Marc Faber On Gold, Terrorism, & Democratic Wealth Confiscation

had the opportunity this week to connect with the legendary Marc Faber, publisher of The Gloom, Boom, & Doom report. It was a fascinating conversation, as Marc is arguably the most well-traveled and street savvy economist alive.

During the interview Marc spoke on gold from a variety of angles, as well as addressing growing & future rates of terrorism, and coming asset confiscations to be supported by the “popular vote” worldwide.

With respect to recent loud cries of gold manipulation, Marc questioned that, “Western central banks still own the bulk of gold in the world, and are well aware…[that] central banks in emerging economies, notably in Asia, are grossly underweight gold. So why would they depress the price of gold [as] a gift to the Asian central banks, to be able to buy [it] at a lower price? That I don’t [understand] entirely.”

Rather than manipulative forces driving the price of gold down, Marc provided an alternative, explaining that, “I think maybe…the collapse in gold prices recently, and the very strong performance in U.S. Treasuries…is signaling that a deflationary shock, in spite of all the money printing, is still a possibility…I would say if you had a deflationary shock, about the last thing you should own are paper assets…But I think if the markets collapse…physical gold may be the [right] place to be relatively speaking.”

He further added, “I’m still buying gold, and I will never sell my gold. But I think the problem with investors, is that they always buy assets after they have moved [up] substantially…instead of continuously applying a disciplined investment strategy that implies diversification between real estate, cash and bonds, gold, and equities. 

Moving on to the subject of terrorism in the wake of the Boston bombings, Marc candidly stated that, “We have to realize that every action creates a reaction…the U.S. and the Western countries of Europe…they go into Afghanistan and Iraq, and launch drone attacks in Pakistan…Put yourself into the shoes of someone who grows up in a family that is not a terrorist, and suddenly a drone hits your house, and your parents die, or your children die—every day that breeds one new terrorist. That man…an innocent bystander, will basically vow revenge. The more you attack these people with artificial weapons…[the more] these people then also apply dirty methods [in return]…[So] if security and personal safety is an issue [to you], you’re better off [living] in the countryside.”

When asked about growing levels of asset confiscations worldwide, Marc distilled the issue down to its core: manipulation of a democratic system, in which one class of people are pitted against another.

“As a result of the Federal Reserve’s monetary policy,” Marc explained, “huge wealth and income inequality [was created]…You have 1% of the people in a system that benefited incredibly from rising asset prices…[and] a lot of people are dissatisfied. They have the same vote as the 1%, except they are the 99%…so to them, it will be very acceptable to take money away from the 1%…In the end something [big] will happen…what I would really hate is if one day the government comes and says, ‘Okay, we’re going to take 50% of your money and give it to social programs…I think that is a real threat.”

The democratic system can be manipulated with relative ease, Marc explained, because as a politician, “Whatever goes wrong, you [just] blame someone, [and] you mostly blame [middle-class] people. They’re easy targets. You tell the majority of people, ‘You know why you have no jobs? You know why your salaries are going down in real terms? Because these rich guys are taking it away from you.’”

As a final chilling comment to end the interview, Marc said, In terms of social conditions in the western world, the wealth inequality, the money printing—it’s absurd to think that you can create economic growth by boosting asset prices…I’m 67, so I hope I don’t have to see all the [ultimate] disaster, but I am very, very bearish on the trend the world has embarked upon. 
This was a powerful interview conducted with one of the great thinkers and economists of our time.  It is required listening for serious investors and market students.

To listen to the interview, left click the following link and/or right click and “save target as” or “save link as” to to your desktop:

>>Interview with Marc Faber (MP3)

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