Legendary investor, economist and commodities analyst Marc Faber says that prices of precious metals, especially gold and silver, could fall, but investors need not worry because the dip in the prices of these commodities will be shot term.
In his February outlook on commodities, Faber who is better known as the editor and publisher of the Gloom Boom and Doom report said that commodities have reached the parabola stage.
Warning that investors should prepare for some downside volatility in commodities, Faber said that long term he is still bullish on the metals.
But Faber said that precious metals, especially gold and silver could fall in the short term with the general market.
Gold could fall to the $1,100-1,200 area, Faber said.
For investors this should not cause any alarm because with the fiscal problems of the US and further monetization, the future for gold is still bright, he said.
Faber would use any decline in precious metals to add to his positions.
Faber is concerned about commodities, as they are currently very overbought by almost any measure. He goes on to say that commodities seem to have reached the parabola stage--going straight up, which is usually the very end of the move. Yes, it could last longer than anyone expects, but at some point prices will collapse again, as they did back in 2008.
This cycle, Faber notes, always occurs as higher prices lead to an increase in supply, which eventually overwhelms the market causing prices to fall. The cycle is longer for industrial commodities compared to agricultural prices as it is harder to build a new copper mine than it is for a farmer to plant more soybeans.
This cycle will play out even with the Fed's money printing. Investors should prepare for some downside volatility in commodity prices.
In his February outlook on commodities, Faber who is better known as the editor and publisher of the Gloom Boom and Doom report said that commodities have reached the parabola stage.
Warning that investors should prepare for some downside volatility in commodities, Faber said that long term he is still bullish on the metals.
But Faber said that precious metals, especially gold and silver could fall in the short term with the general market.
Gold could fall to the $1,100-1,200 area, Faber said.
For investors this should not cause any alarm because with the fiscal problems of the US and further monetization, the future for gold is still bright, he said.
Faber would use any decline in precious metals to add to his positions.
Faber is concerned about commodities, as they are currently very overbought by almost any measure. He goes on to say that commodities seem to have reached the parabola stage--going straight up, which is usually the very end of the move. Yes, it could last longer than anyone expects, but at some point prices will collapse again, as they did back in 2008.
This cycle, Faber notes, always occurs as higher prices lead to an increase in supply, which eventually overwhelms the market causing prices to fall. The cycle is longer for industrial commodities compared to agricultural prices as it is harder to build a new copper mine than it is for a farmer to plant more soybeans.
This cycle will play out even with the Fed's money printing. Investors should prepare for some downside volatility in commodity prices.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
Nothing in this article is, or should be construed as, investment advice.
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