Marc Faber: gold will never go below 1,000 USD again +poll
Posted on 14. Nov, 2009 by Geert in Actualiteit
Buiter and Faber would make a nice match. While Buiter puts the value of gold at zero, Faber makes the case that the price of the precious metal will never go below 1,000 USD again.“We will not see less than the $1,000 level again. Central banks are all the same. They are printers. Gold may be cheaper today than in 2001, given the interest rates. You have to own physical gold.”
ludo
14. Nov, 2009
het zou interessant zijn om toe te voegen hoeveel mensen al gestemd hebben op de poll
stefaan
14. Nov, 2009
Willem Buiter geeft eigenlijk perfect aan waarom goud het ultieme geld is. Zoals hij zegt is het geen verbruikscommodity wat het net ideaal maakt als store of value. Hij noemt dat dan een fiat commodity net zoals alle andere fiat munten, maar net daar wringt zijn schoentje. Goud heeft wel fysieke eigenschappen die het een veel betere monetaire waarde geven dan papiergeld. Enerzijds is het onverwoestbaar en anderzijds is het beperkt voorradig. Alle andere munten kunnen vallen en plots niets meer waard zijn en dat is bij goud omwille van de typische eigenschappen niet het geval. Goud is trouwens de enige extinguisher van debt. Als de overheidsobligaties imploderen dan behoudt alleen goud de koopkracht.
carl
14. Nov, 2009
Ik ben al jaren geabboneerd op The Gloom,Boom and Doom Report van Marc Faber.
Als ik bvb zijn rapport van 10 november 2005 er bij neem,dus precies vier jaar geleden, dan schrijft hij bladzijde zeven en acht al zeer visionair :
Figure 8 shows how many ounces of gold are required to buy one Dow Jones Industrial.So,if the Dow were to rise to 36000 dollar as a result of massive money printing,the price of gold would rise to 3600 dollar in order to achiieve a Dow/Gold ratio of 10 to one.
I might add that at present (nov 05) the Dow/Gold ratio is still very high by historical standards and could,in an extreme crisis of confidence,decline to around,as was the case in the 1930s and in 1980.With the Dow at 36000 ,this would mean an ounce of gold would sell for 36000 dollar.
En verder schrijft hij iets verderop : At the beginning of phrase three (hyperinflation phase) foreign exchange controls will be imposed and the ownership of gold will be declared illegal.Also,oil and gold companies could at this point be apprpriated and nationalised.(If not,we can be sure that an excess profit tax will be imposed).In this phase all dollar bills below hundred dollar in face value will have been retired and will be sought after as curiosities and collector’s items.
Phase three(hyperinflation phase) will be an age odf “penniless billionaires”.
There are currently( is nov 2005) 300 billionaires in the US,compared to fewer tan ten in 1980.
Religious and racial intolerance will become dangerous,as the governement need to blame a minority for the Schlamassel (mess) it has created.
En verder
A gold standard willbe introduced at the end of phase three.A deflationary stabilisation crisis will follow in phase four of our road to fiancial fiasco.
The dollar will be worthless.
Dit alles aldus Marc Faber in nov 2005.
In alle geval tien procent fysiek goud bezitten is zeker aan te raden.
Nick Doms
14. Nov, 2009
From my perspective, a more interesting question as it relates to gold, is why the IMF sold 200 tons of gold to India.
The next question is why this occured only two months after the 09/09 new IMF rule implementation.
Sincerely,
Jan L
14. Nov, 2009
Ik vind de argumenten van Willem Buiter sterk, maar zijn conclusie niet.
Hij heeft gelijk als hij zegt dat de intrinsieke waarde van goud nul is, afgezien van de waarde die het heeft om er juwelen van te maken, én afgezien van het feit dat goud quasi perfect is als ruilmiddel.
Goud is het enige ‘fiat’ geld dat niet kan worden bijgeprint. Daarom zullen mensen in goud blijven geloven en zal de bubble niet breken.
Goud heeft echter een belangrijk nadeel als ‘fiat’ geld. De groei van de goudvoorraad is beperkt en kan de economische groei niet altijd volgen. Daar komen vroeg of laat liquiditeitsproblemen van: niet meer genoeg ruilmiddel voor ruilhandel, sparen, investeren,… Als er opnieuw een goudstandaard wordt ingevoerd, zal die na termijn ook wel weer verdwijnen.
Maar dat zijn veel ‘als’en en een lange termijn. Voor de korte / middellange termijn…? ik zal mijn vriendin dan toch maar die gouden halsketting cadeau doen…
Theo
14. Nov, 2009
And that’s when tally sticks come into play!
Jan P
15. Nov, 2009
Geld in het algemeen is een conventioneel middel om te betalen. En de waarde die het heeft is gebaseerd op het geloof dat de mensen er in hebben. Geld als zodanig heeft geen waarde, je kan er niks mee doen behalve ruilen tegen iets wél nuttig, het is een stukje papier of eens stukje (piepklein) metaal.
In die definitie is ook goud eigenlijk geld; Al eeuwen een conventioneel middel om te betalen. Het metaal zelf heeft (op wat uitzonderlijke toepassingen na) geen échte waarde. Je kan het niet eten, en het is waardeloos om er een ploeg of een tank van te smelten. Als je er in slaagt iedereen te overtuigen dat goud geen waarde heeft, zal niemand er nog iets voor geven. Dat is het verschil met goederen; goederen hebben een echte toepassing; je kan het gebruiken, of eten. Je kan er in wonen of mee rijden.
Noch met geld, nog met goud kan dat.
Het verschil tussen goud enerzijds en de dollar en de pond anderzijds (en in mindere mate andere munten) is dat goud het ultieme geld is;
- Je kan het niet ‘bijmaken’ zoals je geld wel kan bijdrukken.
- Het houd via delving ongeveer gelijke tred met de reele assets groei (2% historisch?)
- Het is internationaal en niet nationaal gekleurd.
- Het heeft een zeer lange traditie van geloof erin…
Net zoals elk ‘geldsysteem’kan onderuit gaan, kan dat dus ook met goud; het is evengoed een ‘geldsysteem’en kan dus ook onderuit gaan als mensen er niet meer in geloven. In theorie zou je dus bruikbare goederen moeten kopen, ipv van in goud te beleggen om je vermogen veilig te stellen. Koop dus maar grond of huizen, koop beter dubbele beglazing en zonnecellen i.p.v. goud. Maar als je een groot vermogen hebt is het niet gemakkelijk of mogelijk om goederen te blijven kopen, zonder tegen praktische bezwaren aan te lopen; Een aantal goederen bederven, je moet ze onderhouden, of je betaald er jaarlijks belastingen op.
De kans dat ondertussen goud ook onderuit gaat als de dollar, de pond, en andere munten onderuit gaan is dan toch verwaarloosbaar klein. Het geloof erin is immers veel groter en het is losstaand van Amerika of het westen. En vanwege de praktische bezwaren t.o.v. goederen wellicht toch nog de beste keuze; Met een klein risico dat het onderuit gaat, maar geen onbestaand.
Ten slotte nog dit als praktische opmerking;
Beide stellingen uit de poll hoeven niet tegengesteld te zijn. Als de dollar onderuit gaat zal goud inderdaad nooit minder dan 1000$ gaan, maar dat wil dan nog niet zeggen dat goud veel waarde heeft. Als door devaluatie de dollar nog maar 1/10 waard word, is 5000$ voor goud nog maar de helft van nu…
Nog een ideetje; Zilver heeft wél industriele toepassingen…
Theo
15. Nov, 2009
Money makes the world go round, the world go round, the world go round…
Well people went around the world to look for gold.
But in fact for almost 800 years wooden sticks served as legal tender in England.
That is until the founders of the Bank of England wiped out the tally system… but not before paying for their shares in the BoE with tally wood sticks!
Whatever your legal tender, in reality we only need it to pay our taxes…
Funny to think money is made out of paper… and paper out of wood!
Buiter vs. Faber… actually they are both right.
The price of gold today is not necessarily a reflection of its worth. After all just as oil, in real terms, gold is still very cheap if it were to be a nominal hedge.
The bet on gold is driven by a bet against the USD. The US finds itself with a falling currency and rising value for its supposedly largest gold deposit held by a central bank. That’s the real story!
Now to me that looks like a real high stakes poker game. On the face of it, somebody is forcing the US to finally open the Ford Knox doors.
Midastouch
15. Nov, 2009
‘t zal echt wel peak-gold worden hoor (om over het lege Fort Knox nog te zwijgen; remember “deep storage gold” in hun boeken)
http://www.goldreporter.de/goldblog/index.php?rs_id=view&s=234#234
Jeroen
15. Nov, 2009
@ Carl, @ Jan P:
inderdaad, de uitspraak dat goud niet meer onder de 1000$ kan of zal gaan is in essentie waardeloos. Het houdt geen rekening met wat intussen immers met de dollar kan gebeuren en hecht eigenlijk veel te veel belang aan de $. Je zou zelf kunnen zeggen dat het eigenlijk een zeer geraffineerde manier is om goud binnen het dollar-gareel te houden (wat het m.i. uiteindelijk niet zal doen, goud heeft een eigen dynamiek).
Faber licht wel al een tipje van de sluier, wanneer hij het heeft over de dow/gold ratio, een veel interessantere vergelijking. Je zou kunnen stellen dat de DOW idd. gerust naar 36000 kan geïnflateerd worden, terwijl de ratio naar 1 gaat. 1 ounce goud = 36000$ bijvoorbeeld.
Om goud beter te begrijpen, is het nodig om ‘geld’ beter te begrijpen, en zich trachten te realiseren wat het eigenlijk betekent wanneer iemand zegt “goud is geld”.
De beste tip die ik kan geven, is om even op de volgende blog rond te snuisteren: “http://www.fofoa.blogspot.com/”, meer bepaald de bijdragereeks “Gold is Money”
“Money, as it is understood today, has three main roles. The late Dr. Willem F. Duisenberg, former President of the ECB, in his famous acceptance speech for the International Charlemagne Prize in 2002 stated it well…
‘What is money? Economists know that money is defined by the functions it performs, as a means of exchange, a unit of account and a store of value.’
Our modern understanding of money is that it has three roles or functions:
1) A medium of exchange, our TRANSACTIONAL currency, 2) a unit of account, a “number” used for comparing relative values, held in each person’s memory AND on paper for bookkeeping (and legerdemain), and
3) a store of value, or wealth.”
@ Jan L: lees even op die blog. De oplossing bestaat er in ieder geval NIET in om terug naar een goudstandaard te gaan. Echte goudadvocaten die de rol van goud begrijp gaan dat ook nooit verdedigen.
“The point here is that our modern understanding of money, or any money concept for that matter, combined with our modern taste for borrowing, lending and trading of credit and debt, may not NECESSARILY be a perfect fit with a pure gold standard. Even a gold standard, with gold as the actual currency, is manipulated by the banks through confidence-based lending schemes. Sure, a gold standard somewhat limits the collective in its more nefarious pursuits, but it also has flaws that always seem to lead to the same conclusion… failure.
Perhaps it is time for us to consider another alternative, even a natural one that is happening whether we like it or not. How about a new, de facto, free market-driven stasis instead of the old de jure (rigged) false parity relationship… how about Freegold?”
Yannick Verdyck
15. Nov, 2009
Hoe meer verwarring, hoe beter.
Ik vind het wel dat de aangehaalde case van Marc Faber wel redelijk kort door de bocht gaat. Er worden in de link naar het standpunt van Marc Faber welgeteld vijf zinnen aangehaald. Terwijl zijn standpunt daarover wel iets of wat genuanceerder is dan die vijf zinnen laat vermoeden.
Nick Doms
15. Nov, 2009
I agree that the play on gold is indeed play against the USD at this point in time.
Where the price of gold may or may not go is irrelevant to me as it is a bet from a pure theoretical perspective or a practical approach and neither one will be right in the end.
The future of gold, at least for the next decade, will be to play within the currency markets, which will change dramatically over the next 30 years.
What i see happening is a move towards an alternative global currency where gold and especially SDR’s will play a preliminary role.
While i cannot substantiate this with facts and therefore my opinion is based on gut feeling and instinct, is that ultimately SDRs, as composed on a basket of existing currencies will become the new currency.
The gold play is just a prelude to such scenario and the IMF is facilitating it through a synthetic secondary market while selling gold reserves to members.
Sincerely,
Jeroen
15. Nov, 2009
@ Nick Doms
So, Nick, what’s your point, regarding individuals preparing for ‘dramatic changes in currency markets’, taking fysical gold in possession?
I think we agree a lot of personal wealth is ’stored inside the financial systeem’.
Money, as peopel see it today, combines 3 functions:
a medium of exchange, a unit of account and
a store of value/wealth.
So, as I understand well, your point is “you’re locked in the financial systeem, even as far as the “store of wealth” is concerned”. You’re delivered to the rulingmaking of an international elite & assets with intrinsic value, like gold, will walk in line with this, never ‘free’. ?
In that case, I think you underestimate gold’s own dynamic.
Theo
16. Nov, 2009
@ Jeroen
And what exactly are the dynamics of gold?
So you buy gold now and physically store it.
And what are you going to do if tomorrow the government passes a law (again!) making ownership of gold illegal and you have to exchange it with them at a fixed exchange rate?
What is the value and dynamics of gold then!?
It all happened the same way back in the Great Depression: devalue the USD in order to stimulate exports, raise the price of gold to fight deflation and then bang! introduce the New Deal.
Why do you think silver has gone up much more relative to gold and Americans are buying silver coins? It’s because they remember what happened to gold during the Great Depression.
Europe wasn’t really that much better – it’s the time Hitler came to power. They were pulling people’s gold teeth out of their mouths.
Jeroen
16. Nov, 2009
@Theo
I suppose your question was rhetorical?
Your examples indeed indicate there’s a kind of explosive power in gold, especially when the system changes, and they’re certainly extreme examples.
It seems gold is the ultimate wealth consolidator, an asset that can behave quite ‘normal’ in times fiat currencies aren’t debased too much and as long as there’s enough trust in those who control them. When people are aware this trust isn’t justified, gold plays its historical role.
Regarding your examples:
* ownership of gold has never been illegal in Europe. Evenmore: Europe encourages citizens to buy it (as China does now e.g.): there’s no VAT on gold…
* IF European countries pass a law to make gold illegal, it simply goes into hiding. But I honestly think they wouldn’t even think of it, there simply is no reason to do it.
* Great Depression: bad example, the gold standard was in place. Deflation in such a system is intrinsic to the architecture of it. And regarding confiscation: there was an exception for numismatic (collector’s) coins… . I doubt it that smart Americans lost their gold … .
* Regarding Hitler: extreme example. What would you prefer to own under a dictatorship? Real estate (not portable, highly taxable, destroyable), ‘funny’ fiat money or gold (portable, undestroyable, globaly recognised as valuable asset, …) ?
If gold can play it’s role as an anchor to currencies (as in SDR’s e.g.), there’s no reason to be afraid of it. And I agree with Nick that power block’s in the world would like to move to a more ‘honest’ system.
Emeline
16. Nov, 2009
@Nick
You are writing:” The gold play is just a prelude to such scenario and…..”
I join the question of Jeroen: “What’s your point ….? Why?
Nick Doms
16. Nov, 2009
We are at crossroads in the currency markets and today gold is playing a role, for sure because of a weak USD.
That makes it IMO a prelude to what will ultimately come.
We are very slowly moving towards a world currency of which the current SDR structure will serve as a base model, just as the ECU served as a platform to launch the Euro, only this time it will be on a global scale.
If gold were to serve as an anchor for this scenario, then i would not be afraid either of buying it, but i do not believe that such will be the case.
Gold may be a temporary play for now but not long term.
Theo
16. Nov, 2009
@ Jeroen
Did I ever say owning gold was ever made illegal in Europe? NO
I wrote that it was the case in the US – under the New Deal.
The Great Depression is was a bad example? Really! gold rose in price for 3 years after the start of the Great Depression – just as now, since the start of this crisis in 2007.
Your argument that the gold standard was in place… so what? the New Deal made owning gold illegal and all gold had to be exchanged for USD at a fixed rated by the government. This is why Fort Knox was built… before the New Deal there was no Bullion Depository.
Hitler is a bad example too… really? And would he have been elected if not for the economic and financial situation at the time? He didn’t need to make ownership of gold illegal – he had the means to just take it.
Gold as an anchor to currencies… you seem to have missed a few point about gold and currencies:
- they are both controlled and manipulated – there is no free market for them; and when one goes off the rails so does the other!
- “a new and more honest system” where gold reserves determine the amount of currency… right! and what will governments be prepared to do in order to get their hands on as much gold as possible? Yes – New Deal and WWII all over again
- the gold standard was revoked by the US in 1970s because they had sold all their gold by that time; continuing with it would have meant buying gold from Russia
- today the question is not who has the largest gold reserves in their volts, rather who has it in their ground. Look at the few instigated armed conflicts around the world in the past 3 years – all in gold rich places not under US control yet.
Tom
16. Nov, 2009
Theo: Can you give some examples of gold-related conflicts? Thanks.
Theo
16. Nov, 2009
Take the entire wave of change which has swept through West Africa – gold, oil, offshore banking and shipping ports
Guinea…
Ghana last elections – President Obama’s first visit to Africa
Equatorial Guinea
…
carl
16. Nov, 2009
very very interesting debate here.
A low dollar ( a hidden tax),a near to zero interest rate,,CD’s,money markets,bonds : the coming inflation from a dying dollar alone could render these investments al losers,real estate is ?,Gold :
During WWI the US government kept gold prices frozen at 20,67 dollar/ounce,thanks to the Gold Standard Act of 1900
During WWII Franklin Roosevelt’s “fix” on gold remained locked in place.
After the OPEC oil crisi of the 1970’s gold (unleashed from the dollar) exploded just under 150 % in only 4 years.
During the gold run from 1960 to 1980 gold exploded for a 2429 % return.
Ten thousand dollars over the last ten years invested in S and P stocks lost 3987 dollar and gold grew to 33754 dollar or a gain of 238 %
The best year return in the past 25 years are 31 % for S & P Dow stocks,198 % for rare coins and 100 % for the gold bullion.
Not much of the following is notnews for you :
Gold demand is higher now than ever before,but gold supplies are down
Governments can print mone (QE) but they can’t print gold or silver
Gold rises during periods of deflation too,as governments print money in a panic,trying to keep stalled economies from falling apart
Gold is a “wealth insurance” during wartime,during stock market crashes,too
Bejing is urging Chinese citizens to buy gold and silver.Hoarding is underway in Russia and India.
Here are some quotes of our “provocateur” Marc Faber :
GLOOM
A very weak economy is best for stocks,because it will induce more money printing from central banks.However this will only make matters worse over the longer term as the US government has no stomach for reigning in budget deficits expected to reach 2 trillion dollar .it is merely underwriting the bankers’ mistakes..Down the line a point of debt revulsion will come;
DOOM :
TThe future will be a total disaster with a collapse of our capitalistic system as we know it today,wars (Iraq,Afghanistan,etc),massive government debt defaults and the IMPOVERISHMENT of large segments of Western society.
History learns us :
Unsustainable DEBT BUBBLES usually end in Depression,war and strife.
BOOM
Marc Faber likes drug stocks.
He thinks that bonds and cash will be the worst Long Term investments because of inflation.
Marc faber overweight Asia,as he believes emerging markets will grow faster than the West.
What thus he says about Goldman Sachs?
Theu are really a smart group of people.
And another quote of him :
I am hundred percent sure that the US will go into hyperinflation.
In the book of Liaquat Ahamed “Lords of Finance” that the monetary tightening of 1928 eventually broke the BOOM.
But the failure of the Fed to restore liquidity after the collapse was the principal cause of the Depression.
And of course that has been the great lesson of the Depression-sometimes overlearned.
Conclusion :
What all today’s fears or hopes that capitalism is finished reveal is a great ignorance of history.
We all have been to places like the present crisis BEFORE.
Theo
16. Nov, 2009
We are getting off topic.
The point is that until this financial/economic crisis gold used to be seen as a save haven for preserving wealth, because it was independent from inflation/deflation and reserve currencies.
Today it just moves up as the USD goes down… and even worse, in real terms it’s actually half the price of the highs it reached during the mid 1970s.
I just don’t see how, considering all that, gold can be still called a save haven.
It’s only just a hedge, nothing more and nothing less.
That’s why it’s price is irrelevant.
Nick Doms
16. Nov, 2009
@ Theo,
You’re right we are getting off-topic here.
Adjusted for inflation the current price of gold should be twice as high, but it isn’t because, as you stated, it’s price is irrelevant and it is a pure hedging tool.
Nice for traders, not so nice for investors.
As you, i believe in silver and copper instead, if making a play in metals. At least both have a practical industrial application and US investors would rather buy a silver eagle than a gold coin.
Sincerely,
Sincerely,
Theo
17. Nov, 2009
“You have to own physical gold”
right!
here is the Wiki version of the 1933 Double Eagle coin story of physical ownership
http://en.wikipedia.org/wiki/1933_Double_Eagle
Jeroen
01. Dec, 2009
Buiter’s goldbashing wordt al beloond:
http://www.tijd.be/nieuws/economie-financien/Citi_strikt_Buiter_als_hoofdeconoom_.8266354-600.art