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Faber: Growth Will Remain Muted For a Decade

Tuesday, 23 Aug 2011 12:45 PM

The United States and Europe may be out of the Great Recession, but both economies can expect to creep along in the economic doldrums for another decade, says economist Marc Faber, publisher of The Gloom, Boom and Doom report.

"If I look at the politicians both in Europe and the U.S., I don't think that prospect (for growth) is very good," Faber tells CNBC.

"If I also look at the entitlement system and the government expenditures and the fiscal deficits and the debt overhang, I think for the next 10 years we'll have very muted growth in the Western world and standards of living for the average household will continue to decline."

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Marc Faber
(Newsmax photo)
Turning to assets, Faber says today's hot investment — gold — may be due for a correction in the near future, although it's still a safe play. "But I think that everybody should have some gold if he wants to own some cash because gold is the most honest form of cash people can own."

Physical gold is the best way to play the metal, and that means stashing it in different areas of the globe, Faber told CNBC. "I prefer if investors hold physical gold in a safe deposit box ideally outside the U.S. in various locations — Switzerland, Singapore, Hong Kong, Australia, Canada."

"I think it's important in today's very uncertain world to diversify not only the various asset classes, in other words equities, bonds, gold, cash, real estate, commodities but also the custody of your assets should be in different jurisdictions."

A well-diversified portfolio should hold 25 percent to 30 percent in stocks and 20 percent to 30 percent in physical gold, Faber adds.

Many economists warn the U.S. is headed back into recession while many more say the country will avoid economic contraction but will grow at a lackluster pace in economic limbo, according to an Associated Press poll.

The survey of 43 economists shows that likelihood of a recession within the next 12 months is 26 percent, up from a June poll that put the likelihood at 15 percent.

High unemployment and weak consumer demand are taking their toll on recovery.

Fear itself is also threatening to push the economy back into contraction, some economists say.

Each day that the stock market sinks "puts another nail in the coffin of the recovery," says Beth Ann Bovino, senior economist at Standard & Poor's, according to the AP.

"I had been saying it was a half-speed recovery; now, it's a quarter-speed recovery."

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The United States and Europe may be out of the Great Recession, but both economies can expect to creep along in the economic doldrums for another decade, says economist Marc Faber, publisher of The Gloom, Boom and Doom report. If I look at the politicians both in Europe...
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Tuesday, 23 Aug 2011 12:45 PM
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