Tags: Faber | Gold | Bubble | price

Faber: Gold Isn't a Bubble Poised to Pop

Tuesday, 06 Mar 2012 07:58 AM

Gold isn't in a bubble ready to pop similar to the tech boom of 2000 or the real estate sector of a few years ago, says Marc Faber, publisher of the Gloom, Boom and Doom report.

Gold may rise and fall amid price corrections, but it's nowhere close to being a bubble.

"A bubble phase is characterized by the majority of market participants being involved in a market space. I saw a gold bubble in 1979 — 1980, when the whole world was dealing — buying and selling gold 24-hours a day, globally," Faber tells The Gold Report.

"If you went to an investment conference in 1989, 90 percent of the people there would have told you they owned shares in Japanese companies. In 2000, 90 percent of them would have said they owned NASDAQ shares," Faber says.

That hasn't been the case with gold.

"Only about 5 percent of the participants at an investment conference today would tell you they own gold. Very few people in this world own gold," Faber says.

In late 2011, gold prices broke past $1,900 an ounce briefly before retreating to just above $1,700 today.

Loose monetary policies in the U.S. and Europe have flooded global economies with paper currencies, which has made gold an attractive hedge.

Calls for a return to the gold standard have grown in wake of inflationary fears that loose monetary policies and government borrowing have stoked.

A gold standard ties the value of the dollar to gold, and supporters say it would force the government to live within its means.

"They've been debating currencies for hundreds if not thousands of years and they always end badly, they always return to market-based money, which is commodity money — gold and silver," GOP presidential hopeful and Representative Ron Paul said at a recent congressional hearing with Fed Chairman Ben Bernanke, according to ABC News.

"People keep arguing from the other side of this argument that [the Fed] is working, it's doing well, and yet from my viewpoint and the viewpoint of the free market economists, all it is doing is building a bigger and bigger bubble."

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2012-58-06
Tuesday, 06 Mar 2012 07:58 AM
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