Quotes and video from ETFDaily News
On Gold’s decline in perspective
I love the markets. I love the fact that gold is finally breaking down. Because that will offer an excellent buying opportunity. I would just like to make one comment. At the moment, a lot of people are knocking gold down. But if we look at the records, we are now down 21% from the September 2011 high. Apple is down 39% from last year’s high. At the same time, the S&P is at about not even up 1% from the peak in October 2007. Over the same period of time, even after today’s correction gold is up 100%. The S&P is up 2% over the March 2000 high. Gold is up 442%. So I am happy we have a sell-off that will lead to a major low. It could be at $1400, it could be today at $1300, but I think that the bull market in gold is not completed.
Gold fundamentals intact, signs of deflation?
$1300. Nobody knows for sure but I think the fundamentals for gold are still intact. I would like to make one additional comment. Today we have commodities breaking down including gold. At the same time we have bonds rallying very strongly. If you stand aside and you look at these two events, it would suggest that they are strongly deflationary pressures in the system. If that was the case, I wouldn’t buy stocks or sovereign bonds because the stock market would be hit by disappointing profits if there was a deflationary environment.
Dr. Faber is referring to bursting bubbles via asset deflation.
What to do under deflationary (bubble bust) conditions
Yes, I agree. That’s why I said if the gold market collapse is saying something about deflation and at the same time we have this sharp rise in bond prices and the signals are correct that we have deflation, I wouldn’t buy stocks because in a deflationary environment, corporate profits will disappoint very badly.
Policies from Cuckoo People means we should expect sharp volatilities on any assets
Everything is possible…In the economy of the cuckoo people that populate central banks, everything is possible. What you have is gigantic bubbles, the NASDAQ in 2000, then the housing bubble and then commodities in 2008 when oil went from $78 to $147 before plunging to $32 within sixth months. That kind of volatility comes from expansionary monetary policies from money-printing.
On Gold’s short and long term view.
All I am saying as a trader I would probably enter the market quickly for a rebound of $20 or $40. From a longer term perspective, I would give it some time. We may go lower. I am not worried. I am happy gold is finally coming down, which will provide a very good entry point.
I say gold will register negative returns this year, but may recover from recent lows by the yearend.
On being nimble.
My argument is that you should always have in this kind of high volatility environment a fair amount of cash because opportunities will always arise again and again and if you have cash you can then buy assets at a reasonable price. I think Patience is very important in this environment. The question is, how do you hold your cash? Hopefully not with a Cyprus bank.
Like Dr. Faber, I am not worried about gold’s plunge, as we’ve seen this before. I am rather disturbed by how the selloff has been rationalized through disinformation by the mainstream. Global government's deepening thrust to confiscate people's savings directly (outright confiscation via bank deposits) or indirectly (inflation) will continue to provide gold with a safehaven appeal over time.
I am more worried about the growing risks of a global/regional crisis than of gold.