Marc Faber Sees Substantially Higher Gold Prices Over the Next 5-10
years, Lower Purchasing Power of Paper Money
Business Intelligence Middle East
the Swiss fund manager and Gloom Boom & Doom editor doesn't
see a large downside risk for gold. He believes US politicians will
come to an agreement over debt and the US will not default.
a phone interview from Thailand with CNBC's
Worldwide Exchange on Thursday, Faber said: "The risk for
investors is not to own any gold".
that there will be fluctuations, he stressed: "I don't see
a huge downside risk for gold, let's say maybe 10% or so".
see that over the next 5-10 years we will have substantially higher
gold prices, or expressed differently, lower purchasing power of
paper money," Faber added.
his position on holding cash, he said that under a rigid monetary
system, with gold as an anchor, cash would be a riskless asset.
However in today's environment of printing money, cash is "actually
very risky except when asset markets correct on the downside".
Asked by Christine
Tan, the CNBC Worldwide Exchange anchor, how real was the possibility
of a default in the US, Faber said the US will not default "in
terms of not paying the interest on the government debt".
will default in terms of paying the debt and the interest with depreciated
or worthless dollars," he clarified.
Standard & Poor's warned Thursday there is a one-in-two chance
it could cut the United States' prized AAA credit rating if a deal
on raising the government's debt ceiling is not agreed soon.
the chairman of S&P's sovereign ratings committee, said "this
is the time" for the two sides to tackle the country's long-term
get a small agreement, that will lead to a downgrade," he told
Reuters in an interview.
could raise borrowing costs not only for the United States but also
for loans that use the Treasury rate as a benchmark.
So, can US
politicians come to an agreement?
I think they will somewhere, somehow come to an agreement or they
will fiddle around with the debt ceiling or invoke the Constitution
whereby the President, in a special situation, can actually increase
the debt of the US," Faber told CNBC's Christine Tan.
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Marc Faber [send him
mail] lives in Chiangmai, Thailand and is the author of Tomorrow's
Best of Marc Faber