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As you know, I am a proponent of people owning gold. I haven't talked much about gold because that's my opinion, I could be wrong, and I have n't sold my gold. But personally, I believe that gold, like silver, is in a correction phase, which may last for some time due to the slowdown in liquidity growth.
So, we may have a gold correction that will last until, say, September- October, but that's not certain. I don't sell my gold, but I look at the charts and it seems to me that the dynamics of gold in the market are not that good. At the same time, as I mentioned, I am impressed by the exceptional strength of financial stocks and the growth of the housing sector .
And I'm watching the strength of developers not only in the US, but also in emerging markets. Although gold and silver are still in a strong long-term uptrend, investors should not expect a linear price increase. Short-term declines are common after significant growth, even if the overall outlook remains favorable.
The biggest fears today, according to Swiss investor and market analyst Marc Faber, known for his unconventional views on international markets, are huge government debt, constant money printing, and rising stock prices. Faber argues that physical assets such as gold and silver continue to provide significant protection against inflation and currency depreciation, even as many investors remain focused on technology and artificial intelligence.
Furthermore, he believes that as the economy changes, market leadership may shift away from the most overheated sectors. He views any correction as a possible opportunity, not a reason to abandon precious metals, even if they go through periods of volatility. If you want more content about investing in precious metal.
After very successful years, say 2010 to 2024, I think the orthodox peak was somewhere between 2021 when meme stocks hit their peak. Mhm. And then, in January 2022, the entire S&P peaked, but not in terms of number of shares. And then we had a bear market, and then a rally again. And during this rally, most stocks didn't reach new highs, but some did and pulled the index up, and in the process, those stocks became, I think, not in your opinion and not in the opinion of some investors.
They have become incredibly overrated. Overrated. Not slightly overvalued, but overvalued, because during a bull market, investors' expectations of future profits increase; and the less visibility there is on the earnings, the higher the expectations are because you have no measurement, no real measurement.
Let's say a paper mill; we can say that the profits will be so-so in a year. Uh , because you know this business roughly, it's an existing business, or a steel mill. But with artificial intelligence, you don't know: will Google win, or Apple, or all of them together? All of them are unlikely, and the capital costs are such that, uh, the reward will be relatively small compared to the capital investment.
As you know, I am a proponent of people owning gold. I didn't talk much about gold because that's my opinion, I could be wrong, and I have n't sold my gold . But personally, I believe that gold, like silver, is in a correction phase, and this may last for some time due to reduced liquidity growth. So we may have a gold correction that lasts until, say , September-October, but maybe not.
I am not selling my gold. I'm just looking at the charts, and I have a feeling that the dynamics of gold are not the best, the market dynamics. Whereas, as I mentioned earlier, what strikes me right now is the exceptional strength of financial stocks and the growing strength of developers, and I'm seeing the strength of developers not just in the US but in emerging markets as well .
I think if you look at the 1970s, the interest rates on 10-year bonds in the early 1970s were 6%. And they rose to 15.84% in September 1981. Good. So we had a sharp increase in interest rates, but in between, uh, sometimes the 10-year note would cut interest rates by half , by 50%. Because there were rallies in the bond market.
Do you understand? When the market is growing, you have periods of correction. Like, say, in '87, looking back, it was a correction in a "bull " market. And then we had the correction of 90-91 in America. And then there was the correction in 1998. And then in 2000 the market went down until 2002-2003 .
Then there was a " bull" market until 2007-2008 and a sharp correction, and then a " bull" market until 2020, another sharp correction and up again. And the interest rates are the same. They go up, then fall, and then go up again . So they move in long cycles. My point is that the interest rate cycle peaked in '81.
Interest rates were falling until August 2020, and since August 2020 we have been in an upward cycle of inflation and interest rates. But these upward cycles can be interrupted by short-term cycles that lower inflation rates and reduce interest rates for a while. But the trend is upward. This is my opinion.
Maybe you'll say, "Mark, you're crazy." Yes, it is possible. Many people think so, but you need to have a certain perspective . And you ask me about my long-term view. I would be very careful with financial assets right now, because they are incredibly overvalued. The S&P has never had such a low dividend yield, and P/E ratios are off the charts.
Today, companies do not evaluate price- to-earnings ratios. They measure the ratio of price to sales volume. Well, up until now, the money has been going into value stocks. Value stocks outperformed the S&P, as did growth stocks and emerging markets. After all, they have also started to outperform the US market in the last 12 months.
So it's possible that money will flow into some emerging markets that have become really cheap. Let's say you're looking at Indonesia. Of course, not the whole world can invest in Indonesia, but stocks there are quite inexpensive right now . They are also inexpensive in Thailand. In my opinion, there is nothing particularly good about Thailand, but there are some aspects that justify investing in this country now.
So, I think that yes, money could flow elsewhere, such as into hard assets: gold, silver, and platinum, but I would n't bet on that right now. I think we had a significant increase in gold and silver last year and early this year, actually until the end of February. And since then we have been in a correction phase, and I think it will continue for some time.
But I am convinced that the United States— and we discussed this about 10 minutes ago —has no choice but to print money. You see, there is... The pain for the average American and for the capital market, for the stock market from tight monetary policy now would be much greater than the pain that Volcker caused the US when he raised interest rates to fight inflation; because the financial market back then was tiny compared to today.
So it affected the economy. Yes, definitely. There was a recession in 1981–82, but it wasn't as devastating as it would be today. I mean, today, a tight monetary policy by the Fed would be a complete disaster. Looking ahead, the biggest danger lies not only in a short-term market correction, but also in a change in the long-term trajectory of interest rates.
During a bond market rally, rates may fall for several months, but the overall trend may remain upward . Inflation and borrowing costs appear to be starting a new upward cycle after nearly 40 years of predominantly falling interest rates from 1981 to 2020. If this happens, many expensive financial assets could come under pressure.
Only a few large corporations have contributed significantly to the market's recent rally, and U.S. stocks remain very expensive with relatively modest dividend yields. At the same time, investors are starting to look at cheaper options such as value stocks and emerging markets such as Thailand and Indonesia.
As investors turn away from overheated U.S. growth stocks, demand for safe-haven assets such as gold, silver, platinum and other precious metals could increase. about new content. We really appreciate your support. The economy has become financialized. This is beyond any doubt. regarding failure. Of course, the markets will eventually assert themselves, and in my opinion, the US is heading towards a fiscal crisis, as budget deficits are very difficult to reduce in a democracy.
A politician who comes to people and says, “ Look, we made mistakes in the past, and so now you have to tighten your belts,” “You have to work harder, pay higher taxes, and receive fewer benefits,” is unlikely to get elected even in a million years; I guarantee you this. Politicians who come in and promise, "Oh, we'll give you this benefit and that benefit, subsidize your children, provide free healthcare, and who knows what else, " they'll get elected, and.
This is not just a situation in the US, right? We see the rise of populism all over the world, wherever elections are held. Right. This is not something unique or specific to the US or Europe. In some European countries the situation is even worse, but I have to say that in most developing economies it is not like that because we do not have social security programs, you understand.
In the US, first, the debt situation is very difficult, and interest rates on the US national debt are unlikely to decrease, as the deficit is large and increases the national debt every year. Interest rates are unlikely to fall due to inflationary pressures, regardless of whether oil prices rise or remain high.
Inflationary pressures are very real. And I expect food prices to continue to rise. So the Fed cannot significantly lower interest rates right now. I have people like John Williams at Shadow Stats who calculated the consumer price index in May at 12.5% per annum. I guarantee you that all your viewers are not living with 4% inflation per year, but with inflation somewhere between 6 and 12%, that's for sure.
Of course, a peace agreement might stop direct hostilities. This is possible, but not a fact, since an important participant is missing, namely Israel. No one knows what the Israelis will do. I can't imagine them just backing down, going home, embracing Hezbollah in Lebanon, giving up the Gaza Strip, and all that .
So hostile actions will most likely continue there. As for a peace deal with Iran, we have n't seen one yet, and there may not be any deal there other than an agreement to negotiate. So the results are uncertain. But part of the deal, apparently, is that the US or other countries will put up money. They are talking about $300 billion in Iran.
In that case, if this happens, it will not happen overnight, but over several years, which will create additional demand. And this additional demand is more inflationary than deflationary. But, as I said, the boom in capital spending and immigration restrictions in the US are also driving up the cost of labor.
Therefore, I expect the rate of price growth to continue to rise over time. And second, monetary policy is in a "straitjacket" because debt payments or interest on them are so large that it becomes the largest expense item. So if you pay interest on debt but don't increase the money supply, interest rates are bound to rise.
But you can print money, and through printing—I mean electronic printing—you can buy bonds or support the bond market to some extent. I say "to some extent", not 100%, but this is an inflationary factor. You see, it is very difficult to get out of an inflationary spiral, and that is exactly what you are in now .
Let's say I'm currently earning 4% on my deposits. I can buy bonds, some of which yield 5%, some 6%. Although in 2020 I actually received nothing from my cash. But the money I get from my cash is extra money. So it's a kind of inflation. Do you understand? Mm. Volcker defeated inflation, but in 1979 he raised the discount rate by 250 basis points in one fell swoop.
Try asking Wash if he's going to raise the rates by more than a quarter point—he'd be killed if he raised them by half a point or a whole point. Marc Faber believes that since politicians have little incentive to cut government spending, the country faces a serious inflationary and financial crisis.
In his opinion, it is difficult to reduce the deficit or debt because democratic governments often promise greater benefits and public spending to win elections. Faber argues that because many everyday expenses, including food, housing, healthcare and other necessities, continue to rise , inflation is likely to remain higher than official data shows.
He believes the Federal Reserve has very little room to lower interest rates without making things worse because inflation is still ongoing. Furthermore, Faber explains that the US faced a difficult political dilemma. Economic growth will slow if interest rates remain high, as borrowing becomes more expensive for people, companies, and the government.
However, it could lead to even more inflation if the Fed prints more money or cuts rates too sharply to stimulate the economy and bond market. This, in his view, starts a vicious circle that is becoming increasingly difficult to escape. In addition, he cites labor shortages, large-scale investment projects , government spending, and geopolitical tensions as factors that will support future price increases.
Overall, he concludes that since inflation is unlikely to disappear anytime soon, investors should remain cautious and focus on protecting their wealth in the face of rising costs and long-term financial difficulties . If you liked this video, don't forget to like it, .
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