Eric King:  “Marc, what are your major predictions for 2014?”

Faber:  “I’m just thinking about this and the more I think about it the more I feel that we all don’t know how 2014 will end.  First of all, we have geopolitical tensions that are rising, particularly in Asia.  Who knows what this will lead to?....

Continue reading the Marc Faber interview below...


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“I don’t think that a war will occur, but the tensions could escalate to a point where they would have some impact on the Asian economies and on the currencies of the Asian economies, notably the yen.

So, whereas I admit that to short the yen is an extremely crowded trade at the present time, everybody is short the yen and long the Nikkei, I still feel there is a good chance that the yen will continue to weaken.  That would be favorable for the US dollar.

Now, against all expectations, this year the euro has rallied against the US dollar.  I think the eurozone economies are probably in the worst shape, and the financial system is in worse shape than the US.  So I would also rather be long the US dollar than short the US dollar.  Also, (I would rather be long the dollar) because of the increased energy self-reliance in the United States.

Concerning the share markets, the big question is this:  Since 2010, we had a massive outperformance of the US vis-a-vis emerging economies.  The US cyclically adjusted earnings P/E ratios are relatively high, which would indicate low returns for the next 7 to 10 years.  In other words, in the opinion of Jeremy Grantham returns of less than 2% are negative in real terms for each of the next 7 years.  

Conversely, in emerging economies we had bear markets.  In some markets, adjusted for the depreciation for currencies like the Brazilian real, the Indian rupee, and so forth, we had declines of 30% to 50% from the highs.  So the question for the investor is, ‘Do I buy the US that is still currently momentum driven but it won’t be driven forever, or do I gradually move into emerging economies?’ 

I think it’s too early to move into emerging economies, and I think it’s too late to buy US stocks.  They (US stocks) may go up another 10%, maybe even 20%, but the risks have increased significantly and I don’t think equity investors in the US, aside from a short-term trading opportunity, will reap very high returns in the future.

Now, compared to equities in emerging economies and equities in the US, what is really incredibly depressed are mining companies.  My preference has always been to own physical gold, but I have to say that at this level the mining companies are relatively good values.

I’m not optimistic about any asset class, whether it’s art, collectibles, bonds, equities, or commodities, but relatively speaking, probably commodity related stocks are very cheap.  And don’t forget in 1999 to March 2000 there were a handful of technology stocks that went ballistic, and these so-called ‘old economy’ stocks were all sleeping.  And when the Nasdaq collapsed, the ‘old economy’ stocks came back (into vogue).

So my sense is that as a contrarian and also given the extremely negative sentiment about gold, silver, platinum, and palladium, going into 2014 I think that the mining sector looks reasonably attractive.”       

UPDATE - This is part I of a series of interviews with Marc Faber that will be released today.  Faber discusses everything from his 2014 incredible predictions, to the end game, government theft, global stock markets, how investors can protect themselves, gold, silver, central planner actions and much more.  The written portion above is just a small part of this extraordinary interview.  The KWN audio with Dr. Marc Faber is available now and you can listen to it by CLICKING HERE.

© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

The audio interviews with Dr. Marc Faber, Bill Fleckenstein, Eric Sprott, Grant Williams, Egon von Greyerz, Dr. Paul Craig Roberts, William Kaye, Michael Pento, Andrew Maguire, David Stockman and Art Cashin are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.

Eric King

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