Faber: 2015 Is the Year to Short Central Banks (Video)
Marc Faber has been long on gold since the mid-1990s. He thinks 2015 may be the year that investors wake up to the scam that is central banking. The only way to bet against the central banks is to buy gold. You can take a riskier approach and get into gold mining stocks, but the safest bet is physical gold and silver bullion. Faber explains his philosophy in this interview with Barron’s.
Follow along with this partial transcript:
“I think if we look at different parts of the world… I have to say Europe is unlikely to grow. Maybe it grows by 1%, maybe it contracts by 1%, statistical aberrations. I don’t think that the US economy is picking up. I think it is slowing down. In emerging economies, we have no growth at the present time. In some countries they may be growing at 1-2%, and in others there is contraction in industrial production. The Chinese economy, which is the dominant emerging economy in the world, is definitely slowing down. India, on the other hand, probably has at the present time around 5-6% growth. But in general, if you look at global exports, they’re flat. If you look at the global reserve accumulations, they’re flat.
“So I think we’ll face a disappointing 2015 in terms of economic growth… In terms of growth, yes, [India is the only bright spot]. But don’t forget last year, in dollar terms, the stock market was up 35% and the India Capital Fund was up close to 50% last year. It way outperformed the indices. I don’t think this will be repeated. Maybe it will go up another 15% or so. In general, I think a lot of markets are not terribly expensive, but not bargains…
“At the Barron’s fall conference… I said the Chinese economy was slowing down, but the stock market would go up. Because the stock markets and economies can move in different directions. There is a lot of central bank intervention, and expectations by investors of what the central banks will do next. So investors are piling into stocks in the expectation that the Bank of China will essentially ease…
“I think there are for the first time in a long time, since 2007, 2008, actually some shorting opportunities. I am thinking of shorting some sectors. I think it’s quite dangerous to short individual sectors, because some idiot may come and take them over. I would say some indices like the biotechnology index is on the very high end. Social media ETFs is relatively high in my opinion… The semiconductor stock index is on the high side… The Australian dollar is probably still a short, although it is very oversold and sentiment is very negative, so it can rebound like the euro. The bullish consensus about the US dollar is enormous, so we may have a setback on the rebound in euros…
“My bet is if I could short central banks, I would short central banks in 2015. I think investors will suddenly realize what a scam central banking is. Then they will lose confidence. There is only one way to short central banks, and that is to buy gold…
“I am long gold. I have been long gold since the mid-1990s. I bought recently again more. I think if someone really wanted to make a lot of money in gold in a high risk proposition, then he should buy the GDXJ [That tends to do better than gold when gold goes up, and much worse when it goes down]… Last year, when gold went up by 15% in the first few months of 2014, the GDXJ went up 40%, so it’s much more volatile…”
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