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Monday, March 3, 2014
Gold Shares now are at a very low level
TD: Right, over the last three years. But when you look at the fundamentals today as compared to 2011, how would you describe the difference?
Marc Faber : Well basically, we had a huge run-up in prices between 1999, from $255 oz. to $1921 oz., in early September 2011. We’ve been in a correction period.
Now, I think the correction period was partly justified because there was too much enthusiasm and too much speculation leading to the peak in September 2011. But I think that there may have been some market manipulation as well, could be. My sense is that the correction has probably come to an end, because if anything, the fundamentals are much better today than they were at that time, but the price is down.
I always tell investors, that every investor understands the principle “buy low and sell high,” but when prices are low, nobody wants to buy. We had very negative sentiment recently. I’m not so sure about asset markets, because we could one day, after this colossal asset inflation of the last 20, 30 years, also have asset deflation.
But when I compare say gold shares and the price of gold to the S&P, the S&P is up substantially since 2011 and gold is down substantially. So if you compare say the performance of gold shares to the S&P, I think it has been a disaster for gold shares.
When I look around at asset prices; real estate, bonds, equities, paintings, collectibles, vintage cars, I think the price of gold is actually one of the few assets that are relatively cheap, relatively inexpensive. In particular, as my friend Eric Sprott always says, “Gold shares now are at a very low level.”
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Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.