Tags: Faber | Stocks | Gold | economy

Faber: Sell Stocks, Gradually Stock Up on Gold

Tuesday, 10 April 2012 11:25 AM

Investors should sell stocks and gradually stock up on gold, says Marc Faber, publisher of the Gloom, Boom and Doom report.

Investors shouldn't rush, as gold will see some corrections and stocks will see some nice buying opportunities in the near future.

But for the long term, stocks are on the decline and gold is set to rise.

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"Where investors were overly negative last year, they are now overly optimistic about the prospects for the U.S. economy," Faber writes in his newsletter, according to Yahoo’s Breakout.

Stocks have posted a ''huge bull run'' since 2009, Faber says, adding "I think the (stock) market is very overbought."

While gold prices have fallen over the past few months, investors should consider jumping in now, pointing out the metal is not in a bear market but rather, is "still in a correction phase."

"Individual investors should gradually accumulate gold."

"Hold some cash, hold some precious metals, hold some equities, and hold some real estate," Faber says, Yahoo's Breakout adds.

"If one asset class or the other declines substantially move money into that asset class."

Gold prices have shot up recently in wake of the government's poor March jobs report, where it was revealed the economy added 120,000 jobs, way below expectations.

March's numbers caught global markets off guard, priming concerns the Fed will intervene via quantitative easing.

Under quantitative easing, the Fed buys assets from banks, bonds namely, injecting liquidity into the economy and weakening the dollar in the process, which often sends gold rising.

Big investment banks like the precious metal as well amid such uncertainty.

"We still prefer gold despite an extended period of profit taking in 4Q11 and renewed volatility in 1Q12," Goldman Sachs analyst write in a research note, according to Reuters.

"Negative real interest rates, the prospect of further unconventional monetary policy in the U.S. and Europe to confront uncertainties on the growth outlook, and heightened political tensions in the Middle East are all expected to underpin strong investment demand."

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Tuesday, 10 April 2012 11:25 AM
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