The Blunt, Ominous Financial Wisdom of Marc Faber

Depending on their investment outlook and motives, financial industry observers of the bold Swiss economist Marc Faber either politely tolerate him as a contrarian, or mention him with the same reverence they’d accord the Oracle of Delphi. Certainly the notorious publisher of the Gloom, Boom & Doom Report has built his career by unsparingly shattering the idols of stock market fans and central bank supporters.

Born in Switzerland in 1946, Faber achieved early academic success, earning a Ph.D. in economics from the University of Zurich at twenty-four.  He first went to work for the investment company White, Weld & Co. In 1978 he became a managing director at Drexel Burnham Lambert Ltd. Hong Kong, where he gained renown for advising clients to get out just in the nick of time before the October 1987 crash. After Drexel Burnham shuttered in 1990, Faber quickly set up his own enterprise, Marc Faber Limited.

As an independent investment consultant, Faber’s been credited with a series of spectacularly accurate predictions. In the early 2000s he predicted the rise in precious metals, oil and other commodities. He foresaw the growth of China and other emerging economies during those same years, and he also correctly called the 30% jump in gold prices in 2015.

As a widely sought commentator and advisor, Faber continues to startle observers with his against-the-grain take.  On the eve of the Brexit referendum, he told a FOXBusiness reporter he could care less if the UK left the European Union. In fact he said he welcomed the move, comparing it to his Swiss ancestors’ fight against the Hapsburgs to free themselves of foreign laws, judges and taxes.

Furthermore, Faber feels central banks will mindlessly use Brexit as an excuse to print more money. For this reason, he feels investors should turn to gold, silver and platinum to buttress the consequent devaluation of their cash.  With both markets and currency under siege, he reminds us that precious metals traditionally take off during central-bank bouts of quantitative easing.

In a June 29 Bloomberg interview, Faber repeats his slam on the Brussels bureaucracy within the EU, and how it burdens member countries with excessive regulations and taxes.  In this interview, though, he amusingly extends his thinking to the United States. This country would be better off as a group of separate states, each with its own laws and government, as opposed to its being ruled by a Federal Government.

Wow – quite an analogy – and quintessentially Faber! Frankly, I’m not sure whether the Gloom, Boom & Doom guy was kidding, or whether he wanted to make sure Bloomberg’s listeners were paying attention. But I’ll wager he had some takers when he suggested the very first state to declare its independence should be Texas.

I confess Marc Faber makes me uncomfortable. He makes me uncomfortable because he makes me think. For the most part, I derive two big ideas from his presentations. The first is Faber’s insistence investors should be very careful.  Clearly, we don’t want to simply hurl our retirement funds at the next stock du jour in our irrepressible hope for a big score. We have too much to lose.

My second takeaway from Faber is his unrelenting admonition that investors need to buy gold. The yellow metal has only begun its surge. And once central banks crank up the dollar-printing presses, that surge can only gain speed.