Marc Faber says US$1,000 gold is new floor

Marc Faber the Swiss fund manager and Gloom Boom & Doom editor said Gold won’t fall below US$1,000 an ounce again as central banks print money to help fund budget deficits.

Speaking at a conference in London on Wednesday, Faber said: “We will not see less than the US$1,000 level again”.

“Central banks are all the same. They are printers. Gold is maybe cheaper today than in 2001, given the interest rates. You have to own physical gold.”

In the latest issue of the Gloom Boom & Doom Report, Faber had expressed some short-term concerns about commodity prices including gold.

“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 wrote.

Gold prices having held above the upside breakout, Faber now sees the US$1,000-mark as the new floor.

China will keep buying resources including gold, he said.

“Its demand for commodities will go up and up and up,” he added. “Emerging economies will grow at the fastest pace.”

In contrast, Western countries will be lucky to avoid economic contraction, while the Federal Reserve will maintain interest rates near zero percent, he said.

Spot gold gained as much as 0.5% to a fresh record-high of US$1,123.38 an ounce on Thursday in London and traded down 0.12% at $1,115.50 by 11.30am GMT.

December gold futures climbed as much as 0.8% to US$1,123.40 on the New York Mercantile Exchange’s Comex division and were last up 0.1% at US$1,115.60.

Faber has been reiterating, in various recent interviews, the notion of over-streched assets and a possible short-term dollar turnaround.

Speaking in a Bloomberg interview from Istanbul last week, he said: “Maybe the dollar has made a turn, it can easily rebound by 10%”.

“It may have started already since the asset markets started to go down 10 days ago.”

“I don’t think that the dollar will be a strong currency, but you can have periods like in 2008 that the liquidity tightens”.

The dollar index, currently at 75.23, has dropped on record-low US interest rates and increased government borrowing to combat recession.

News last week of bullion purchases by the Indian and Sri Lankan governments raised speculation other countries will follow suit. Analysts at Bank of America Merrill Lynch, Societe Generale SA and Barclays Capital have forecast further purchases by central banks, already the biggest holders.