Tags: Faber | Invest | Oil | crude

Faber: Don't Invest in Oil Now, Prices Are Too Volatile

Thursday, 15 March 2012 08:09 AM

Gloom, Boom and Doom editor and contrarian investor Marc Faber says now isn't a good time to invest in oil.

"I think there is a risk that oil prices will go much higher," Faber tells oilprice.com. "At the same time, the bullish consensus on oil is now at one of the most elevated levels it's ever been," he said.

"In other words, from a contrarian point of view, you shouldn't buy oil right now."

Editor's Note: Wall Street Whistleblower Warns of Meltdown, See His Uncensored Interview

"In general, if trouble breaks out in the Middle East, or if there is a war, I think the price of oil could go much higher," he said.

Faber says the Federal Reserve’s expansionary monetary policies and artificially low interest rates have increased oil prices.

“We don't know exactly how long this asset bubble will last — but say if you had interest rates in real terms, of five percent, instead of negative five percent, then I think all commodity prices, including gold, would be lower,” says Faber.

“It’s possible for an increase in supplies to drive down the price a little bit,” he says. “But in emerging economies like China and India, the demand continues to go up.”

Faber also thinks selling down U.S. oil reserves would be a useless strategy as one of the main reasons prices are rising is due to international tensions, and that the Keystone pipeline is an excellent idea.

In the most recent Federal Open Market Committee statement, Chairman Ben Bernanke and the Federal noted that rising oil prices will feed higher inflation.

“The recent increase in oil and gasoline prices will push up inflation temporarily, but the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate,” said the statement.

Editor's Note: Wall Street Whistleblower Warns of Meltdown, See His Uncensored Interview

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