Marc Faber: Gold and Silver Only Protection from ECB’s Quantitative Easing

GoldJust one day before the European Central Bank declared an expansion of their stimulus program, Marc Faber was on Bloomberg TV arguing that rogue central banking will cause an economic collapse. He argued that “easy money” policies are dangerously irresponsible, and investors should be wary of assets whose value depends on more quantitative easing.

Faber is a famous Swiss investor who currently lives in Thailand. He is well known for his book Tomorrow’s Gold: Asia’s Age of Discovery and the bold calls he made on oil, precious metals, other commodities, and emerging markets. Speaking on Bloomberg this past Wednesday September 2nd, Faber once again assumed a contrarian stance.

“I think that because of modern central banking and repeated interventions with monetary policy, in other words, with QE, all around the world by central banks there is no safe asset anymore.” (Source: Bloomberg, September 2, 2015.)

The next day, ECB President Mario Draghi announced an extension of the eurozone’s stimulus program. Growth is lower than expected because of China’s economic slowdown and the Greek drama from earlier this summer, forcing the central bank into action. (Source: The Wall Street Journal, September 3, 2015.)

Marc Faber is Buying Gold and Silver to Prepare for Economic Collapse

Faber thinks the costs of ECB intervention are simply too high. According to him, China’s deceleration and a hollow stock market will converge at a tipping point. When we go over the edge, he doesn’t think there are many places to hide.

“The purchasing power of money is going down,” said Faber. “[I] would rather focus on precious metals because they do not depend on the industrial demand as much as base metals or industrial commodities.”

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Year to date, gold and silver are down 5.3% and 6.8% respectively. Although precious metals have traditionally allowed investors to hedge against economic uncertainty, there is reluctance to abandon optimism.

Faber is even skeptical of the most conventional assets. “When I grew up in the ’50s it was safe to put your money in the bank on deposit,” he said. “But nowadays, you don’t know what will happen next in terms of purchasing power of money.”

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