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Faber: Gold Could Plunge to $1,100

Monday, 26 Sep 2011 08:36 AM

Economist and investor Marc Faber says the price of gold could drop to as low as $1,100.

"We overshot on the upside when we went over $1,900," Faber told CNBC. "We're now close to bottoming at $1,500, and if that doesn't hold it could bottom to between $1,100-$1,200."

Faber, publisher of The Gloom, Boom and Doom report,  attributes the price drop to the economic slowdown in China.

"Asian markets are weak, Asian currencies are weak and economically sensitive stocks are weak because there's a more meaningful slowdown in China," Faber says.

"You have a capital goods level where capital spending increases dramatically and companies keep spending to a high level, but because of the acceleration, it can lead to recession simply by the economy growing at a steady rate, and I think we are at this point in China."

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Marc Faber
(Faceboook.com photo)
Nonetheless, Faber says long-term investors who "believe in the Asian economic growth story" should not be scared. "In China at least deficits and government intervention is leading to infrastructure spending,” says Faber. “There are overcapacities but ultimately these will be used.”

Faber, who has 25 percent of his portfolio in gold, remains bearish in the long-term but thinks equity markets will rebound in the short term.

"Both equity markets and gold markets have become very oversold, and I think a rebound is occurring," says Faber.

"Following this rebound, which I expect to get underway this week, there will be a longer slowdown."

NASDAQ reports that Gold and silver prices tumbled, led by a nearly 10 percent drop in spot silver prices, as investors liquidated their positions on fears of an impending recession.

Spot gold prices fell more than 3 percent to $1,604.29 an ounce, wiping off gains over the past two months.





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Economist and investor Marc Faber says the price of gold could drop to as low as $1,100. We overshot on the upside when we went over $1,900, Faber told CNBC. We're now close to bottoming at $1,500, and if that doesn't hold it could bottom to between $1,100-$1,200....
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