Wednesday, December 07, 2005 IN A prediction that would make even the most bullish of gold bugs blush, Hong Kong-based investment adviser and fund manager Marc Faber has forecast that gold could reach as high as $US3600 per ounce in the not-to-distant future.
Addressing the Commodity Investment World 2005 forum in Sydney on Monday, Faber told the audience that commodity markets were only in the fourth or fifth year of what will be a sustained 20-year run of strong commodity prices.
Faber's upbeat predictions were based upon his assessment of the economies of the United States and China. He said the "stupid" political and economic leadership of the US, combined with the growing debt and housing bubbles among its population, would serve to continually erode the value of the US dollar and in turn drive up the value of gold.
Faber pointed to a rise in personal spending as a percentage of income (from less than 77% in 1982 to more than 88% at present), a fall in personal savings (from just under 12% to less than 2% over the same time frame) and a substantial cut in personal taxes to illustrate the excessive consumption currently out of the US that will both hurt the US and benefit China.
Using a vast array of charts and indexes to back up his assertions, Faber also said strong continued growth out of China would help push commodity prices on a continued bull run.
Addressing the audience of institutional investors and fund managers, Faber said investment houses should overweight their investments in Asia and natural resources for the long term.
On an ominous note, Faber - who also publishes the monthly 'Gloom, Boom and Doom report - warned that rising commodity prices and increasing uncertainty over supply could lead to considerable international tension.
