the trials and tribulations!
Better settle down and get myself a wife.
And a wife would cook and sew for me,
And come for me, and go for me,
And go for me, and nag at me,
The fingers, she will wag at me.
 The money she will take from me.
 A misery, she'll make for me...

...I think I'd better think it out again!

Fri, 05/10/2013 - 18:45 | 3549997 hamstercheese
hamstercheese's picture

Or pony tail risks.

Fri, 05/10/2013 - 18:13 | 3549903 stocktivity
stocktivity's picture

Blah blah blah....It's all Bullshit!!!

Fri, 05/10/2013 - 19:12 | 3550081 Kirk2NCC1701
Kirk2NCC1701's picture

The nice thing about the Scientific Method, is that you get to test predictions.  Here's one of his from a year ago:

"Mark Faber speaks of Imminent Market Crash" http://www.youtube.com/watch?v=rKIhIxfPyy4

Mr. "Gloom, Doom & Boom": DEFINE 'IMMINENT'.

Sat, 05/11/2013 - 03:55 | 3550938 Lore
Lore's picture

Do you sense that Faber is a market timer?  He seems more like a big picture kind of guy.  His thesis takes time to unfold. 

Fri, 05/10/2013 - 17:39 | 3549785 Pareto
Pareto's picture

If it keeps on rainin, levee's going to break.

When the levee breaks I'll have no place to stay.

Fri, 05/10/2013 - 19:52 | 3550222 willwork4food
willwork4food's picture

You should put that to music..

Fri, 05/10/2013 - 17:39 | 3549786 capitallosses
capitallosses's picture

It's only when, not if.

Fri, 05/10/2013 - 19:48 | 3550205 Debt-Penitent
Debt-Penitent's picture

I can't help it.  Every time I read something from Farber, my mind reads it with his unique dialect.

Sat, 05/11/2013 - 04:06 | 3550945 Ratscam
Ratscam's picture

the read this hilarious article about him.
you may need google translate.
no bullshit, just simple truth. i love the guy.
http://www.sonntagonline.ch/ressort/menschen/2636/

Fri, 05/10/2013 - 17:40 | 3549788 francis_sawyer
francis_sawyer's picture

francis_sawyer will go ALL IN 3x LONG stocks with joobux... That'll be the clincher...

Fri, 05/10/2013 - 17:44 | 3549799 akak
akak's picture

Francis, careful of the new ZH anti-racism policy.

I don't suspect that you are going to last out the day if it is enforced.

Fri, 05/10/2013 - 17:56 | 3549852 dick cheneys ghost
dick cheneys ghost's picture

I just saw that...............that sucks...........Free Speech Francis_Sawyer is one of the main reasons I read ZH................

 

Oh well, Free Speech just got kicked in the nuts.........

Fri, 05/10/2013 - 18:05 | 3549879 Room 101
Room 101's picture

Oh don't be so niggardly in your views. It's all for the children dontcha know.  

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