Marc Faber: Buy gold at $1400 | www.commodityonline.com | 3

Marc Faber: Buy gold at $1400 | www.commodityonline.com


Following is the July global outlook from Marc Faber:

Commodities: Even though Dr. Copper bounced off its 200 day moving average, Faber would stay away from any commodity which is dependent on Chinese growth. The probabilities of a significant slowdown or crash in China have increased recently.

Gold: As Faber mentioned last month, gold is undergoing a short-term correction, which is natural during a bull market. The correction could take gold to as low as $1400. This would represent an excellent buying opportunity for investors. To counter the anti-gold crowd, Faber emphatically states that gold has not reached a major top and is likely to trend higher later this year.

Stocks: The stock market is going to rally in the short-term (July-August), but equities will not surpass their previous highs reached back on May 2. After this bounce, Faber believes the market will decline sharply to around 1100 on the S&P 500 (during the September-October period). This is when the Fed will likely consider implementing QE 3 to stimulate asset prices.


Bonds: The rally in US Treasuries is over and investors should take profits.


Dollar: Everyone and his brother loves to hate the US dollar and expects it to decline further. While Faber despises the dollar long-term, he thinks it is attractive compared to the Euro. In fact, Faber recommends investors short EUR/USD as the situation in Europe is likely to deteriorate. The recent bounce in EUR/USD provides a good entry to initiate a short position.


Money Market Funds: Faber is increasingly concerned about holding money market funds because of their exposure to European banks estimated at around $800 billion. This is why the 1 month T-Bill recently went negative. Faber says that he plans to reduce his exposure to money market funds.


Australian Real Estate: If you have been lucky enough to have owned Australian real estate over the last few years, you may want to take profits. The Australian housing market is in a bubble and is very susceptible to a housing crash. The likely catalyst for the sharp decline would be a major slowdown in China, which would depress demand for commodities.

at 7/05/2011

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