Tags: Faber | gold | insurance | policy

Marc Faber Is Holding Gold as an ‘Insurance Policy’

By Michael Kling   |   Tuesday, 08 Jan 2013 10:00 AM

Although gold prices might continue to drop, as the collapse of the U.S. dollar is not imminent, Marc Faber is not giving up on the precious metal.

"I just think that government will print money and that there will be competitive devaluation, and so I want to have gold as an insurance policy," he told CNBC.

Gold prices probably won't increase soon and there may be a correction of "10 percent or so on the downside," said Faber, managing editor and publisher of the Gloom, Boom and Doom Report.

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He noted that he feels "deeply uncomfortable" about the future of the global economy, the geopolitical situation and social unrest in different countries.

"I don't particularly like any assets at this stage. I mean have I a diversified portfolio, I'm not liquidating anything, but I have a lot of cash."

In his January Market Commentary, Faber predicted that gold would fall to $1,550 to $1,600 an ounce, according to CNBC. Still, he wrote that he planned to increase his gold position on any further weakness, despite his concerns that strength of the U.S. dollar could be a headwind for a strong gold rally.

A growing number of banks have cut their outlook for gold. Deutsche Bank reduced it forecast for this year by 12.1 percent to $1,856 and its 2014 forecast by 5 percent to $1,900 an ounce.

"From an investment perspective our conviction for continued structural strength in the gold market is being tested," said Deutsche Bank analyst Daniel Brebner, MarketWatch reported.

Central banks seem to have successfully mitigated risks associated with excessive financial leverage, economic conditions seem to be stabilizing and equities seem strong, Brebner said, according to MarketWatch.

Plus, many believe the U.S. dollar will probably strengthen over the long term, he added. A stronger dollar makes gold more expensive in other currencies because gold is priced in dollars.

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