Marc Faber, publisher of the Gloom, Boom & Doom Report, isn't too impressed with the easing programs of central banks around the world, and he says the best way to bet against those programs is by buying gold.
"I think people will wake up finally and say, if they can short central banks, that is the trade of the century," he tells
CNBC. "The central banks will be exposed for all the fraud they commit."
The European Central Bank is expected to announce a quantitative easing program Thursday, and the Federal Reserve isn't expected to begin raising interest rates until mid-year.
But central banks can also surprise the markets, as the Swiss National Bank (SNB) did last week when it dropped the Swiss franc peg to the euro.
"You never know — that's the problem with central banks," Faber notes. "They're professors who never worked a day in their lives."
So what's an investor to do? Buy gold, he insists. "My view is that when confidence in central banks finally collapses, then gold has a 30 percent upside potential, easily, this year."
A 30 percent rise from 2013's closing level of $1,184.37 an ounce would put the precious metal at $1,540. It traded at $1,302 Wednesday morning.
Faber also recommends junior gold miner stocks. Junior miners are exploration companies that look for new deposits. Those are "the only stocks that have a great upside potential from here," he argues.
The SNB's decision last week to abandon its ceiling for the franc sent investors scurrying to gold. The SNB's move pushed the euro to an 11-year low against the dollar, and that may make gold very attractive to Europeans.
"If you're a European investor with assets, and you're seeing your core currency getting rapidly debased, you're going to want to diversify, . . . and some of that is going to go into gold," Michael Purves, chief global strategist at Weeden & Co., tells
The Wall Street Journal.
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