Gloom, Boom & Doom Marc Faber: We Are in 'QE Unlimited'
Are interest rates held down when the Fed continues this type of policy?
Marc Faber: ”On September 14, 2012, when the Fed announced QE3, that was then extended into QE4, and now basically QE unlimited, the bond markets had peaked out. Interest rates had bottomed out on July 25, 2012–a year ago–at 1.43% on the 10-year Treasury note. Mr. Bernanke said at that time at a press conference, the objective of the Fed is to lower interest rates. Since then, they have doubled. Thank you very much. Great success.”
What are unintended consequences of money printing (or, what is the endgame)?
Marc Faber: ”Well, the endgame is a total collapse, but from a higher diving board. The Fed will continue to print and if the stock market goes down 10%, they will print even more. And they don’t know anything else to do. And quite frankly, they have boxed themselves into a corner where they are now kind of desperate.”
Where is gold heading?
Marc Faber: ”When I look at the market action today, I would like to see the next few days, because it may be a one-day event. The markets are overbought. The Feds have already lost control of the bond market. The question is when will it lose control of the stock market. So, I’m a little bit apprehensive. I would like to wait a few days to see how the markets react after the initial reaction.”
Will the 10-year yield float back up to where it was before the Fed’s speech?
Marc Faber: ”I will confess to you, longer-term, I am of course, negative about government bonds and i think that yields will go up and that eventually there will be sovereign default. But in the last few days, when yields went to 2.9% and 3% on the 10-year for the first time in years i bought some treasuries because I have the view that they overshot and that they could ease down to around 2.2% to 2.5% because the economy is much weaker than people think…I think in the next three months or so.”
What is the gold price forecast?
Marc Faber: “I always buy gold and I own gold. I don’t even value it. I regard it as an insurance policy. I think responsible citizens should own gold, period.”
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.