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Friday, July 10, 2009

Peter Schiff interviews Marc Faber

The interview was held in late February 2009.

Faber recommended shares in emerging economies, physical gold (not stocks of gold-producing companies), real estate in the countryside (not in the city), REITs in Singapore (what Faber calls the richest country in the world), and cash.

With respect to cash: in February, Faber thought the U. S. dollar would be OK in the short term. However, by April he was much less sanguine about the U. S. dollar:
With all the money printing, I begin to have doubts about the US$. I am aware that there is nothing particularly favorable about any currency in the world (sadly indeed) but if I were a US based investor and if I had all my assets tied to the US dollar, I would certainly use the US dollar rally over the last 12 months as an opportunity to diversify my assets into non-US dollar assets. When I look at Mr. Obama, Mr. Geithner, and Mr. Bernanke it is difficult to envision a scenario under which the US dollar would be in the long term the world's strongest currency!
On commodities:
The problem is for the individual to play the commodity markets if he doesn't have a commodity-trading account and he can't buy and sell; he gets stuck because he has to stay the course. And so for individuals the best way to play commodities is to buy a good mining company, a good oil company, or a good exploration company, or just physical gold. I don't believe that individuals are very successful at investing in commodities and commodity-related structure products.
On government:
[Y]ou have these clowns in government that think that they can solve any problem. As Mr. Geithner said recently, "we know how to fix the problems." Well, if he knew so well how to fix the problems, why did he let the problems happen in the first place? He was the New York Fed Chairman when the conditions were created! And Mr. Bernanke was the Fed Chairman since, I think, 2005, and he was the architect of this ultra-expansionary monetary policy. They have no credibility at all, and in my opinion they're going to make matters worse. . . .

When you have a perfect free-market, it's difficult to predict the future. But when you have a market that's disturbed by government manipulation and money-printing, it's impossible to make any predictions.

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