"I Will Never Sell My Gold," Marc Faber Warns, China's "Gigantic Credit Bubble" Unwind Is Just Beginning

Tyler Durden's picture




 

While the S&P 500 closed at record highs (and VIX near record lows), Marc Faber says the "momentum sell-off has caused serious internal damage to the market," with many of the most-loved and most-levered stocks down 30-50%. Interestingly Faber warns that if bond bears are correct and rates rise to 4% then stock prices "will really tumble." But it is China that worries him the most. Faber warns that Chinese growth figures are a fallacy and that "if one analyzes the data carefully" it is clear that "China is growing at most 4%" and given the "gigantic credit bubble" the outlook is not hopeful as the sharp deceleration in growth is likely to continue. Faber also has strong words for Western nations treatment of the rest of the world and "the US will have to back off.. because China is so important."

"Momentum Sell-off has caused internal market damage"

 

"Gigantic credit bubble in china"

 

Full Interview (well worth the price of admission):

Western nations don't realize "you can't treat other nations the way you treated them in the 19th Centrury... China is so large and so important to its neighbors that the US will have to back off"

 

"People think they know what the future holds... and what Central banks are up to.. they don't... I will never sell my gold and I buy more every month... I would not be short gold"

 

"Every asset in the world is over-inflated right now..."

 

"I like the concept of Bitcoin"

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Sat, 05/24/2014 - 20:54 | 4792264 old naughty
old naughty's picture

OMG, MF increasingly looks like Fu Man Chu.

Sat, 05/24/2014 - 20:56 | 4792271 fonzannoon
fonzannoon's picture

Here is a very interesting article for anyone else tired of Marc Faber calling for a 10% correction.

http://ftalphaville.ft.com/2014/05/23/1861282/goldman-sachs-on-coping-wi...

Sat, 05/24/2014 - 21:44 | 4792332 DoChenRollingBearing
DoChenRollingBearing's picture

I hope to never sell my gold either.

I would prefer to give it away.

***

With the S&P 500 at an all time high, well, buy-low-sell-high might work...

***

On the other hand (I sound like an economist, sorry), it may be just as well that virtually no one I know bought gold at my encouragement.  They would likely be very pissed-off at me...

Sat, 05/24/2014 - 23:00 | 4792518 Dickweed Wang
Dickweed Wang's picture

I hope to never sell my gold either.

I would prefer to give it away.

I'll take it off your hands if you're that stupid.

Sun, 05/25/2014 - 00:20 | 4792635 BlindMonkey
BlindMonkey's picture

You lived up to your Avatar's name there. Thanks for clarifying that for us.

Sun, 05/25/2014 - 01:28 | 4792703 DoChenRollingBearing
DoChenRollingBearing's picture

Mr. Wang,

Perhaps I should have added "to my child / grandchildren".

Sun, 05/25/2014 - 08:31 | 4792938 Snoopy the Economist
Snoopy the Economist's picture

Of course we understood - only a dickweed would misunderstand.

Sun, 05/25/2014 - 08:38 | 4792946 FranSix
FranSix's picture

When you sell your gold, then you would have to sell it for cash, riiiight?

Sun, 05/25/2014 - 09:20 | 4792985 bonderøven-farm ass
bonderøven-farm ass's picture

Think outside the box, buttercup......

Sun, 05/25/2014 - 09:53 | 4793041 Bendromeda Strain
Bendromeda Strain's picture

I'll play. If, and when you liquidate your gold... if, you decided to accept cash for it... then, you should expect magnitudes more scrip for your gold than your boss or your mother is willing to give you. Stick with your speculation, though. Just because it didn't work in Japan, you still have Weimar to fall back on.

Sun, 05/25/2014 - 10:32 | 4793115 Snoopy the Economist
Snoopy the Economist's picture

Exactly - "if you decide to accept fiat for it". It would probably be best to trade directly for necessities rather than fire starting paper.

Sun, 05/25/2014 - 15:49 | 4793740 NickVegas
NickVegas's picture

No, you shouldn't of added it. Your children and grandchildren received your wisdom and have no need for charity.

Sun, 05/25/2014 - 09:10 | 4792972 sessinpo
sessinpo's picture

 DoChenRollingBearing    I hope to never sell my gold either.

I would prefer to give it away.

----

I would gladly sell my PM's in exchange for something I find of more value. I am not married to my PMs.

I would never give my PMs away. It dilutes the value of it, to me and the receiver.

Sun, 05/25/2014 - 10:18 | 4793083 TruthHunter
TruthHunter's picture

DCRB..."I would never give my PMs away. It dilutes the value of it, to me and the receiver."

If your grandchildren study and work hard enough to appreciate them, it wouldn't be a give away.

Sun, 05/25/2014 - 16:29 | 4793835 Spumoni
Spumoni's picture

Well, DCRB, you've got as many suggestions as there are commentarios on your remark. Hat's off to you from here anyway-as if anyone owns a damned thing. We are but stewards - some as arrogant as the last steward of Gondor. SOMEBODY, be it relatives, my children, grandchildren, the IRS, some unknown, will just fight over it all when I leave. Might as well do something you enjoy with it. I like to just stare at mine...I appreciate all the imagination my otherwise befuddles species-mates have put into making that stuff look nice.

Sat, 05/24/2014 - 23:03 | 4792522 Al Huxley
Al Huxley's picture

Oh Lord - "Goldman agree there isn’t anything conceptually special about negative rates because bond math works with negative numbers (as it’s focused on real returns)".  Any time a system gets to the point of justifying what any common sense inspection would point out to be insanity, it is on its last legs.  Remember the last time an obviously crazy idea was accepted whole-hog by the mainstream?  Subprime lending and CDS. The math worked there too, on paper, and in 2006 the people pointing out the obvious unsustainability of the system were being derided as idiot naysayers who didn't understand the secrets of wealth in the new economy.

 

But a ponzi is a ponzi, and the part of the math that gets ignored is that the ponzi goes until nobody is willing to be the next greater fool, and then it collapses in spectacular fashion.  And where was Goldman the last time 'the math worked'?  Betting against the very 'math worky' products they were so earnestly selling to their eager, and unforgivably, mind-boggling credulous and unsuspicious customer base.

 

I've facetiously pointed out a number of times that the bond market has a constant bid under it, regardless of the low rate of return because nobody buys for yield anymore, they buy for capital gains.  But it must be obvious to everybody who just puts the math aside for a few minutes and thinks about the underlying dynamic that a debt-financing market that's been converted from a risk-return, yield-based financing mechanism to a purely speculative 'sell to the next greater fool' money machine is doomed to fail, and when that market is the global sovereign debt market, how can its failure result in anything other than a complete collapse and reset of the entire global financial system.

 

Finally, the super-wealthy of the world have historically, repeatedly demonstrated two very relevant characteristics in regards to these types of systems

- a propensity for accumulating wealth in the form of real and tangible assets

- a willingness to capitalize repeatedly on the public's propensity to believe fairytales that promise free money without risk or consequence as a means of increasing their wealth and power.

 

I know this probably sounds like hard-core ZH reader party line stuff, but seriously, ignore the math temporarily and think about the real implications of negative interest rates. 

Sun, 05/25/2014 - 10:25 | 4793038 Doña K
Doña K's picture

Krugman had written  extensively about Japan's liquidity trap several years ago arguing that even if they went to negative interest rates it will still not work and was warning them of a potential collapse. I wonder what he may say now.

Edit: I found the article. His writings then contradict what he has been saying now about monetary expansion

http://web.mit.edu/krugman/www/japtrap.html

Very intersting article. Comments please

Here is a gem in the last page:

"The way to make monetary policy effective, then, is for the central bank to credibly promise to be irresponsible - to make a persuasive case that it will permit inflation to occur, thereby producing the negative real interest rates the economy needs. This sounds funny as well as perverse."

 And...According  to this the FED is a one trick pony:

"Fiscal policy: The classic Keynesian view of the liquidity trap is, of course, that it demonstrates that under some circumstances monetary policy is impotent, and that in such cases fiscal pump-priming is the only answer." Krugman 1998

 

 

Sat, 05/24/2014 - 22:15 | 4792438 rubiconsolutions
rubiconsolutions's picture

"I like the concept of Bitcoin"

Translation: "I like the concept of Bitcoin...but I won't be buying anytime soon."


Sun, 05/25/2014 - 07:00 | 4792880 what's that smell
what's that smell's picture

bitcoin?

you mean the fat kid on the exercise ball and magic the gathering online exchange?

that bitcoin?

Sun, 05/25/2014 - 09:16 | 4792979 TheHound73
TheHound73's picture

Shhh, up 66% in 6 six weeks, not complaining.

Sun, 05/25/2014 - 09:22 | 4792989 q99x2
q99x2's picture

Bitcoin goes up when people have to move money.

Last Price: 566.8000

And Climbing.


Sun, 05/25/2014 - 12:51 | 4793431 dark pools of soros
dark pools of soros's picture

the sheep missed the part where concern is rising on banks using btc to move funds behind the scenes

 

 

Sat, 05/24/2014 - 21:03 | 4792267 Yen Cross
Yen Cross's picture

    xau or au Mr.Faber?

   Hey Fonz, My best to you and your Mrs. Have a wonderful weekend.

Sat, 05/24/2014 - 21:11 | 4792291 fonzannoon
fonzannoon's picture

Thanks my man. All the best to you as well. I will be playing around on here for a bit. That article was very interesting Yen. Here is a clip from it.

"In short, paper cash would begin to behave like a scarce commodity, with a forward curve that depreciates over time because of warehousing costs, meaning money’s only worth holding physically if the rate at the central bank is even more erosive.

None of which would necessarily encourage more liquidity or spending in the system itself."

 

Sat, 05/24/2014 - 21:22 | 4792320 NoDebt
NoDebt's picture

"None of which would necessarily encourage more liquidity or spending in the system itself."

Sorta like.... um..... Japan.

Sat, 05/24/2014 - 21:37 | 4792342 DoChenRollingBearing
DoChenRollingBearing's picture

Yen, fonz, NoDebt, nice to see you guys here this weekend.  With civil conversation, smile.  

Fishez!

Sat, 05/24/2014 - 21:40 | 4792351 NoDebt
NoDebt's picture

I like it around here on sleepy weekend nights.  All the kids in bed.  Throw around a few ideas that would likely get you bombed out of the thread on an average Tuesday afternoon.

Sat, 05/24/2014 - 21:42 | 4792359 DoChenRollingBearing
DoChenRollingBearing's picture

My wife is running around Mass. with our daughter doing the Boston thing, the Cape Cod thing, the Tea at the Chatham thing...

I'm OK with that, OK with being here rather than there.  Ever traveled with women before (as the only guy)?

Sat, 05/24/2014 - 21:54 | 4792382 NoDebt
NoDebt's picture

"Ever travel with women before (as the only guy)?"

Is that a trick question?  

Before I was married that was called "a good weekend".  After I was married that was called.... oh, nevermind, I'm not going there.  

No, I've never traveled with multiple women as the only guy.  That's my story and I'm sticking to it.

 

Sat, 05/24/2014 - 22:20 | 4792443 DoChenRollingBearing
DoChenRollingBearing's picture

That story is probably the smart one to stick to...  

+ 1

 

EDIT: I see our serial junker is out now!  Yay!  I wonder whose team he's on?

Sat, 05/24/2014 - 22:27 | 4792452 NoDebt
NoDebt's picture

Not my guy.  This is the "junk the whole thread" guy.  Look down the page.  Everyone's getting hit.

MY junker has a hard-on only for me.  I wish I knew who he was, I'd shake his hand.  He's my most loyal reader and he keeps me honest.

Sat, 05/24/2014 - 22:31 | 4792459 fonzannoon
fonzannoon's picture

I went down the line and junked everyone once I saw the serial junker come out. Then 4 mins later I came back and up arrowed everyone. Even James Cole. It was my version of a stop hunt followed by some quote stuffing and momentum ignition. That's how mentally fucking gone I am.

Sun, 05/25/2014 - 01:30 | 4792708 DoChenRollingBearing
DoChenRollingBearing's picture

High Frequency Junker, LOL!  Needed the laugh, fonz, thanks!

Sun, 05/25/2014 - 12:57 | 4793438 dracos_ghost
dracos_ghost's picture

Ok, that comment made my day. Spewed coffee all over the place, but it was worth the laugh.

Sat, 05/24/2014 - 21:28 | 4792329 Yen Cross
Yen Cross's picture

     In all honesty Fonz, NO one really knows. The most valuable commodity in my life is family and close friends.

  I get junked everytime usd/jpy bounces. I like you for your honesty/integrity Fonz. I'm pretty simple Fonz.

    I'll give everyone a trade if the stars align.

    Even if the yield curve steepens over the next few months (elections) , It's a "kings" world!

Sat, 05/24/2014 - 21:31 | 4792331 fonzannoon
fonzannoon's picture

Here is another good one. I gotta call a spade a spade here and say that I am finding on this site what I used to crave over here.

http://ftalphaville.ft.com/2012/07/31/1102191/negative-rates-as-a-precur...

Sat, 05/24/2014 - 21:44 | 4792358 Yen Cross
Yen Cross's picture

  Thanks for the link Fonz.

  It's a "holiday weekend" fonz! You spend time with your family for (3) days .

  You come to Z/H because you're venting, and sharing ideas. (not looking for new meatballs)

  P.S. Fonz I'd take anything From the "Financial Times" with a "grain of salt".

Sat, 05/24/2014 - 21:48 | 4792368 fonzannoon
fonzannoon's picture

It is thought provoking stuff is all I mean. We get Faber on here 4 days a week. At this point I more than take Faber with a grain of salt as well.

I was with my wife at a park near the beach today Yen while this was going on overhead

http://newyork.cbslocal.com/2014/05/22/blue-angels-arrive-on-long-island...

It happens every year over here. It really is interesting to see these things flying low overhead and the booming sound they make. My wife hates it. Says it gives her the chills. I revert back to my 8 year old G,I Joe days and stare at it in awe for a few mins. Then it sorta makes me sick too.

Sat, 05/24/2014 - 21:44 | 4792360 James_Cole
James_Cole's picture

FT? So, you've officially come to the darkside then Fonz?

Also, anyone notice a striking similarity between faber and this guy?

http://www.rounds.com/blog/wp-content/uploads/2010/11/a-blob-fish.png

Infact, if it could speak English I'd imagine it sounding exactly like the man.

Sat, 05/24/2014 - 21:45 | 4792361 Yen Cross
Yen Cross's picture

 James _Pole smoking instigator?

Sat, 05/24/2014 - 21:52 | 4792374 fonzannoon
fonzannoon's picture

James, the articles I referenced are interesting. Kiss Tylers ass all you want. I hope it gets you somewhere. I'm sick of Faber and Snyder. I am however interested in if Draghi goes Nirp over in Europe and the ramifications on the banking system because it is very possible that we follow that path over here. I am willing to explore anyone's angle on it and use it as a basis for conversation. 

Sun, 05/25/2014 - 13:38 | 4793522 dracos_ghost
dracos_ghost's picture

I think Draghi has already been given the NIRP go ahead -- that's why the premature ejaculation of the markets. We've been hearing this "bail-in" talk for months now. It seems like NIRP is a surrepticious way to socialize "bail-ins".

Sat, 05/24/2014 - 21:53 | 4792379 James_Cole
James_Cole's picture

I used to get so much shit for posting ft articles (articles which were correct btw) while the folks on here were lapping up everything sprott and his group of conmen were on about.

The less sprott the more ft the better.

Sat, 05/24/2014 - 21:56 | 4792386 Yen Cross
Yen Cross's picture

   I'm suprised Tyler puts up with you. I'm guessing your FT links were your "saving  grace?"

Sat, 05/24/2014 - 22:00 | 4792398 fonzannoon
fonzannoon's picture

How do you know these articles are not correct? I don't know if they are, or are not, I am just using them as a basis for discussion. I am absolutely threadjacking a Marc Faber thread to do so. I am fine with getting junked for it. I have heard enough out of Faber. 

Sat, 05/24/2014 - 22:09 | 4792411 Yen Cross
Yen Cross's picture

  I like AEP Fonz. I won't mention what British financial he comes from. The man has balls and about 40 years in the currency trading business.

  It's different this time Fonz. (soft luguage)

Sat, 05/24/2014 - 22:12 | 4792426 James_Cole
James_Cole's picture

I'm suprised Tyler puts up with you. I'm guessing your FT links were your "saving  grace?"

I've been surprised too, I'm one of the very very few people on here who have called those guys on their lies / nonsense. On a lot of sites the advertisers are sacrosanct - fuck with them and you're out. I'd say it's a credit to zh that they haven't booted me.

So few dissenting voices left on here to begin with. Not that I'm even dissenting much.

Sat, 05/24/2014 - 22:15 | 4792437 fonzannoon
fonzannoon's picture

you are a legend in your own mind. I hear you calling bullshit on all the PM pumpers, which is all well and good. Although it certainly has gone mainstream that PM's have been purposefully pushed down. Are you on seeking alpha calling BS on all the stock pumpers yet? The same stawks that are purposefully pushed up? 

Sat, 05/24/2014 - 22:25 | 4792450 Bay of Pigs
Bay of Pigs's picture

He is completely full of shit on PM's. The cat is out of the bag now. Question is why he ignores that.

Sat, 05/24/2014 - 22:35 | 4792464 James_Cole
James_Cole's picture

He is completely full of shit on PM's. The cat is out of the bag now.

Yes, my track record of being entirely right aside..

Do NOT follow this link or you will be banned from the site!