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u.s trade war that seems to be developing what is your perspective do you think it can get worse from here in a real trade war actually will develop well i doubt that will get as far as a real trade war because i believe that the u.s will realize that actually it has more to lose than china for china the exports to the u.s are meaningful but they're not as important as they would have been 40 years ago when i went to hong kong in 1973 until the end of the 1980s the saying was if america sneezes asia catches a cold because up to 70 percent of asian exports went to the us directly or indirectly but this is no longer the case nowadays in asia the largest trading partners are actually asian countries all asian countries export more to china than to the us with the exception of india and globally china exports more to commodity producers and to countries that have a free trade agreement with china then to the us so the u.s is still an important trading partner but it's no longer the most important trading partner hey dr faber um i just wanted to ask you your thoughts i know this is more of a short-term question there's a lot of people out there who are us dollar bullish at least in the short to medium term i think there's going to be a rebound i know last year it devalued 10 percent versus other large trading fiat currencies do you see any any type of rebound on the xy and if so why potentially well there has been a big long position in euros and the short position in u.s dollars in recent weeks and obviously just the talk about the trade war leads to essentially the dollar strengthening but i don't think these strengths will last very long because when you think about it the u.s under mr trump would actually like to make america great again in other words he wants to make america more competitive trump is complaining about the weakness of other currencies in the world in other words that in his view the dollar is too strong compared to other currencies in the world i'm not sure he can think that far but anyway that is the implication so the last thing the u.s administration wants today is to have a strong dollar because that makes the u.s even less competitive so i think that the dollar may strengthen maybe for another month or two and then eventually weaken again as it becomes obvious that the other countries with or without tariffs or a trade war remain very competitive now as for the stock market do you believe that asian stocks or specifically chinese stocks are you more bullish on them than the u.s stocks yes in the very long run but i think if we i believe we've seen a high for the u.s stock market and global markets essentially on january 26 2018 with the smp at 2872 we're now approximately 200 points lower than we were at the time now the market is unlikely to crash in my opinion but what could easily happen is that market decline as we had between 1969 and 1982.
we didn't collapse in those days although we had a major bear market between january 1973 and december 74 almost two years but we didn't have really a crash it was just sliding a slope of hope where markets would go down and then rebound and they would go down lower than a rebound and go down even more and so i think that may be a scenario that may unfold and that's a father i'm looking at a chart that has the dow gold ratio for uh you know 100 years and i'm looking at that time point that you discussed from 69 to 1982 roughly it looks like you know the dow gold ratio back then it reached at a point about 1.4 or so at the peak in january of 1980.
now the dow obviously is not the greatest measure of the stock market because it's 30 rotating companies that get changed out all the time depending on how well they're doing i think ge is the only one that's still around from the original conception of the right it's barely around right it's been a terrible stock that's true um but you know i'm just looking even s p 500 gold ratio you know right now we're around just two or so roughly s p versus gold but in 1980 it hit 0.2 so if we went back to a situation where it was like 1980 that's a 10 multiplier of gold versus you know s p 500 do you foresee that happening let's say in the 2020s possibly is that potential something that could that could be the peak of this well i could easily foresee that that happening again in the sense that the s and b would grossly underperform gold in the years to come that wouldn't surprise me at all and but the point is it may not happen right away i think it may happen in future but it may take maybe a few years until we're there because the belief right now among investors is very strongly geared towards equities globally and especially towards among young investors it's skilled to its cryptocurrency so at the moment gold and silver are not particularly popular among young investors but i think this will change especially when a major fraud will be revealed in the crypto space that people will lose faith in cryptos as a store of value and that they will again buy gold i mean my advice is i don't know when gold will go up i suppose it will go up relative to other assets now there's one point i need to clarify here everybody thinks that asset inflation as we had a century since 1981 for bonds bonds rallied since 1981 september 81 and equities august 82 equities rallied over the last 34 years real estate prices went up arts prices went up collectibles went up and so so people and investors are conditioned that this will continue they may have some arguments about which assets will perform the best but i think that this asset inflation will continue but i'd like to introduce an element where maybe all assets will go down and gold would go down far less than other assets or maybe even increase in value that is a possibility extremely deflationary scenario i'm talking here not necessarily about the huge price deflation but i'm talking here about a huge asset inflation where asset price is really tank that is a possibility because don't forget that this is a subject that is not discussed all that much which is normal towards the end of the world market the subject of debt has taken a back step in other words yeah people mentioned the government said but then they argue well it's so large already and so far it hasn't caused that it happened you can expand much further and the feds can expand its balance sheet much further and so these things is what people believe but may in fact uh not help asset crisis in fact they may depress enterprises can you expand on why you see cryptocurrencies falling in the future and people moving out of that space well i didn't say they will fall my sense is that i as a citizen have no idea what these cryptocurrencies should be worth i have really no idea it's a little bit like you and i we would print a new currency or a new banknote say a 500 banknote or one million dollar and we would restrict the number of bills that we would print to say a million or 10 million or 20 million whatever and our neighbor seeing that we were able to sell these freshly printed banknotes he says that's a great idea i start my own printing machine he prints also something like new paper currency and so on and so on so forth and the crypto craze has created now uh more than 1500 different cryptocurrencies and whether they will all be worse anything that is a big question i have my reservations about that now can the one or the other have some value yeah maybe but i don't know what the value will be and if i have no idea what the value will be i'm not terribly interested to invest a large amount of money in this concept yeah i'm not sure if you're familiar with the dr faber i think there was an academic study about mount cox and uh the price of bitcoin going from 150 to a thousand dollars and it's you can google it i think it's called um price uh manipulation in the bitcoin ecosystem and it's a long academic study about the data um and no one was you know except for the people who ran mount cox no one got indicted for this so my hunch is that bitcoin traders were just simply emboldened and if you look at the concentration of who owns bitcoins it's only a thousand or so it won't about 40 of the bitcoin in the world so for them to clue together and ramp the price up and down and make money in futures now on on the comics is it's possible to make money both ways so i'm sure that i can envision yeah i don't know how much it will be worse right and what i ca what i have observed however and that should be her warning signal uh i have a house here in the north of thailand specifically in chiang mai and chiang mai is a city that consists mostly of people who have no share ownership they never owned a single bond they never trade foreign exchange and there's just a few maybe you know like a handful of people that i would know that occasionally trade stocks but the bulk of people don't have any interest in stocks they have no money to buy stocks answers and so on they if they have a money they will buy a house but all these people over the last say one year uh people who never speculated they are now all involved in cryptocurrency and this is not just happening here in chiang mai i get emails from people in estonia i get emails from people in hungary and the voice in korea in china everywhere in japan they all gamble on these cryptos and whenever the public is so fully involved in one object of speculation it's always a warning signal but anyway the future will tell i don't want to say anything negative about cryptos i don't want to say anything positive i think the blockchain technology is here to stay but it's not new this was developed before and i have no idea about the end value of cryptos i suppose that 90 to 98 of cryptos uh currency will be worthless but maybe the one or the other will have some value now moving on here you said you're um if i heard you're right you're bullish on gold and you think that people will move into gold and silver what is your perspective on which is better gold or silver well right now from my technical indicators i watch i think silver has probably the greater upside potential but i'd like to qualify my bullishness by saying i have been buying gold since the late 1980s most of the gold i bought was around 300 an ounce and i continued to buy during the bull market between 1999 and 2011 and i continued to buy i've never sold an ounce of gold for me the price where it's here or goes lower or higher doesn't change my lifestyle but i want to have some reserves that are not held in paper form and i hold some gold in switzerland and some here in asia hey dr father just to drill down on that for a minute is there a specific type of gold bullion that you prefer i assume you'll go bullying outright yeah i own physical gold yes and some physical but it's in coin form like krugerrand or there are some coins issued by creditors or so so these are type of uh essentially pure gold investment investments great thank you i also got some gold shares oh yeah yes but not much right just for a little bit we'll have a huge move but it hasn't happened yet i think they are again in a range from which they could have say a 30 upside move all right well mark
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