Marc Faber: Investing, Gold, Economics, Currencies, Emerging Markets

Marc Faber is a lot of fun to read, and is really the original Dr. Doom as far as economic projections. He is definitely a contrarian to mainstream economics, and is far more right than wrong in contrast to the court economic pundits.

Recently Faber has talked a lot about investing in the current recessionary climate, gold, economics, currencies and emerging markets.

Gold is rightly on the top of Faber's investment list, and he believes everyone should have some physical gold on hand, which most experts believe should be in the form of gold coins.

Another insight by Marc Faber is in reference to the U.S. dollar, which he knows is on a downward spiral, as endless quantitative easing by the Federal Reserve continues to debase the dollar, meaning it is falling in value and purchasing power.

Gold thrives in times like that, as well as many other commodities as well.

Concerning emerging markets over the next decade, Faber has predicted they will account for about 50 percent of global stock market capitalization by 2020.

As most of us know, the major emerging market is China, although Brazil and India are significant as well, as are a number of smaller Asian economies.

Even as China slows down they're still expected to continue to grow at a high single-digit rate. Even so, Faber doesn't like the threat China faces because of their economic policies, and looks for them to crash in the near future.

The economy of Brazil is rich in commodities, and they're increasingly becoming a major player in the energy sector, as new methods of discovering oil under the salt of the ocean has resulted in major oil finds.

Faber has advised people to invest in a basket of emerging economies. 

Because the US dollar will continue to drop in value because of the continuous printing of the greenback, Faber also sees many other global

currencies appreciating against the dollar.

He points out the Chinese yuan or renminbi (different names for same currency) as one of the major beneficiaries of the weakening dollar, as well as other Asian currencies.

As long as the policies of the Federal Reserve remain in place and are practiced, nothing is going to change this.

Much of the purchasing power of the US dollar has been lost over the years, and it has plunged against raw materials, oil and precious metals.

Fellow contrarian Jim Rogers also recommends investing in real stuff like commodities rather than cash and equities over the long term. 

In commenting on gold, even after the decade-long increase in gold prices, Faber still considers gold at cheap prices, even though it recently surpassed the $1,300 mark, breaking yet another historical record.

He recommends people buying gold on a monthly basis in order to average out the entry costs.

Gold prices will surely continue to swing up and down, albeit continuing to rise on a consistent basis for some time to come.

Those who invest in gold monthly can do it confidently without being overly concerned on attempting to time highs and lows, and rather get a good average cost over time. 

In an interest rate environment of basically zero in the U.S., Faber sees those investors who are willing to invest in equities will largely focus on investing in those that pay out good dividends.

Dividends of course are guaranteed income, and those companies will long-term track records of paying out dividends year after year are among the most reliable and safe.

In these cases, the companies will assuredly survive, and even if they have a couple of lean years, their historical performance, in most cases, will guarantee dividend investors will do well no matter which way the stock market goes.

That's why investing in quality, companies with a strong history are the

best, as companies with good dividends but a short track record, can't be measured in a way that can be counted on, as you don't know what they'll do in response to lower revenue and earnings. 

You could search around and find literally hundreds of interesting and enlightening quotes from Marc Faber. Below I've included a few you may enjoy and learn something from.

Government Interference:

What I object to the current government intervention in so-called 'solving the crisis', they haven't solved anything. They've just postponed it.

Printing Money:

If you print money like in Zimbabwe... the purchasing power of money goes down, and the standards of living go down, and eventually, you have a civil war.

What to Invest in:

"... you ought to own some land, and you ought to own some stocks and you ought to own some gold or a lot of gold and other precious metals. Because paper money and bonds are very vulnerable over the next five to ten years.

Ben Bernanke:

The first action Mr. Bernanke should take is to resign. If I had messed up the system so badly, as he has done, I would have to resign. He has talked constantly about the Great Depression and what caused the depression but the problem is that he really doesn’t understand what caused the depression, which was also excessive leverage at that time. I

have to stress that in 1929 the debt to GDP ratio was of course minuscule in comparison what it is today. It was 186% of GDP but you didn’t have Social security, Medicare and Medicaid and unfunded liabilities for Social Security and so forth. So, debt today, as a percent of GDP, is 379% and if you add the unfunded liabilities we are at over 800%. The Federal Reserve should pay attention to that.

Central Banks:

The whole world is now optimistic and positioned to take advantage of forever expansionary monetary policies by buying assets, precious metals, real estate, equities, and everybody believes that the central banks in the world will print and print and print and print. That is correct, they will do that, but they printed, printed and printed and we

still saw a financial crisis in 2008. So I can print and print and print, and you can still have big corrections in the market. But I believe that if the S&P in the US drops 15-20% to around 900-950, the Fed would come out not with this quantitative easing No. 2, but with quantitative easing No. 2, 3, 4, 5, 6, 7, 8, 9, 10 until the asset markets go up again. They are going to print and print and print.

Currency Wars:

The Brazilian Finance Minister has just said we are in the midst of a currency war, a foreign exchange war and the central banks of emerging economies have a choice to do nothing - then they have high domestic inflationary pressures with accompanying bubbles - or they tighten monetary policies and their currency becomes even stronger and you have a speculative bubble in the currency.

Bankrupt US Government:

Eventually the US Government will go bankrupt the way California is almost bankrupt, but that will take some time. The next bubble in my opinion can be a bubble again in equities.”

There you have a few fascinating insights and comments from Marc Faber, who everyone should have at least a general understanding of concerning how he thinks, as it cuts against the grain and is much needed in these turbulent economic times.

In one of his more oft quoted and challenging lines, we'll end by saying what he says, "In the end we're all doomed."

Which he means if we don't change our direction economic destruction is inevitable.