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Geneva conference to examine central bank suppression of gold
By James Poole and Mike Firn
Bloomberg News Service
Tuesday, April 25, 2006
http://www.bloomberg.com/apps/news?pid=10000081&sid=aUeDGtHNebpI
Marc Faber, who told investors to bail out of U.S. stocks a week
before the 1987 Black Monday crash and began recommending
commodities at the end of 2001, said gold may rise 10-fold in the
next 10 years.
"If the Dow Jones goes up three times in the next 10 years, I think
gold prices will go up by a minimum 10 times to something like
$6,000 an ounce," said Faber, 60, who founded Hong Kong-based Marc
Faber Ltd. and manages about $200 million.
Faber, author of a newsletter called The Gloom, Boom & Doom Report,
said gold wasn't expensive when "you compare its price to the
quantity of money that has been printed in the last 10 to 15 years
in the U.S. and the world in general."
Gold for immediate delivery rose to $645.85 an ounce on April 20,
its highest in the more than 25 years, as hedge funds and other
speculators bought commodities to seek greater returns than from
stocks and bonds. Former George Soros partner Jim Rogers forecast
April 17 that gold would reach $1,000 an ounce.
The outlook for the precious metal depends on how much money Federal
Reserve Chairman Ben Bernanke "will print," Faber said in an
interview yesterday in Tokyo.
"As you know he has pronounced speeches about asset deflation," said
Faber, referring to Bernanke. "He's concerned about real estate and
stocks going down, so in the long run for sure he'll print money."
Pension and mutual funds are pumping record amounts of cash into
commodities as China's booming economy stokes demand for oil and
other raw materials, leading to a three-year boom in prices. The
amount of money invested in index-linked commodity funds rose last
year by as much as $30 billion to $80 billion, according to Barclays
Capital. The amount may rise by 38 percent this year to $110
billion, the bank said.
Gold for immediate delivery reached a record $850 in 1980. The metal
rose 0.4 percent today to $623.09 an ounce at 11:45 a.m. Tokyo time.
Energy and uranium prices will continue to rise on growing Asian
demand, said Faber.
"Asian oil demand will double," he said. "We don't know whether that
will be in eight or 15 years but for sure it will double and I don't
think supplies will be able to match that."
Faber has worked in Asia for more than 30 years. He served as
managing director at the Hong Kong unit of Drexel Burnham Lambert
Inc. from 1978 to 1990, when an insider trading scandal drove the
junk bond firm into bankruptcy. He's on the board of several funds.
He didn't rule out a big correction in commodity prices. Still, that
wouldn't mean the end of the commodity boom.
"Between December 1974 and August 1976 the price of gold declined
from $195 to $103," he said. "Then it still went up eight times."
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