Money printing creates unpredictable volatility in any economy, which also has inflationary consequences, keeping prices up and leading to a much bigger economic crash, Marc Faber proprietor Dr Marc Faber warns.
Faber, who will speak at the yearly Investing in African Mining Indaba, taking place in Cape Town from February 4 to 7, cautions that excessive monetary printing by world central banks could be detrimental to any economy.
Referring to the US economy, Faber says that asset markets printed money “like crazy”, but economic zones, such as the real estate sector still went down. “You can have money printing, but simultaneously have the negative behaviour of assets,” he says.
He will deliver the keynote speech on February 5, titled Deflationary Bust or Government Profligacy and Money Printing.
Meanwhile, Faber, who has about 25% of his assets in gold, believes that every individual and investor should own gold, but has some concerns about the confiscation thereof, particularly in the US.
In an interview with The Economic Times, in December last year, Faber said individual investors were in an environment where world central banks were monetising debts and where the balance sheets of central banks were increasing. He said this would continue, particularly in the US and Europe.
“We are also in an environment where, in the long run, a lot of sovereign debts will either not be paid or will have to be inflated away. So, owning some actual gold is a prudent insurance. I am specifying here actual gold because one wants to protect oneself as an investor from the potential of a systemic collapse of the financial system,” he said.
Faber also noted in the media that the price of gold was still going to climb. “Maybe not quite as much in percentage as it did in the years from 1998 to last year’s September high of $1 920/oz, but the trend will be upwards.
“We could expect big corrections in all markets. In gold, I would like to see a correction in gold prices; down to about $1 650/oz and then it should hold at that level and not move lower.
”Faber is the author of several books, including Tomorrow’s Gold – Asia's Age of Discovery, which was published in 2002 and highlights future investment opportunities worldwide.