Prepare for the Worst

Saturday, August 6, 2011
By Paul Martin

Ultra Bearish Marc Faber Says Current Gold Price ‘Low’, Investors Must Prepare for the Worst as ‘It Will Come to War’

Business Intelligence Middle East

Marc Faber the Swiss fund manager and Gloom Boom & Doom editor said markets are “extremely oversold” and a “snap-back” rally – 50 points on the S&P – could start as early as today.

However, he sees no new highs for the year, and expects markets to drift lower to a mid-term target of 1,050-1,100 for the S&P by October-November of this year.

In one of his gloomiest predictions, he tells investors to prepare for the worst by buying precious metals on dips.

Markets oversold

Speaking in a phone interview from Zurich with CNBC this morning, Faber said: “The market has experienced huge technical damage. Near term as of today, all markets are extremely oversold, so a rebound will happen.

“The damage technically is so great that the rebound, no matter if QE3 happens right here, is unlikely to lift the markets above the May 2 high on the S&P at 1,370,” he added.

Faber has set a mid-term target of 1,050-1,100 on the S&P 500 by October-November of this year. After, “we will have to see if QE3-QE4 will come and whether markets will stabilize.”

In general, the renowned investor said he would use rebounds as selling opportunities.

The S&P 500 Index slumped 60.27 points, or 4.8% yesterday, to 1,200.07. The percentage drop was the biggest retreat since February 2009, as concerns the global economy is weakening prompted a global rout.

An index of global stocks entered a so-called correction yesterday, falling more than 10% from this year’s high. The seven-day sell-off has wiped out more than US$4.4 trillion from market values worldwide, according to Bloomberg News.

“The world has gone mad,” Faber told Susan Li and John Dawson on Bloomberg Television’s “On the Move Asia,” earlier this morning.

“Investors don’t understand that markets are volatile and that they have to be prepared to see stocks drop 30% annually and then rallying 20% and then dropping again. That’s going to be the pattern, and anyone who cannot live with that shouldn’t be buying anything”.

The Rest…HERE

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