Marc Faber: US 'Financial Mess' Will Force Government to Take Your Gold

According to long-time gold and market expert Marc Faber, the government will seize privately held gold. He suggests that investors choose to store their gold outside of the US like he does because he believes the US will eventually take it away if it is stored in the country.

Friday, 02 Mar 2012 07:52 AM
By Julie Crawshaw
Money News

Economist Marc Faber, publisher of the Gloom, Boom and Doom report, says the government will seize privately held gold, even as he continues to buy physical gold himself.

“I prefer to play the commodity space by owning physical gold,” Faber tells Chiefsworld. “If I were an American, I would store it outside the U.S., because in the U.S., it is not completely unlikely that they will eventually take it away.”

“Like in 1933, gold will be purchased back by the government” because eventually the financial mess will be so bad that gold prices “will go ballistic, and the government will take away something from a minority, and not many people own gold."

“When gold prices shoot up, it will be quite a popular measure to take it away from these rich people,” Faber says. “It’s happened before.”

From May 1, 1933, until 1974, U.S. citizens could no longer hold gold as a protection against paper money, which also lost its gold backing at the same time.

Foreign central banks could continue to exchange the U.S. dollars that came into their possession – known as eurodollars for decades — for gold and did so particularly when the U.S. dollar was devalued and then floated against the gold price in 1971.

Faber says he’s not in a hurry to buy gold, but accumulates gold every month because he believes the gold market is still under a correction.

Faber notes that the Chinese economy is slowing, and says it will slow further and perhaps crash at some point, which is why he is staying out of commodities other than gold.

Meanwhile, Nomura's Bob Janjuah says markets are so rigged by government policies that investing dangers lurk virtually everywhere.

"My personal recommendation is to sit in gold and non-financial high quality corporate credit and blue-chip big cap non-financial global equities," Janjuah writes at Zero Hedge.

"Bond and currency markets are now so rigged by policy makers that I have no meaningful insights to offer, other than my bubble fears."

Elsewhere, Gold traders are getting more bullish after billionaire hedge-fund manager John Paulson told investors it’s time to buy the metal as protection against inflation caused by government spending.

Twelve of 22 surveyed by Bloomberg expect prices to gain next week and five were neutral. Paulson & Co. is already the biggest investor in the SPDR Gold Trust, the largest exchange-traded product backed by bullion, with a stake valued at $2.9 billion, a Securities and Exchange Commission filing Feb. 14 showed.

Gold for April delivery, the most actively traded contract, rose $10.90, or 0.6 percent, to settle Thursday at $1,722.20 a troy ounce on the Comex division of the New York Mercantile Exchange.

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