With the euro-zone sovereign debt crisis coming to a head the man voted the fifth wisest investor in the world by a Bloomberg poll was advising caution over any investment in the next 10 days when he addressed the Agora Financial conference in Vancouver on Wednesday.
Dr. Marc Faber said he favored equities over bonds for the long term after that and if forced to choose a 10-year investment would prefer equities, preferably in Asia. He remains as bullish as ever on gold that he promises never to sell.
“Talk of a gold bubble is nonsense,” he said. “There is no sign of the price surge you saw with the Nasdaq bubble or oil stocks in the late 70s, or the jump in the gold price from $380 an ounce to $800 between November 1979 and February 1980.”
For US citizens Dr. Faber thinks housing is a great buy as a distressed asset in places like California, Nevada, Atlanta and Pheonix, noting that one of his friends in the business says rents are up 9% nationwide.
He noted: “Basically there are two strategies: you can be an aggressive trader and try to switch at the right times between asset classes or go for diversification. I prefer diversification because I don’t feel confident about getting the trading right.”
Dr. Faber is also uncomfortable about sitting on large amounts of cash because inflation will erode its real value over time and he does not accept protestations that there is no inflation in the system.
He is also very confident that the US will continue to print money undermining the dollar and said the US “fiscal cliff” – with taxes set to rise and spending fall at the end of the year – might turn out to be an endless Grand Canyon, though he doubted politicians had the will to make it happen.
“The Middle East will go up in flames with a military confrontation and the oil price will go higher,” he forecast, though with several countries already in a virtual state of civil war that is an easy prediction. The scale and contagion are far harder to predict.
In short a holding statement from the giant of the contrarian analysts and a reluctance to commit to anything while financial markets remain so vulnerable to a euro zone meltdown scenario.