Friday, November 29, 2013

Real Estate, Stocks are better than Cash

I would imagine that real estate is relatively safe because it’s widely owned by a large portion of the population. It may go down in value and it may be taxed away but it’s feasibly safe. 

If you look at Germany in 1928, the large and the more stable companies from Siemens to whatever it is, say, BASF, they survived. And so you were better off in stocks in the long run to wars and hyperinflation than in cash and bonds. 

Article via

Wednesday, November 27, 2013

New oil is costly to produce

In China over the last fifteen years, oil imports, they have risen three times. China consumes now almost ten million barrels of oil a day. So the demand is there, if they slow down somewhat, long-term it’s there. Every oil well eventually runs dry. It cannot produce forever. 

New oil is very costly to produce. In other words you have to go and drill and you have to then extract the oil and there’s a lot of safety regulations and very costly, probably around eighty Dollars a barrel. 

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Tuesday, November 26, 2013

Credit percent rising fast

If we take total credit as a percentage of the most advanced economies, then total credit of the economies is now 30 percent higher than in 2007 when the last crisis occurred. 

Similarly in China credit as a percentage of the economy has been growing the last few years by 50 percent. This is unprecedented. It is a gigantic credit bubble. I admit it may go on but it will end badly.

Monday, November 25, 2013

The Fed can buy the whole stock market

Even if the market drops by 20 percent it is not cheap. The Fed could go into the market and buy the whole S&P500. They would have to borrow money or issue money but basically they can do it. It has happened before. In Hong Kong in 1997, the government came in and bought the stock market but at that time it was cheap. 

Thursday, November 21, 2013

Faber likes Newmont, Freeport, Platinum

I stick to physical Gold largely, and I have some holdings in shares like Newmont, Freeport McMoran.

I think commodities, precious metals, will all move in the same direction. Some may move faster than others. Some say Silver is better than Gold, some say Platinum is the best. I tend to agree that maybe platinum is the best precious metal. 

Wednesday, November 20, 2013

Credit growth in Asia exploding

Over the last Five years, everywhere in Asia, the household debt as a percentage of the economy has exploded higher, in other words a lot of growth was driven by unsustainable credit growth. 

The household debt levels are relatively high, the asset prices are high, the affordability of buying homes has diminished and many countries have had currency weaknesses and their currency account surplus has turned to deficits. Some countries like India, Indonesia had to push up interest rates to support their currencies. 

I'm not overly negative in the Asian regions but if a bubble bursts in China it would have a devastating impact on the surrounding countries.

Tuesday, November 19, 2013

I wish they would audit the Federal Reserve

I dont value gold, I just weight it every year to see if its the same weight. I wish they would do that with the Federal Reserve, because nobody has audited these governments who claim they have that much gold. Maybe they dont have it, maybe they have lent it already. 

Monday, November 18, 2013

Marc Faber on Libya Civil war

Libya is already in civil war. Partly due to countries intervening such as North America, Qatar. It is very clear that money going to Rebels ends up in the hands of Al Queda units. We are in a crazy world. 

Thursday, November 14, 2013

Faber says Karl Marx maybe right

Karl Marx might prove to have been right in his contention that crises become more and more destructive as the capitalistic system matures and that the ultimate breakdown will occur in a final crisis that will be so disastrous as to set fire to the framework of our capitalistic society.

Wednesday, November 13, 2013

Marc Faber says Paul Volcker is a man of integrity

It is certainly not my intention to criticize Paul Volcker or to question his achievements at the Fed, since I think that, in addition to being a man of impeccable personal and intellectual integrity, he was the best and most courageous Fed chairman ever.

However the investment community to this day perceives Volcker’s tight monetary policies at the time as having been responsible for choking off inflation in 1981, when, in fact, the rate of inflation would have declined anyway in the 1980's for the reasons:

One could argue that without any tight monetary policies in the early 1980's, disinflation would have been even more pronounced. Why? The energy investment boom and conservation efforts would probably have lasted somewhat longer and may have led to even more over capacities and to further reduction in demand. This eventually would have driven energy prices even lower.

I may also remind our readers that the Kondratieff long price wave, which had turned up in the 1940's, was due to turn down sometime in the late 1970's.

Tuesday, November 12, 2013

Real Economy vs Financial economy

In a financial economy or “monetary-driven economy,” the capital market is far larger than GDP and channels savings not only into investments, but also continuously into colossal speculative bubbles. 

This isn't to say that bubbles don’t occur in the real economy, but they are infrequent and are usually small compared with the size of the economy. So when these bubbles burst, they tend to inflict only limited damage on the economy. The bubbles tend to be contained by the availability of savings and credit, whereas in the financial economy, the unlimited availability of credit leads to speculative bubbles, which get totally out of hand.

Monday, November 11, 2013

After every boom, a BUST follows

The energy boom of the late 1970's led to the application of new oil extracting and drilling technologies and to more efficient methods of energy usage, as well as to energy conservation, which, after 1980, drove down the price of oil in real terms to around the level of the early 1970's. 

Even the silly real estate bubbles we experienced in Asia in the 1990's had their benefits. Huge overbuilding led to a collapse in real estate prices, which, after 1998, led to very affordable residential and commercial property prices.

[A highway in China]

So my view is that capital spending booms, which inevitably lead to minor or major investment manias, are a necessary and integral part of the capitalistic system. They drive progress and development, lower production costs and increase productivity, even if there is inevitably some pain in the bust that follows every boom.

Thursday, November 7, 2013

Dont think many life vests are left

Marc Faber talks on Thai Property Funds, Thai Food companies, Thailand, Global Economy, asset diversification and Inflation.

Faber further compares the stock market to the Titanic, and that we are going to hit the iceberg and that there may not be enough life vests left.

Wednesday, November 6, 2013

Continued... Faber Market Commentary - Part 2

Following Monday's post on the latest Market Commentary I will expand on Doctor Dooms report today. The report suggests that Faber thinks emerging economies to outperform the US stock market over the next few years. In addition he suggests that he likes to buy Gold and Silver mining shares rather than industrial commodity shares. Action Plan: Buy Emerging Markets, Gold & Silver miners

"Jeremy Grantham of GMO expects emerging markets to significantly outperform the S&P 500 over the next seven years. This supports Bannister’s view that investors should now overweight “commodity stocks” (commodities closely correlate with the performance of emerging markets). For reasons I shall explain, rather than to buy industrial commodity stocks, I currently prefer to own gold and silver mining stocks."

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Monday, November 4, 2013

November 2013 Market Commentary

The latest monthly Market Commentary is fresh off the press. In the November 2013 issue Dr Marc Faber says,
"My friend Barry Bannister believes that although “the Secular Bull Market of 1999 to 2011 for commodities has ended, a push-back in which commodities beat the S&P 500 appears to us in store for half (or all) of calendar 2014.”

This seems to imply that Dr Faber shares the opinion that commodities are a Buy and are likely to Outperform for next year 2014.

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