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Marc Faber Warns "There Is No Safe Haven"

Tyler Durden's picture




 

There is no safe haven, Marc Faber tells Bloomberg TV's Tom Keene, "The best you can hope for is that you have a diversified portfolio of different assets and that they don't all collapse at the same time." Bank deposits are no longer safe; money and treasury bills are not 100% safe; and equities in the US are relatively expensive by any valuation metric. However, at around $1250, gold is a buy, Faber adds on the basis of the ongoing monetization of debt globally. The debt ceiling debacle will lead to the Fed stepping up to directly fund the government (something it already implicitly does but mainstream media prefer not to consider). Faber clarifies the idiocy of the discussions, "both parties want to spend, it's just on different things," with "the idiocies of government" having grown way too large, wasting money everywhere... the Democrats are "buying votes" and the Republicans funding the military complex. The debt-ceiling is merely a symptom of the problem, Faber concludes, that "government has grown disproportionately large and that retards economic growth."

 

 

Full Transcript:

Faber on gold:

"We have a strong rally form the lows at 1180 to over 1400 and now we are backing off. I think between around 1200 and 1250 it is getting into buying range. The sentiment about gold is very negative, but if you look at everything considered - the monetization of debt, the debt ceiling, which sooner or later will be increased because both Republicans and Democrats are big spenders and the government's debt has expanded from $1 trillion in 1980 to $5 trillion in 1999, now we are at $16 trillion. Both Democrats and Republicans have been big, big spenders because a lot of money flows through the government."

On how he sees the debt ceiling debate playing out:

"If they don't agree by the 17th, I think what can happen is that the Fed will actually finance the Treasury independently so the interest payments are being met. If the interest payments are not being met, I think it will cause quite a bit disruption to the financial market. I am not that concerned about that. I think this larger issue is like the euro issue a year ago where people were very negative and it was debated and so forth. In the end it is a political decision. I think both parties want to spend. It's just on different items that they want to spend money."

On whether what's going on across equities, bonds currencies and commodities, along with the events in US, can be compared to other idiocies by governments in previous decades:

"Yes, idiocies by governments. That is exactly the word. It's basically a dysfunctional government that we have that is far too large that is essentially wasting money left, right and center. The Republicans are wasting money on the military complex and the Democrats are basically buying votes with transfer payments, with entitlement programs, it goes on. It is a huge waste. The problem is that I don’t see a solution. I think the current debate about the debt ceiling and the budget is more a symptom of a problem than a problem itself. The problem is really that the government, not just in the US but other countries as well, has grown disproportionally large and that retards economic growth."

On whether there's a safe haven left:

"There is no safe haven. Bank deposits are not safe, which used to be safe. Money in treasury bills is not 100% safe because there is inflation in the system and you hardly get any interest. Bonds are not very safe anymore because eventually interest rates will go up. Equities in the US are relatively expensive by any valuation metrics you might use. I don't see anything particularly safe. The best you can hope for is that you have a diversified portfolio of different assets and that they don't all collapse at the same time."

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Mon, 10/14/2013 - 16:36 | 4053877 TaperProof
TaperProof's picture

It's a slam dunk buy at 1250

Mon, 10/14/2013 - 16:42 | 4053883 Stoploss
Stoploss's picture

No shortage of retards, that's for sure. Seems like we're already in WWZ, just with retards instead of zombies.

Then they cut off the EBT...

Mon, 10/14/2013 - 16:48 | 4053895 Pharming
Pharming's picture

I'm diversified.  Three different calibers.  Multi food storage sites.  Several full 5 gallon gas containers for a long trip and that generator...my wife said what the hell is wrong with you...that runs on diesel, propane and regular gas.

Mon, 10/14/2013 - 16:50 | 4053935 Manthong
Manthong's picture

Since the Fed et al have used their paper scam to drive the price of physical down to production levels, the marginal mines that shutter will enhance the scarcity value of the precious and it’s relative value to the tsunami of fiat.

..and Au is still held as a reserve asset by banks.. so what part of those sentiments do people not understand? 

Mon, 10/14/2013 - 17:04 | 4053960 SilverIsKing
SilverIsKing's picture

What is the Net Present Value of an ounce of gold based on the USD being worthless in 10 years?

Mon, 10/14/2013 - 17:06 | 4053967 SilverIsKing
SilverIsKing's picture

----> > $1,250
----> < $1,250

Mon, 10/14/2013 - 17:14 | 4053990 Troll Magnet
Troll Magnet's picture

I have several bottles of Jack Daniels, Jim Beam, Johnny Walker each.  I'll be drinking my way through the collapse.

Mon, 10/14/2013 - 17:32 | 4054033 capitallosses
capitallosses's picture

I'm ordering a home brewing kit for my bugout bag.

Mon, 10/14/2013 - 17:59 | 4054092 Enslavethechild...
EnslavethechildrenforBen's picture

Gold fluctuates between a thousand and two thousand pieces of worthless green toilet paper per shiny ounce, a fucking steal of a price if there ever was one

Mon, 10/14/2013 - 21:52 | 4054633 TeamDepends
TeamDepends's picture

"government..................retards......"  More genius from Faber.

Mon, 10/14/2013 - 23:54 | 4054967 Big Slick
Big Slick's picture

I think the Bloomberg hottie is Sara Eisen, who I can never watch without thinking about the strange video of her caught off guard adjusting what appears to be a sexual device under her dress while on air...

http://www.youtube.com/watch?v=iWWW0PqkSHU#t=144

 

Tue, 10/15/2013 - 01:28 | 4055079 TruthInSunshine
TruthInSunshine's picture

LMFAO.

OT, but Japanese PM Abe is cribbing Bernanke's "virtuous circle" bullshit, verbatim, now:

http://portal.ransquawk.com/headlines/japanese-pm-abe-says-he-ll-create-...

News Headline Summary

Japanese PM Abe says he'll create virtuous circle of employment and investment

Print 05:05 - Asian News - Source: Newswires

Mon, 10/14/2013 - 19:45 | 4054329 therevolutionwas
therevolutionwas's picture

growing grapes, saving empty wine bottles.

Mon, 10/14/2013 - 21:04 | 4054508 RafterManFMJ
RafterManFMJ's picture

I read about dehydrated beer not long ago. Perfect for the BOB. Google it, it might be on sale by now.

Tue, 10/15/2013 - 02:16 | 4055112 TruthInSunshine
TruthInSunshine's picture

Hops = the new gold standard of crops.

Mon, 10/14/2013 - 22:43 | 4054780 DaveyJones
DaveyJones's picture

currency and consumption

 

Mon, 10/14/2013 - 23:26 | 4054898 Rusty Shorts
Rusty Shorts's picture

...there is enough currency now to last a thousand years.

Mon, 10/14/2013 - 23:41 | 4054937 FEDbuster
FEDbuster's picture

Most of it is just 1's and 0's in some computer somewhere.  The actual paper and coins are a small percentage of the total.  Gold and silver are an even smaller percentage of that (at current prices).  The collapse will be epic. 

"If you can't stand in front of it and defend it with an AR-15, you don't own it." Ann Barnhardt

Mon, 10/14/2013 - 23:58 | 4054969 Big Slick
Big Slick's picture

WISE advice from Ann, whose website is always a must-read:

http://www.barnhardt.biz/

 

 

Tue, 10/15/2013 - 19:35 | 4058454 MeelionDollerBogus
MeelionDollerBogus's picture

She's a religious fundie. I have no care for that.

Mon, 10/14/2013 - 23:47 | 4054950 PP
PP's picture

@capitallosses your logo is great. it means true Gold and Silver.

Mon, 10/14/2013 - 23:56 | 4054972 Serfs_Up
Serfs_Up's picture

Nothin' like a frosty Doom Gloom and Boom Brewski to take the edge off the Fucking Apocalypse I must say (:

Mon, 10/14/2013 - 18:12 | 4054134 GubbermintWorker
GubbermintWorker's picture

Ridgemont Reserve, Buffalo Trace, and Town Branch here :)

Mon, 10/14/2013 - 18:14 | 4054144 Doubleguns
Doubleguns's picture

Buffalo trace for sure!!!

 

 "both parties want to spend, it's just on different things,"

 

I have said the same for years but phrase it both will spend you blind they just have different shopping lists. 

Mon, 10/14/2013 - 19:33 | 4054298 I need Another Beer
I need Another Beer's picture

I've got several gallons too!!

Mon, 10/14/2013 - 22:03 | 4054669 Fluorideinthewater
Fluorideinthewater's picture

Wise investment.  You can't have too much on hand!

Mon, 10/14/2013 - 23:26 | 4054902 Harbanger
Harbanger's picture

"I have several bottles of Jack Daniels, Jim Beam, Johnny Walker each.  I'll be drinking my way through the collapse."

FUCK YOU FOR SUGGESING THAT WE SHOULD DRINK OURSELVES TO DEATH.

BE SOBER, SO YOU CAN FEEL AND REMEMBER.  I'm ready.  I'm ready to play my part and help my brethren.  My own brother John cries out to me in my dreams from his grave.  "I gave my life"   He was foolish, I need him now.

It breaks my heart that our own Veterans are being turned away from their memorial.  The same brave men who can take down any fucking obstacle or gov. in defense of our liberty.  Lord, let us find peace.

Mon, 10/14/2013 - 19:39 | 4054317 SAT 800
SAT 800's picture

That's a very interesting question; it would have to be north of $20,000/ oz.

Mon, 10/14/2013 - 22:41 | 4054585 SilverIsKing
SilverIsKing's picture

Gold is criticized for providing no return on investment. Why then would someone buy a zero coupon bond? Anyone who talks negatively about gold from a valuation standpoint is either clueless or has an agenda which benefits from a lower gold price.

Mon, 10/14/2013 - 23:20 | 4054879 chindit13
chindit13's picture

When Zerohedge first began, the crowd it drew would not have asked that question.

Mon, 10/14/2013 - 23:46 | 4054942 akak
akak's picture

Well, since we are not that (formerly elite and erudite) crowd, please be so kind as to answer the question, which I feel is a very good and pertinent one, instead of metaphorically looking down your nose at us.

Tue, 10/15/2013 - 00:14 | 4054988 chindit13
chindit13's picture

At what price does one buy a zero coupon bond?  What does the buyer expect its value to be at maturity?

A zero coupon bond is simply a long term TBill, but because of its tenure, it is called a bond and not a note or bill.  At any intervening period between purchase and maturity, the bond's price will reflect both the passage of time (or remaining time to maturity, which is another way of saying the same thing) and any changes in market rates for equal tenure during the holding period.

Let's say you buy a 10-year, zero coupon bond today.  The price you will pay reflects an interest rate, or a return, because at maturity (and assuming no default) the bond will reach its par value.  For example, let's say you buy today a bond that will be redeemed at $1000 in 10 years' time.  You might pay somewhere around $750 for it, which would give you a total 33% return over ten years.  The per year return might be minimal (10 year rates are pretty low today), but it still a return.

Tue, 10/15/2013 - 01:14 | 4055072 SilverIsKing
SilverIsKing's picture

Since the Fed is now caught in an infinite loop of money printing...forever, the true value of physical gold has only one way to go due to its inverse relationship to the value of the Federal Reserve Note.

While the value 10 years from now might not be as defined as a zero coupon bond, in USD terms at least, there is much lower risk with gold since there is no counter party risk.

It is safe to say the value of the USD is going to go down relative to gold over the next 10 years because there is no feasible way for the Fed to stop printing over a sustained period of time and if they do, well, that will be good for gold too.

Tue, 10/15/2013 - 01:54 | 4055094 chindit13
chindit13's picture

You may well be right, but you are making a bet.  People said the same thing in 1980.  Lots of people, especially those who sell PMs in exchange for fiat, like to put up a chart of US Debt vs. Gold Price since 2000.  Equity promoters like to put one up of the US Debt vs. the S&P since 1980.  The latter has a much better correlation, which perhaps is why equities have been an easy sell.  (Even since FDR a basket of equities has outperformed gold, not even accounting for dividends.)  Both US Debt and the S&P have gone up 16x since 1980.  Gold was running well from 2000 until the printing and debt went turbo in 2011, at which point the correlation is quite negative.  Many will call that manipulation, but for two and a half years?  Unlikely.  Remember, "record" physical buying also means "record" physical selling, and that has been in a falling market.  Something else is going on, and it is not just a simple "if A, then B follows".

I am not saying that equities will outperform over the next ten years, but just pointing out why more people might favor equities over PMs.  Everybody takes what he wants from history, and then projects it into some uncertain future.  Right or wrong, a majority now see that future in terms of equities and London real estate.  Holders of any other asset have to hope that others move to their way of thinking.

I even can see a scenario where bonds continue to outperform.  (Considering it as a possibility is different from betting on it;  I'm just presenting a scenario.)  Pension shortfalls means the population is going to lose purchasing power.  That's deflationary.  Excess government debt is eventually going to be addressed via pension capture, increased taxes, and a special tax on bank deposits.  All of those would be deflationary, too.  Populations in advanced countries are, or will be, in decline over the next fifty years, just as Japan and Italy are now (save for Italy's wave of illegal immigrants).  That is also deflationary.  Then there is the high personal debt levels in countries as diverse as the UK and Thailand, which means future purchasing power is limited, which adds to deflationary pressures.  That deflation, if it comes, might well be bond positive (as it has been in Japan for two decades, despite massive deficits and a savings rate that dropped from 17% in 1989 to 0% today).

Nothing is "written".  There are lots of variables and their interactions are not consistent, much less understood at any one moment in time.

Tue, 10/15/2013 - 19:34 | 4058448 MeelionDollerBogus
MeelionDollerBogus's picture

no, people made the same bet in 1971. 1980 was an entirely other story.

This can't be repeated. To attempt it would crush the US economy permanently. I dare them.

Tue, 10/15/2013 - 09:00 | 4055433 Weisshaupt
Weisshaupt's picture

Its not a "return" if the money devalues in the meantime, leaving you with less buying power than you started with. 

 

Mon, 10/14/2013 - 17:43 | 4054030 Shell Game
Shell Game's picture

"It's a slam dunk buy at 1250."

 

How dare you suggest buying low and holding...      /sarc for the down arrows

Mon, 10/14/2013 - 21:23 | 4054561 AllWorkedUp
AllWorkedUp's picture

Love Mr. Doom Gloom but gold has been nothing but a nightmare. Don't see why that will change at $1250. Hope it does but..

Mon, 10/14/2013 - 22:12 | 4054694 Peachfuzz
Peachfuzz's picture

It could change overnight at 1250 because on C.B. buy orders carrying the last of the phyz out the back door at the lbma. Remember there are powerful players in your corner with lots of paper money and generational levels of patience. They will allow the west to tie a nice long lead on the noose. In order for repricing of gold, gold must be set free of manipulative paper games, once the vaults are empty, paper goes to zero and phyz goes to the moon.

Mon, 10/14/2013 - 22:38 | 4054768 DoChenRollingBearing
DoChenRollingBearing's picture

+ $55,000

Gold will zoom when the sellers of physical stop selling.

Tue, 10/15/2013 - 00:23 | 4055010 chindit13
chindit13's picture

Everything everyone says might be true, but I wonder why the so-called paper price was perfectly representative in the long move from $255 to $1925?  Should those who bought merely "paper" at those low prices be somehow prohibited from selling, with instead just a big "thank you" for having been the driving force behind that move?

Lots of stuff remains a puzzle.  When a large seller hits a 2-3% range of bids, people scream that no real seller would sell like that, yet the same people see absolutely nothing wrong with holding from $48 Ag and $1925 Au for anywhere from a 30-60% drubbing and a substantial loss of purchasing power (where one bought is for ego purposes only; maintaining purchasing power is the gauge).  As it has turned out, all of those size sellers who took out a 2-3% range of bids saved themselves a bundle, and all of those who have held from much higher levels have lost purchasing power,  The ones who bought at $255 and the ones who bought a $1925 have lost the exact same amount of purchasing power.  At ~$1270, we're a pittance from a multi-year low, so virtually all of those size sellers are looking good.  Some might argue that those sellers will never be able to buy back, but as the Zen Master says, "We'll see".

Tue, 10/15/2013 - 00:35 | 4055032 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

It is always nice to be in a dialog with you, chindit13.

I am holding gold with a very long-term view (yes, I bought some gold at $1700 +, but that's OK *).  IMO, physical gold is way-undervalued (with so many paper claims upon each physical ounce) and eventually the paper gold holders will not get what they believe they own: gold!

Gold also has value as an insurance hedge against financial mismanagement...

A big puzzle indeed.  But, FOFOA explains this far better than I can.

fofoa.blogspot.com  (long reading...)

* Yes, I have the receipts from purchases over $1400.  Can't seem to find them for all that gold I purchased before 2002 though, darn it!

Tue, 10/15/2013 - 04:36 | 4055186 Pareto
Pareto's picture

+1 Brilliant.

Tue, 10/15/2013 - 18:45 | 4058267 MeelionDollerBogus
MeelionDollerBogus's picture

All pales in comparison to the future price of 3000 to 7000 per ounce AND for those who are smart enough to hedge ounces by re-selling puts for slv, agq & gld there is no loss short-term in paper price while HOLDING real ounces.

Tue, 10/15/2013 - 04:12 | 4055170 BringOnTheAsteroid
BringOnTheAsteroid's picture

Why has it been a nightmare, it just sits there and acts all shiny like, regardless of what stupid people do. If you are trying to trade gold you really, really, really don't get it.

Tue, 10/15/2013 - 18:43 | 4058259 MeelionDollerBogus
MeelionDollerBogus's picture

The entire past 12 years has been a buying price gift compared to the future prices over 3000/oz and then no price when paper isn't money anymore.

You're thinking too short-term. The lower it goes the happier I am.

Tue, 10/15/2013 - 00:55 | 4055054 diesheepledie
diesheepledie's picture

What would Genghis do?

Tue, 10/15/2013 - 18:42 | 4058256 MeelionDollerBogus
MeelionDollerBogus's picture

He would get gold - and pay the iron price.

Tue, 10/15/2013 - 18:42 | 4058250 MeelionDollerBogus
MeelionDollerBogus's picture

and sure enough it bounced right off 1254 usd.

Mon, 10/14/2013 - 16:37 | 4053881 max2205
max2205's picture

The power of herd markets is incredible

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