Home > General Topics > Wall St. News > Marc Faber, Dollar Will Eventually Go to Value of Zero, Oct 26, 2009

Marc Faber, Dollar Will Eventually Go to Value of Zero, Oct 26, 2009

  1. "$USD to zero"... won't be any time soon, but will weaken hugely... to the point of being [nearly] Monopoly Money. The WIPEOUT of the $USD could take 50 years. However, it could lose 75% of its current value quickly from here. That wouldn't make the $USD "worthless", but would be damaging enough to crush the retirement hopes of the Boomers, and more.

    Why? Because the US government is too ARROGANT, COWARDLY, SELF-SERVING, GREEDY AND STUPID TO DO ANYTHING ELSE. :mad: :mad:
  2. I like Faber and think he is a sharp guy, but obviously, he gets a kick out of making these outrageous comments.
  3. Dollar to zero :-}

    As much as I would like to see that, comments like these just add to uncertainty and fear which in return adds to volatility.

    Therefore I am advocate for such outlandish/ridiculous comments :}
  4. Really... how so?
  5. Roubini, Schiff, Celente, Rogers, and Faber have become fame whores. At one point they made sense. Now they are talking out their asses with their future forecasts.
  6. I tend to not like your posts, but you are spot-on here.
  7. They have precedent on their side.. throughout history... whenever the dominant regime got too big for its britches and spent money they didn't have willy-nilly, it eventually lead to their destruction and disappearace.

    Same is likely to happen to the USA at the rate we're going. And Obama is likely to be remembered as "the man who destroyed America"... won't be 100% correct, but close enough.
  8. The destruction began with the third rate actor Reagan. His ballooning of the military while cutting revenue collection meant he had to borrow from foreign nations.

    To borrow money, he had to make sure they had money, so he exported all the jobs.

    Not only did the third rate actor start the process of economic destruction, Reagan and Bush Sr. created OBL and the Taliban. OBL was a CIA operative funded by the CIA to fight the Russians.

    Reagan started the entire process of flooding the country with illegals with his amnesty programs and allowing family members to immigrate here.

    The power structure tried to get rid of Reagan and bring Bush Sr. into office to accelerate the process and failed. Then he lost on re-election and Clinton hood winked the power structure and actually set them back by balancing the budget and re-working welfare.

    Bush Jr. accelerated the destruction and Obama is putting the nails into the coffin.

    However the real problem is not the politician. It's the voter.

    The voter is too busy eating Twinkies and watching fag shows like dancing with stars to give a sh*t.

  9. u and others probably said the same remarks years ago when they made their forecasts which became eventually. true.
  10. well said...
  11. You need to blame the neocon spawn that came out of the Reagan adm. Reagan's deregulation helped in all areas, except for banking which has come back to haunt us. Derivatives, however were not created under his watch. I do not think he would be happy with the aftermath. As far as bin-Laden, that is a Bush family gift exclusively.
  12. It is more likely that the value of Marc Faber's collection of Mao Zedong memorabilia will go to zero.
  13. be serious. is hitler memorabilia worth zero?
  14. All of the "pundits" have discovered that drama sells. Add that to the fact that most are clueless regarding markets and that even those who have a clue (Faber has more than a clue) make five and ten year predictions with more certainty than we would making a five day prediction off a daily chart. They know the out years are a guess as to magnitude if not direction.

    THAT SAID, lol, I think there are few among us that would dispute the basis for his comments. The dollar and many other paper assets are being devalued at an incredible rate. We may have a deeper recession before this is all over or even a depression and the dollar may benifit from a flight or even flights to "safety". But through it all there will be classes of assets that will inflate and eventually the paper will begin to sink like a stone.


  15. t-market: Reagan: rabid segregationalist.

    Faber: rabid socialist.

  16. Many critics of reducing taxes claim that the Reagan tax cuts drained the U.S. Treasury. The reality is that federal revenues increased significantly between 1980 and 1990:

    - Total federal revenues doubled from just over $517 billion in 1980 to more than $1 trillion in 1990. In constant inflation-adjusted dollars, this was a 28 percent increase in revenue.3

    - As a percentage of the gross domestic product (GDP), federal revenues declined only slightly from 18.9 percent in 1980 to 18 percent in 1990.4

    - Revenues from individual income taxes climbed from just over $244 billion in 1980 to nearly $467 billion in 1990.5 In inflation-adjusted dollars, this amounts to a 25 percent increase.

  17. Been cruising this site for a few months and I had to register just to say "thanks" for making my day with this line. Nicely put.
  18. If you have been of the opinion for years now the USD is going to totally crash at one point during our lifetime why whould you change your opinion just because the internet crowd thinks your song is getting to sound old?
  19. It is just at the point when it seems to be old and tiresome that the collapse is about to appear on the horizon. Big events set up in big ways over extended periods of time.

    Your song is not old it is a classic.

  20. Does anybody else have a feeling Faber slips in these ridiculous lines into his interviews, just so the blogs keep picking him up?

    * "100% certain US will have hyperinflation as bad as Zimbabwe"
    * "Guaranteed that the Dollar will implode to value of zero"
    * "Financial system collapse and another world war within our lifetime a certainty"

    Either he is completely nuts or he's a viral marketing genius. He's probably laughing his ass off with his buddies back in the Thai jungle when they're smoking a bong.
  21. Indeed. Faber is just another talking head signing a very old and tired song. Eventually he (or his successors) will be right, everybody will have forgotten about the dozens of clowns who were proven wrong by the markets before:

    # Hardcover: 264 pages
    # Publisher: Beaufort Books (April 1985)
    # Language: English

  22. It is my believe people in the western world have had the pleasure to enjoy one of the longest periods of rising prosperity and peace in history that we have grown so accustomed to, a state of affairs we can not possibly see coming to an end.

    We therefore tend to shield ourselves from the possibility of a different future ahead perhaps even only on a psychological level.

    I live in a town that has been basically bombed to pieces during WWII but I can tell you this has left the mindset of the people of today completely and that's not even a bad thing perhaps because that is what people do. You adapt and move on.

    Now don't get me wrong I have no frozen food stocked up in my bassement nor do I have all my money in physical gold (I own goldstocks as well :D) but in my view people like Faber (who stands out amongst his peers imo) only tries to share his view on a future perhaps not so bright as many still today might think and he does that with quite more nuance then these headlines seem to suggest without claiming to know all the answers.

    He was bullish on the USD fall 08 and has been bullish on the USD since the end of the summer this year so to suggest he is a one trick poney who has been screaming the sky is falling forever isnt totally coresponding with the actual facts I would say.

    In fact, when you read between the lines the message he has gotten across to me is to relax, don't fear the future, people, banks and even countries have been going bankrupt for centuries and after each period of doom comes a period of boom.

    You just need to try and play the swings for personal profit and if you fail, too bad better luck next time. :)
  23. The hole in your optimism....

    Though it's true, "boom has followed gloom", the problem is that the winners in the new recovery are generally not the ones who lost when things went but...
  24. All the pundits worth their salt do it and have forever. Give print people a headline and broadcast people a sound bite.

    Media 101

  25. I hate to give any of these bullshit pundits any credence but Debaser is right. Faber is a notch (OK ... maybe only a half notch) better than the rest.

    He knows their are no straight lines up or down and is sometimes in tune with the markets. More than I can say for the others. Sound bites make money; hence Mr. Faber gives them sound bites.
  26. I'm sure it would sound ridiculous to a lot of Ivy League educated people if somebody went back in time and told them in 1929 that their financial crisis would end in a World War a decade later that would ultimately cost the lives of 10s of millions of people, and that rockets would fly from Germany to London.

    Just because a scenario is horrific, doesn't make it that less likely to happen.
  27. Look at Germany.

    Bankrupt to the bone.

    Bombed back to the stone age.

    Most hated people in the world for decades.

    See where they are today.

    It can be done.
  28. I made no representation of these two other than what they did and what they said. Their actions spoke for themselves.
  29. Yes, but repeating the same scenario for 35 years year in year out doesn't make it more likely neither.

    In my world, anything has a probability attached to it. Financial Armageddon has a place in my probability universe just like Goldilocks does. I don't operate on "100% likelihood" or "guaranteed with absolute certainty" dogmas, I think you're bound for a world of pain if you do.

    Obivously, the talking heads including Faber are not concerned with thinking "what if my investment recommendation goes against me? When do I admit I am wrong?". Rather, they're engaged in a "who makes the most outrageous call that gathers headlines" beauty/horror contest. The more attention the better.

    This leads to an interesting question. Did retail (!) investors save more money following sell/short recommendations by the doomsday talking head du jour over say the last three decades or did they end up hurting their long-term investing performance. My guess is the latter. This would be a great topic for a behavioral finance study.
  30. If the dollar ever went to zero, I would give an ounce of silver for 1 billion dollars in 100 dollar bills and keep it in a room in my house, just for the heck of it. :)
  31. Faber's statement is hardly outrageous.

    <b>ALL</b> types of unbacked fiat 'money' are inherently more illusion than currency, and they <b>ALWAYS</b> end up getting devalued down to zero eventually.

    <img src=http://z.hubpages.com/u/38177_f260.jpg>

    P.S. Buy this dip in gold and thank me in a week (Current spot price: $1039). This is an official RM prediction.
  32. Right and stocks ALWAYS go up eventually.
  33. I wish this were true. But sorry, I think this will not work. The Germans pulled up their bootstraps and worked. I think Americans are not going to do that. We are too fat, spoiled, lazy and entitled, and we have raised our children to be the same way. The only way America can prosper again is to open the borders to many more people (probably from Asia) who want badly to excel and are willing to work really hard. We don't want to work hard. We like to sit on our ass and watch TV (or post on ET, I suppose).
  34. Buffet says the history of the U.S is that every generation has lived better than the next.
    I would add that every generation has worried if the next generation will live better than the next and as a result has done things to insure a better life for their progeny.

    I have been very angry and gloomy over the last year due to the financial crisis, which in my opinion ended in Nov of 08 with the first TARP and has become a political crisis once government took the reins.

    If you believe in free markets, then you believe they are eventually self correcting, no matter how painful the process.

    I don't believe in Government solutions and it’s clear that currently the problems the country face are more of a political direction than whether Americans know how to build and run businesses.

    I am optimistic though that the political process has been brought to a tremendous grind, and the Americans as a whole are more concerned about deficits, and dollars and than other problems.

    That’s a sign that over time we will make the right decisions.

    As much as I despise the level of intervention in the markets, I still have some faith, maybe foolishly, that Bernanke is trying to do what he thinks his right.

    Now For the dollar to go to zero it would be deliberate and you would need to buy into crazy conspiracies of NWO, UN Armies and the Amero,

    Central banks can print money and the can also erase it, Bernanke will not let the dollar go to zero. The YEN has been operating under similar constraints for 10 years, it is not worth zero.

    Kudos for the Fabers and Rogers though without them there would not be a pressure to otherwise prevent the very collapse they predict.
  35. and the march downward continues....
    Dow 10k, 9k, 8k......0k
  36. Agree, of course. But you're still missing the point... and that is, it would be CATASTROPHICALLY BAD for all of us here today. We would all be bankrupt.

    When the "country recovers", it will be profitable for those who came in and bought assets on the cheap... people whose money did not get destroyed in the currency collapse.

    Frankly, if I get bankrupted but somebody from another country with is assets having been held in another currency... gets rich in the recovery... I doubt I'll give a shit.
  37. For those that think Faber is using exaggeration for personal benefit - even at the risk of losing his credibility - please explain how we will cover a siginificant amount of these debts/obligations in the coming 3 decades. Granted, no nation need be debt free to be viable, so I will allow that not all of these obligations need to be extinguished - but some, like Social Security and Medicare, do. Interest payments also need to be serviced.


    source: http://www.marketoracle.co.uk/Article14518.html
  38. The Germans did not rebuild themselves. Neither did Japan.


    Neither did Europe. It was called the "Marshall Plan". In addition, the Allies never repaid the colossal amount of war debt from the U.S.
  39. The unfunded liability is over the infinite horizon. The majority comes from Medicare and the projected high growth in health care cost.
    All the more reason that Medicare and health care needs to be reformed soon.

  40. I agree, but how much of that will be due in the next 3 decades? That's why I specifically gave that time frame.

    Here's something more concrete:

    By 2020, in addition to payroll taxes and premiums, Social Security and Medicare will require more than one in four federal income tax dollars.
    By 2030, about the midpoint of the baby boomer retirement years, the programs will require nearly half of all income tax dollars.
    By 2060, they will require nearly three out of four income tax dollars.

    Source: http://www.ncpa.org/pub/ba662
  41. Well at least the Chinese are feeling our dollar pain too. They hold billions worth of U.S. Treasury bills earning "0" interest, and with the dollar still poised to tumble even further, they are for the foreseable future, holding a money bag full of "donkey sh**" eeh haw! eeh haw! :D
  42. How is it wrong? The dollar has been losing value over the last 35 years, albeit a few hiccups, money supply & debt all across the board has been exploding. Cost of living has gone up to unsustainable levels. The largest state in US, which is more significant than most nations, has pretty much gone bankrupt via using IOUs with even those most optimistic budget projections looking like sh*t.
  43. Just wait and see if other nations( Russia, Saudia Arabia, China, Japan, and France) decide to really convert to a basket of currencies, and ditch the U.S. dollar, to trade oil. The subsequent, further U.S dollar weakness in this country (U.S.) will be the norm and our standard of living will be forever adversely affected.

    Thank you very much Mr Bush!

    P.S, No wonder Ive hated Texas for as long as I can remember, full of ignorant, arrogant, racist, hillbilly, know-it-alls........
  44. Isn't this a "tempest in a tea pot"?

    Couldn't oil seller receive payment in $USD and immediately exchange to Euro or Yen?

    Couldn't oil seller who is afraid of $USD declining... hedge his $USD receipts in Forex?
  45. Spot on. The entire "Oil exporters will ditch the USD as trade currency" debate is moot.
  46. I hope you're right !
  47. Transaction costs via spread.

    Transaction costs again.

    Does not make sense if you're active buyer/seller of oil. That's why large USD reserves are held by active participants in oil.

  48. Transaction costs? Big players on an exchange? What's the vig, couple of pips??

    Does THAT justify a wholesale change in how the oil world does bidness??

  49. as of Wed, Oct 28th, the USD has rebounded to strongly as to have wrecked so many shorts and negative position plays, including CL (crude oil prices)

    so, perhaps this is / was designed to have that affect...
  50. Both Germany and England payed of WWII debt to the USA up untill this century even correct me if I am wrong.
  51. regarding England - They received a grant of 4.4 billion in order to sign off on bretton Woods:

    "A devastated Britain had little choice. Two world wars had destroyed the country's principal industries that paid for the importation of half the nation's food and nearly all its raw materials except coal. The British had no choice but to ask for aid. Not until the United States signed an agreement on December 6, 1945 to grant Britain aid of $4.4 billion did the British Parliament ratify the Bretton Woods Agreements (which occurred later in December 1945).[8]"


    Nonetheless, there was a debt that England incurred after the war that was recently paid off, yet they never paid of WWI debts to the US:


    In terms of money owed to the US - England was ahead of the game. However, in terms of international prestige and control of global markets - England lost big-time to the US.

    Right after WWII, no one could compete with US Industrial might. No one.
  52. Thanks for the clarification Misthos. Always enjoy your posts as I like to learn about economics with history as the main guide.

    One more question if I may.

    I once listened to a Peter Schiff radio show :)p ) in which he claimed the US owned 70% of the global fx reserves after WWII only to see that number drop to just a few percent this decade.

    Is there any truth in that?

    If there is, it seems as if the US funded global growth and rising living standards across the board but... at it's own expense or selling out as some might see it.

    Seems the US has been one of the least beneficiaries from globalisation.

    Question remains whether that is due to failed internal policies or it's more a relative decline compared to others given it's prime status before.
  53. Don't know what the current percentage is. But Schiff's using WWII as a starting point is extreme in my view. The era just after WWII was extremely unbalanced in the US's favor - but that too, was unsustainable - that manufacturing base needed global customers.

    I believe what you stated: "it's more a relative decline compared to others given it's prime status before" is the case.

    And one more thing... Globalization also created Transnational Corporations. Whereas right after WWII the US govt planners wanted ALL Americans to have a better life and planned accordingly, as time went by, US Transnational power grew and pushed aside the needs of the little guy. Corporate Lobbying exploded.... and not just US corporate lobbying, but other countries also paid for lobbyists. In the late 1980s Japanese companies were spending $100 million a year lobbying. Mexico spent upwards of 25 million to help get NAFTA passed.

    Such events would have been practically unheard of in 1949.
  54. Nice call, RM -- closest thing we can get to a "hero" on an internet msg board. I've had a position for weeks now (although intend to hold for months -- $1300 area), but doubled down yesterday (and in USO and a few others), just based on the timing of your statement.

    Hard to say where the dollar's going after the big change in volatility over the past few days, but if the buying in equities remains broad enough over the next few days, I'll be happy enough to sit on this as intended.
  55. What humors me is all the folks that don't think further down the "what happens next after the US falls" theory.

    Let's say the dollar goes to zero. Lets say the US crashes, all debts are declared unpayable, and default comes crashing down like a financial meteorite onto the world's economy.

    Who benefits? Can anyone out there name me one country that will escape the fallout from such a catastrophe?

    Do you guys think Europe, or China, or *laugh* Australia or Canada will end up in a better situation?
  56. I personally don't think any of that will happen, for the reasons that you state (no one benefits), and because the Fed does have the ability to mop up that liquidity when it decides the time is necessary. Right now all I care about is getting good entries for certain positions.

    Long term is a different story. The dollar surely is going to stay low for a long time, both taxes and interest rates will inevitably rise again, the U.S. consumption economy will surely lose its dominant position in driving global demand. Not doom and gloom, but a more realistic end to the long party.
  57. Agreed. Though the end of the world crowd won't listen to that. Reminds me of a past boss of mine who used to say "Don't confuse the issue with facts..."
  58. My best guess is during such a scenario sovereignty and nationalistic sentiments will be labeled as one of the prime suspects for what caused the collapse and a further unification of nations will be on the table to ensure that what happened 'will never happen again'.

    Or you get the opposite where the globalisation and weakening sovereign powers will be seen as the main reason of the crash and a retreat from those policies will be evidently on the table.

    I guess both scenario's would have their pro's and cons.

    I would like to chose the latter as the most healthy state as it would ensure the best oportunity for freedom on all levels but then again as a member of the european union I see the upside of these movements as well so I'd be a little bit in dubio what to chose here.:)

    Each scenario has it's own beneficiaries and losers, some achieve the same status during both.

    Anyway, more interesting then the 'what if' question (To Mad Max or not Mad Max) to me has always been the 'Should we reset or not?' question. :)
  59. Regardless of what insanity does ensue, I assure you, the United States will be one of the countries to suffer the least, despite what you're hearing from the Fabers of the world. The defaulting county ALWAYS gets out of it ahead.

    Countries like China (hell, most of Asia) and Russia will have the financial equivalent of a nuclear bomb going off in their main financial centers.

    The EU? Please. Germany might get out of it with major burns, but the euro would be toast, as it would rise to infinity (in comparison to the dollar AND asian currencies that are pegged to the dollar). Countries like Spain and Ireland would have thrown the EU to the wolves and taken their chances on their own- where they too can devalue. Italy? Please. France would burn as rioters there would essentially take out the country as the government stalled (they do very little that meets the "just in time" heading).

    Australia would sink into the ocean as China would go full-blown protectionist (more so than now). Canada would see it's #1 trade partner evaporate as the US goes protectionist as well. The price of oil would head into the 1000 area, if not beyond, choking everything that does not run on solar or some other form of electricity.

    Sure, gold would be launched into orbit, if it werent' confiscated by then, but who would you sell it to?

    Goldbugs always secretly giggle in glee at the thought of financial Armageddon, but they rarely think things through. What they SHOULD be hoping for (if they're going to be morbidly hoping for something) is a GRADUAL decline of the dollar. That will give them the best bang for their buck.

  60. That's the camp I am in. All the political uncertainty is not helping to build confidence with "change you can believe in" getting more negative with each passing day. Let us hope he learns how to be a President before leaving office.
  61. I'm of the opposite view. I think the more he screws up, the more chance there is of REAL change as this country takes the two party system and throws it in the crapper where it belongs. We're seeing it now with the GOP splintering into an ultra conservative side and a more realistic view of the world side. How long before the independents of the world go "You both suck!" and start to vote their own?
  62. I wouldnt draw conclusions on the aftermath of such a crash based on these countries' economic strength today but rather at the mindset of the average Joe and in that case obviously those places with the highest standard of living and lowest crime rates would feel the effects the hardest.

    You have travelled around the world extensively I believe so you must be well aware of the phenomenom of one person fearing hardship as it would change his live completely and an other person who has been living the equivalent of an economic depression all his live yet they only live 20 miles apart from each other.
  63. You misunderstand us Doomers. We don't give a FUCK what goes on in the rest of the world (post c ollapse), or who gets screwed the least. We care about our situation, and what we can do to prevent or prepare.

    You miss the whole point.

    I have no opinion on this, but it does seem valid on many levels:

  64. Anyway, I agree the US would be one of the least hit during such a scenario.

    In fact I advocated those in charge to let it crash a long time ago as the US still has the economic and geopolitical power to come out on top after such a crash.

    Unfortunatly, as these powers have come under pressure, the pendulum swings more and more in the direction of a US that has a lot to lose should the system would come crashing down which puts them between a rock and a hard place.

    Chinese water torture VS choping of a leg because it has gangreen.

  65. I disagree. The higher the level of complexity a society has, the greater it falls when there is a credit or resource collapse.

    How far does a farming village on a Mediterranean Island fall during a great depression? I'll tell you - it barely notices.

    How far does a city like Detroit fall just in the beginning stages of a great depression?

    Think it thru.

    Economic and societal complexity is great during boom times. Not so much during bust times.
  66. I'm drawing conclusions based on a hypothetical happening that is so illusionary that we're forced to discuss it on ET of all places. Accuracy is optional.

    I have traveled and lived all over the world, but I'm not sure what your second point was.
  67. YOU might feel this way, but that is not the case with many "doomers" as you call them. Regardless, MOST of the doomers, don't realize that the collapse they are hoping for (so that their gold goes to a million or whatever) will result in a substantially poorer lifestyle for themselves, with or without gold. Furthermore, many of these people operate on the hilariously off-track assumption that the US will collapse and the rest of the world will go on humming a cheery tune. Many of these folks are haters of America and manifest these feelings on hope of economic collapse while they sip their Coca Cola watching Baywatch with their Nike sneaks up on their ottoman.

    THAT is my point (which you might have missed).
  68. Agree. Let the whole thing come down for cleansing now rather than "death by a thousand cuts".
  69. I would assume no one hopes for a collapse. Especially if they are diabetics or rely on any type of monthly medication.

    But yeah, it looks like I misunderstood your post.
  70. Exactly. I'll even go as far as saying, I hope this Obamination of a president starts talking, like Clintion was, about taking a portion of people's 401(k) plans for distribution to the Looters & Moochers. That'll get your average joe to think twice about ever voting for another socialist/liberal again.

    The Republicans screwed Conservatives and Libertarians last time around and they better wake up in 2010. So far, I see NO plan to get my vote.
  71. There is the story of an economist in 1932 who was growing more and more pessimistic as the country slid deeper and deeper into the depression. Seeing his mood a student asked him "but just how bad can it actually get". He looked at the young man and said simply "The Dark Ages".

    Societies, continents and even entire eras that are very poorly led and managed leave themselves at greater risk than most can imagine. In 1935 very few people thought Europe would have 30,000,000 dead and an unfathomable slice of their populace destitute within 10 years.

    The political leadership in the US and in many other countries is dismal. My crystal ball is still in the shop so I won't predict what will happen. Yet it is undeniable that we are heading down some very dangerous paths. As far as I am concerned it is far from an out bet that our current path leads mankind to lose faith in currencies and other paper assets.

    If the dollar and/or other currencies are not perceived as reliable stores of value then the sky is the limit. Human beings will always seek a reliable "currency". Historically, when it is not paper then precious metals fill the gap until a political and economic structure develops that people have faith in. At that point people become willing to deal in the new paper because they believe in the society that issues it.

    The question is not "who would you sell gold to" in the chaos before a new currency has the confidence of the people, the question is under that circumstance why would anyone trade it for the old paper.

    Hint -- they wouldn't.
  72. You obviously have never been to Kitco or goldismoney.info.
  73. After reading his comments, I emailed Marc Faber offering to take the other side of $/€ forwards for 2020, at a price of 10 dollars per euro. As an alternative I offered US $/Zimbabwe $ forwards at an exchange rate of parity, again as he predicted earlier this year.

    The offer is also open to anyone else who thinks the US $ is going to "zero" or going to end up like the Zimbabwean currency within a long-term investment time horizon (i.e. within 10 years).

    Furthermore, I informed him that as a long-time Gloom Boom Doom subscriber, I would cancel my subscription if he did not take the other side of at least one of those trades, and said I was unhappy with the recent BS snake-oil hyperbole he is peddling on bubblevision and the blogosphere, as - surprising though this may sound - I originally subscribed to get solid investment recommendations based on valuation and market analysis, not tips on insincere credibility-incinerating fame whoring, headline grabbing, or viral newsletter marketing.

    I will let you know how he replies.
  74. Good for you, mate. I'm interested in hearing the reply. And good to see you're back, even if it's in ethereal form.
  75. The dollar has lost 50% of its value in the last ten years. Not rocket science, just look at what a dollar bought vs. buys now. Faber's forecast is doable, but unlikely, since according to the DOW's disconnect with the dollar, anything is possible. One reason I increased my physical gold delivery and reduced my dollar holdings.
  76. I think you're being unfair and ignore the rest of the things Faber says. Faber does BOTH. He makes short term recommendations and long term predictions.

    Back in March, he said the market was oversold, and it was ready to take off again. He also makes frequent stock picks, lately, Intel being one of them.

    Just because he says that ultimately the (fiat) system will collapse in the future doesn't void his current advice. You think he's pandering, I think, he's one of the few that is honest about it long term. Just a difference in opinion, I know.

    I'm sure Faber's bank account is a bit more hefty than yours. He won't miss your canceled subscription.
  77. Cold, a better investment in time would be to cease creating aliases on ET, log off, and seek the support of your local psychiatrist.
  78. Awesome! Going forward, I expect to see a slow grinding uptrend in gold, eventually peaking in an orgasm-spike top.

    Instead of just buying and holding, I'll be constantly adjusting my position size; Buying more on dips, and lightening up whenever we get near the top of the channel.
  79. Your point is completely valid. Anticipating the dollar's demise is one thing, but actually cheering & rooting for it to happen is the dominion of short-sighted fools.

    Nobody would truly benefit from that.

    <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2622271>

    (Except for this guy)
  80. That sounds like the sanest way to go, but I've got less of a stomach for timing this instrument. I've tried and failed around four times entering LT positions at 920 and 980 in the past so I'm just glad enough to get a good avg price to wait for a rollover after a trend line violation. Or a top or volume blow-off. But your call gave me the balls to buy into that horrid sell off -- thanks!
  81. Is it reasonable to buy the out contracts ... say June '10 instead of the Dec. '09 in order to roll them less often. Or is there a way to roll them at lower cost. Seems to me many who think gold is a reasonable investment (as opposed to a trade) intend to hold for years not months

  82. How to best accomplish tossing out the two party system:
  83. Reinstate the constitution, restore the republic, bring back sound money, abolish fractional reserve banking, abolish the FED, abolish the two party system, bring back US troops from abroad, ...

    Just a few actions ( with possibly disastrous short therm repercussions) perceived as necessary by those 'hoping' for a collapse as they view the curent route the USA is on as unsustainable and ending in total disaster anyway.

    Somethimes societies have to be willing to take a huge hit so their grandchildren will enjoy a better live.

    Ofcourse this is all theoretical jibbering, nevertheless I could understand why some would actually be in favor of happening what I described before and I wouldnt judge their motivation as being more flawed then that of those hoping for the system to survive in it's curent form.
  84. He never said the dollar was going to zero vs the euro. He would probably say that all fiat currencies will approach zero value relative to real assets, and that the dollar is currently on the fast track, with the euro close behind.

    Also, Faber never implied that the dollar would under perform the Zimbabwe currency, although he stated that he was 100% certain the US would experience hyperinflation. I agree that this is a ridiculous statement, but has no relation to your proposed wagers.
  85. 1. When talking about exchange rates (and that is what he's doing) then one currency imploding vis-a-vis another exchange rate automatically means the other currencies are going to the moon. Without further clarification it would mean the EUR/GBP/JPY will go parabolic (vs. the USD). Like Cutten said, e.g. $10 per EUR.

    That is what Faber is saying and it is complete non-sense, let's say over the next 10 years. Faber knows that but he is more interested in shocking headlines rather than boring the audience with e.g. "The purchasing power of the USD and all other fiat currencies for consumer goods and commodities will continue to be eroded" -- because that doesn't catch as much media attention because it's too much common sense.

    2. http://www.bloomberg.com/apps/news?pid=20601110&sid=avgZDYM6mTFA

    "U.S. Inflation to Approach Zimbabwe Level"

    Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.

    He said US inflation should approach 231 million percent. If that's not sensationalist then I don't know what is.

  86. You did not listen to or understand the interview.

    Faber was talking about the value of the dollar, not the exchange rate. The value of a currency is determined by purchasing power, which Faber is saying will go to zero. Given a long enough time horizon, he is 100% correct. Faber also points out that other currencies are not much better than the dollar.

    Your second point proved my point (brilliant debating tactic). He said the US inflation will 'approach' Zimbabwe's. Meaning the USD and ZWL could never reach parity, hence cutten's bet makes no sense.
  87. I agree

    I disagree with this interpretation.

    As hofficita suggested,

    although it should be noted that Faber didn't specifically state ("zero" against real assets) either.
  88. It is called hyperbole.

    Like when the goldbugs say gold is going to the moon.

    They don't actually believe it is going to go to the moon.

    They just expect it to apreciate considerably.:)
  89. I call it sensationalist marketing. He has a product to sell (newsletter and appearances) and he needs headlines.
  90. Hey, it's a free market.:p
  91. Not cold's IP.
  92. Bingo. The man has it right. Faber in years past has been interesting to listen to (although I never back any pundits opinion) but he has mastered what pundits all must do eventually to make real money.

    Give headline writers the sensationalist headline and broadcasters the over-the-top sound bite. The formula brings in subscribers and that means income.

  93. Gotcha, I take it back.
  94. I don't really have a good answer on that one, and have never personally tried buying distant month contracts.

    I stick with (near-month) futures, ETF's or leveraged ETF's (like DGP), despite the drawbacks.
  95. Up untill a year or two back his GloomBoomDoom report was free and after charging 200$ for it for a years subscribtion (which is quite moderate really) he is known for using a substantial part of those proceeds to support the Child's Dream charity, a tax-exempt Charity Organization that supports the poorest of Thai children in their education.



    He is a saint!

  96. It's always best to trade as close to Front as possible. You get the best price discovery. Rolling is very cheap compared to the price discovery you lose by going farther out. My firm has permanent positions and we always trade front and roll as market rolls.
  97. It's the nature of their 'prediction' business, they have to make even more breathtaking predictions to keep their subscriber/viewers attention and not be eclipsed by a competitors outrageous predictions.
  98. Makes sense. The ETF's seem to frequently under perform the market and it has been written that because it is easy for experienced traders to know when they will roll their positions they get killed on the roll over. Any feeling if this is reality? Any estimate on what I give up rolling them?

    Thanks. You have already been helpful.

  99. Nelsanity agrees with your opinion that the near month makes more sense. Thanks for the comment.

  100. Ok well when you roll vs going out one more contract farther, you pay a 'round-trip'. So 2*commission is the difference.

    I never follow gold, so I'll use an example I am more familiar with: TYZ9. Say you short this b/c it's front vs TYH9. You'd pay 2 more commission's to short and buy back vs just short the H1. So say thats 2*($2 [have to insert your broker+clearing fee here, but I use 2]

    In TY 1/32nd of pt is worth $31.25 per contract so to find equivalent price movement that equals roll fee is almost 1/8th of a 32nd...very tiny.

    Check order book of contracts farther out and you will see there might be some in next contract out because we are so close to rolling Dec, but after that it drops off a cliff. I.e. you will pay more than 1/8th of 32nd because of lack of open interest. Hope this all makes sense.
  101. The guy is becoming a lunatic. Let me understand this...

    The dollar will go to exactly zero, but not yet. Waaaaiiit for it....a rebound is coming. The US market is a disaster, and world equities are poised for a crash - but wait, look! Emerging markets offer a good investment!

  102. That's why his website is titled "GloomBoomDoom"

    There's a "boom" in that title, in case you missed it.
  103. Is that because he forecasts all 3 and then takes credit for whichever of the three scenarios actually plays out?

    "The US dollar is going to crash" (doom)

    "The US dollar is going to rally" (boom)

    "The US dollar is ultimately going lower but might go higher first" (gloom)

    Hard to lose with that kinda forecast - does anyone know an actual trading position you can take that makes money in all 3 scenarios? Apart from setting up a newsletter advisory service of course.
  104. LOL...

    Hey man, you have to have all your bases covered.

    But seriously, I've been following Faber for a few years now. Has he always been dead on? No. But you know what? He gives pretty solid reasoning behind his predictions, so if the facts change, it's not that difficult to assume what that would do to the prediction.

    And yes, all three scenarios (gloom-boom-doom)are part of our landscape. Wisdom is in anticpitating the order and frequency of those scenarios thru time. Micro and Macro. They all occur at different times, in different places, and using a global outlook, all at once.
  105. Yes, it makes sense. If it ends up to be just commissions it is not prohibitive. Yet I have often heard the ETF's (sophisticated traders I would hope) and up getting much lower returns because of costs "associated with rolling their contracts".

    Doesn't compute for me.

  106. Well I am not too familiar with ETF's, so I am wondering what requires an ETF to be rolled? i.e. Do they have maturities?
  107. Credit where it's due. Although I'm holding longer than a week, I know there are others out there who have cashed in. Once again, another shout out to RM is in order.
  108. Good work, and you get credit for noticing that I'm usually right about these things and mustering up the balls to act on that conviction. Most people can't do that.

    Unrelated to the gold trade, I just realized that for once I could actually directly benefit if people were to piggyback me on something.
    Yesterday I cut a large check to privately invest in a local business. I come across these types of deals all the time, and pass on over 95 percent of them- but this particular one feels very different. Encouraging other investors to come in with me can only strengthen their chances of success.

    In case anyone here happens to take me seriously and has a minimum of $50K to invest in this sort of thing, feel free to PM me. This would be especially relevant if you're located around Chicago or south Florida, as you'd be able to keep a close eye on your investment.
  109. Do it again- Go big or go home- and thank me in two weeks. Current spot price: $1146.60. Official RM prediction.
  110. I`m long GLD from 111.90. My algos firing buys across all my frames since pre mkt. Not that it means anything to you. But i`m in agreement. Looking at 119.18 target. 106.47 i`m stopped.
  111. Right about here looks interesting, depending on the first 30 minutes to an hour on 12/11
  112. RM, still bullish on gold? Also bearish on the dollar?
    And by implication, bullish on equities?

    I am thinking this correction is something bigger. The anti-dollar trade is over now. And gold was heavily bought by people wanting to be short the dollar. So it might take a while before gold bottoms.

    Now 1117, the Feb future.
  113. I don't like gold here... I LOVE it... just bought more.

    Absolute worst case scenario is that it goes sideways for the rest of the month.
  114. getting close to a technical bounce in gold ,crude, eur/usd,
    soon. might coincide with funnyclaus rally.
  115. If gold hits $1000, I will double my physical holdings.
  116. Well then....where the hell is the volatility!???
  117. Ok. That must also mean the dollar to stop strengthening right here.

    What's your risk/reward? Since gold has been down $30+, you must be looking for a move back to the highs, at least?

    Not worried about this chart? Record-high spec longs, even after the worst crash (Dec 8).

  118. The spec long positions don't really worry me, as the same thing was going on <i>before</i> the big breakout two months ago. Think 1999 tech stocks- Everyone's bullish, yet the orgasm spike top in gold is still about to occur. The top in this decade-long bull market may be near in <i>time</i> (probably within 18 months tops), but not in <i>price</i>.

    The only thing that worries me about the gold chart right now is that we might move sideways for a few weeks, and I'll look stupid on my "thank me in two weeks" call when I should have said two months.

    As for risk/reward, you know I'm a play it by ear/gut feel/INTP kind of of trader. My options are always open. That's not an evasion- I just don't yet know how and where I'll be scaling out of this one.
  119. Well that stupidity seems to be approaching fast.. :D

    I agree about the spike top, but believe it's still a few more years and thousands of $ away. In my view we're just about halfway through a 16+ year bull market. The price of gold has about quadrupled since the 2001 bottom, and it could very well quadruple again. But as in the 1970s, there could be a few years waiting time before the last spike leg even begins.

    I've been trying to day-trade gold but with very little success. It seems gold is too much affected by EUR/USD, oil and the index futures. I would like to see gold move much more independently, which I think will happen when we finally get the next bull market leg going.

    As to the R/R, was just wondering what's your scale both in time and price. Already "all-in", or still lots of room to build a bigger position? And timewise your target is months away?

    Now that the euro is down to a new low (1.453), but gold is not (1116), I'm seeing the first signs of bottoming. Could start building a longer-term position (than just a day trade) right here, especially as a hedge against my short EUR/USD.
  120. No, I'm pretty sure the top in this decade-long bull market is near in time (probably within 18 months tops), but not in price.

    I went to the bank to do a wire transfer (unrelated to bullion) a couple weeks ago, and the banker commented on how she's seen a recent flood of outgoing wire transfers for gold bullion purchases. Tech stocks had 1999, gold bullion has 2009.
    Some patterns are timeless.

    This little Colbert piece says it all:

  121. That Colbert piece only focuses on the BUYING end. What about the individual level SELLING end?

    There is a GIANT market for middle/lowermiddle class/poor people selling their gold well under spot. Wouldn't this ultimately depress the gold market or at least cool off the exchange regulated/monitored markets for gold? And this has been going on for awhile now. People are selling gold in droves to pay property taxes, bills, etc...

    What happens when the lower classes exhaust a good part of their gold in order to pay for their bills? Don't forget, many of them no longer have credit cars to live on... now they're raiding whatever jewlery they have.

    For every Goldline type ad I see, I probably see 2-3 ads targeting people to sell their old "useless" jewelry.

    In my view, this is not the most efficient commodity market in terms of price discovery, and my bias is that gold is undervalued because of this - IMHO. Maybe I'm overestimating how many people need to sell their gold to pay bills? I don't know.
  122. Interesting. In Europe I've seen no ads about buying gold, just about selling. Also, nobody I know is heavily invested in gold, only a few have even minor positions. And I have talked about gold for many years and to everybody. Gold bug I am.

    Would be amazed if we get a bubble here in 18 mths. But that's not bad at all - the sooner the better.
  123. Hey, I know my credibility has been shattered because I've only been correct on my calls around 80% of the time, but right here, right now is another great entry point to get long gold. I just bought more.

    Current spot price: $1111.70

    Looking to exit some when it trades ~$1145 in a few days, and holding the rest for longer term.
  124. I'm in on it too.
  125. Sprott Inc. announces appointment of Marc Faber as Director

    (the "Corporation") is pleased to announce that the Board of Directors has appointed Marc Faber as a director and member of the Audit Committee.

    Dr. Faber is the Managing Director of Marc Faber Ltd., an investment advisory and fund management firm. He also acts as a director of Ivanhoe Mines Ltd. (TSX, NYSE, NASDAQ: IVN), an international mining company with operations focused on the Asia Pacific region, and as a director and advisor to a number of private investment funds. Dr. Faber publishes a widely read monthly investment newsletter entitled "The Gloom, Boom & Doom Report" and is the author of several books including "Tomorrow's Gold - Asia's Age of Discovery". He is a regular contributor to several leading financial publications around the world, including Barron's. Dr. Faber has over 35 years experience in the finance industry, including acting as manager of an investment bank in the U.S. where he routinely performed financial analysis on a range of companies. Dr. Faber received his PhD in Economics magna cum laude from the University of Zurich.

    "We are honoured and delighted to have someone with Marc's credentials join our Board. Marc is an internationally renowned expert and commentator on financial markets and we look forward to his contribution as a director of Sprott Inc.," said Eric Sprott, CEO of the Corporation.

  126. Nice, here in Canada Sprott is a pretty big deal, they're really good. Of course they also have similar viewpoints on commodities, gold etc

  127. Indeed, at least regarding gold.. :)

    I think the anti-dollar & inflation trade must die before gold gets really going again. We need to get all the weak inflationistas and commodities bulls to fold. The "dollar is dead" crowd must be proven wrong.

    I am afraid this process will take the entire year. One good sign would be for the correlation between gold and stocks to go negative. Another would be for oil to lose its contango. Unfortunately, neither seems to be happening any time soon.

    That said, I am buying here, spot $1065. There could be a bounce if the Greek-pressured euro gets a relief rally.
  128. We had a +50% crash in commodities and a 30% crash in gold in 2008.

    There you had it, a big correction driving out the weak hands.
  129. Sure. And since that time we had another big surge in gold and oil with the usual suspects crying "the dollar is going to hell". This anti-dollar trade must die, and it is dying as it's now euro's turn to go to hell, before gold can advance very much further.

    I am not calling for any big crash in gold. A few months around $1000 may be enough to reload for the next bull leg.
  130. Faber said the $ could rise 10% against the Euro when it was at 1.50.

    We reached that last week I believe.
  131. RM, are you still long gold?
  132. I have no short or medium term trading positions anymore, just the ultra long-term core holding I've had for almost a decade.