Gold, Equities, Bonds And The US Dollar

"Since we had in 2008 the third best annual return (41%) in the last 35 years and since each time high returns were followed by negative returns I would be, regardless of the economic outlook, very reluctant to invest in long term government and also in corporate bonds."

Faber says he is more negative about US bonds under a further deterioration of the economy than under a recovery, adding that inevitable further economic weakness "will lead to further fiscal stimulus packages and necessitate further money printing".

He believes the latest GDP growth figures are a result of massive government interventions into the free market which inevitably resulted in extremely volatile economic and financial conditions.

As a result assets are over-stretched: equities are too high, the euro is over-bought the dollar is over-sold. Even gold may be due for a short term correction, he says.

"I should also mention some concerns (for now of short-term nature) I have about commodity prices including gold. A large number of commodities including oil, the CRB Index, and gold broke out on the upside in early October," Faber said.

"I would regard a failure to hold above the “upside breakout points” in the period directly ahead with great caution. In the case of gold a decline below US$1,000 would likely lead to further more meaningful weakness, possibly down to between US$800 and US$900," Faber added.

in Business Intelligence Middle East

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.