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faber: buy gold, miners, and US debt; short stock index

EO 11110

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#1
i like the gold idea. and if US debt takes off, hopefully borrowing costs go with it. then i can borrow cheap and buy more gold :thumbs_up:

http://www.zerohedge.com/

Beginning by disavowing Mario Gabelli of any belief that rising stock prices help 'most' people, Marc Faber discusses his increasingly imminent fears of the markets in this recent Barron's interview. Quoting Hussman as a caveat, "The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak. There's no calling the top," Faber warns there are a lot of questions about the quality of earnings but "statistics show that company insiders are selling their shares like crazy."

His first recommendation - short the Russell 2000, buy 10-year US Treasuries ("there will be no magnificent US recovery"), and miners and adds "own physical gold because the old system will implode. Those who own paper assets are doomed."
 

gringott

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#2
The good thing about Faber is he doesn't change his song, you can pretty much figure out what he will be saying.
I agree with him on gold as a 'insurance policy' rather than an investment vehicle.
 

<SLV>

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#3
Dave Ramsey also harps on the point that gold is a lousy "investment" (but he doesn't see a place for it anywhere except on his wrist). Gold is insurance. That is absolutely true. It is a hedge against a currency collapse. I don't think gold bullion will be exchanged in a SHTF barter environment (maybe jewelry like wedding bands, class rings, gold chain). But it will preserve wealth until a new monetary paradigm emerges.

Once you understand the purpose of gold in your portfolio, then you can understand the necessity of diversification. NOBODY knows the future. I also recommend holding cash ($20s). In the event of a bank run environment (already on the brink in China and Russia) CASH IS KING, and it will do as well as T-bills. I personally won't keep more than @$1,000 in a deposit account (local Credit Union, not a "bank").

I also think it still makes sense to make regular purchases of an S&P500 index fund in a Roth IRA. Dollar cost averaging will win out in the long term. And if you can't do well owning the 500 largest companies in the USA, then you better make sure you've got enough beans and rice.
 

Ahillock

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#4
"The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak. There's no calling the top."

What a great quote.
 

gringott

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#5
Dave Ramsey also harps on the point that gold is a lousy "investment" (but he doesn't see a place for it anywhere except on his wrist). Gold is insurance. That is absolutely true. It is a hedge against a currency collapse. I don't think gold bullion will be exchanged in a SHTF barter environment (maybe jewelry like wedding bands, class rings, gold chain). But it will preserve wealth until a new monetary paradigm emerges.

Once you understand the purpose of gold in your portfolio, then you can understand the necessity of diversification. NOBODY knows the future. I also recommend holding cash ($20s). In the event of a bank run environment (already on the brink in China and Russia) CASH IS KING, and it will do as well as T-bills. I personally won't keep more than @$1,000 in a deposit account (local Credit Union, not a "bank").

I also think it still makes sense to make regular purchases of an S&P500 index fund in a Roth IRA. Dollar cost averaging will win out in the long term. And if you can't do well owning the 500 largest companies in the USA, then you better make sure you've got enough beans and rice.
I think we concur except for the Roth S&P 500. The paper I have in Roth is energy [oil] related to hedge against the energy I must buy to function.
 

Ebie

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#6
".... buy 10-year US Treasuries... and miners and adds "own physical gold ..."
.... Those who own paper assets are doomed."

??
If massive inflation, treasuries will be worthless.
Miners =paper assets = own them or not?
Own gold or treasuries?
- -
I don't understand his thinking.
 

EO 11110

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#7
".... buy 10-year US Treasuries... and miners and adds "own physical gold ..."
.... Those who own paper assets are doomed."

??
If massive inflation, treasuries will be worthless.
Miners =paper assets = own them or not?
Own gold or treasuries?
- -
I don't understand his thinking.
he cites the winners from last implosion 6 years ago

except the miners -- they got crushed with the rest of stocks
 

Ebie

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#8
he cites the winners from last implosion 6 years ago

except the miners -- they got crushed with the rest of stocks
Gold went down.
Cash/treasuries were best.

So, is he saying that gold will go down again?
He does not seem to believe in hyperinflation.
I am not sure I understand what he if trying to say.
 

EO 11110

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#9
Gold went down.
Cash/treasuries were best.

So, is he saying that gold will go down again?
He does not seem to believe in hyperinflation.
I am not sure I understand what he if trying to say.
gold recovered into positive territory for the calendar year 2008, gov bonds went up from the get go. both of them huge winners in comparison to the other asset classes
 

Irons

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#11
Makes me nervous as feck when some expert tells me I'm already doing the right thing. :hmpf:
 

Oldmansmith

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#12
"The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak. There's no calling the top."

What a great quote.
Agreed, yet is surely seems like we are much closer to the top in the stock market than the bottom.
 

Ebie

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#14
If gold goes up, it's better to be in gold than US treasuries.
What is he saying?
Be in both?
Confusing.