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But if I look at Mr. Trump and his administration, and some of the idiots around him, I think gold should be worth $100,000 by now. And if interest rates rise, then government debt payments, interest payments, also rise, and in the US it is already over $1 trillion per year. This will be the largest item of government spending in the future.
The deficit is so huge that it will grow, and this will actually force more money to be printed. Dr. Mark Faber, editor and publisher of the Gloom, Boom, and Doom report, expressed an extremely bullish view on gold, noting that he estimates the metal should already be worth $100,000, given the Trump administration’s policies and the broader risks to the financial system.
His comment should be viewed as a personal opinion, not an official target. Faber's broader argument is that excessive money creation, large government deficits, negative real interest rates, and rising financial risks could make precious metals increasingly important. Faber argues that printing money does not push the prices of all assets up at the same time or by the same amount.
Instead, newly created money moves unevenly through the economy . He compares this process to money going into a house with several rooms. Capital may initially flow into speculative stocks or other popular assets before moving into commodities, food, and eventually precious metals . As a result, different sectors of the economy may experience inflation at different times .
According to Faber, certain signs of this process can already be observed in real estate markets. He points to the weakness of commercial real estate in the US and says that residential property prices have also fallen in many cities. He argues that this demonstrates an important feature of monetary expansion .
Printing money does not guarantee that every asset will continue to grow. National debt is another major part of Faber's concern. He argues that Western governments borrowed heavily to maintain living standards, public spending, and government operations. As interest rates rise, the cost of servicing this debt also increases.
Faber says the U.S. government's interest costs have already exceeded $1 trillion a year, and believes the size of the deficit makes it difficult to significantly reduce it. If you fi. Only 2.7% of our viewers are subscribed to the channel. Help us reach our goal of 1000 followers . Your support helps us continue to provide you with in-depth market analysis.
Thank you for watching. This is precisely the symptom of the end or beginning of the end of a financial or asset bubble . If you print money, it is important to understand that it does not raise the prices of everything at the same time and by the same amount. Let's say we are sitting in a house where there are different rooms, corners with furniture, and we print money in this house where several families live.
There is no guarantee that all prices will increase equally. But here's what happens: in one apartment, let's say, there's a casino, suddenly people go there, money flows into the casino, and then people buy shares of the casino companies because they benefit from the increased attendance. So it grows, and then, a little later, people get tired of losing all their money in the casino.
Then they move into agriculture. There is a shortage of food, they raise food prices, and then suddenly there is a shortage of precious metals . They don't have any precious metals because everyone was buying stocks. So, everyone buys, uh, food, and then the prices of metals go up; but not all at the same time.
And what happened recently, and this is important, I think, is that they printed a lot of money after Covid, I mean huge amounts, and increased the amount of money globally, not just in the US. And what happened to real estate prices? Well, I mean commercial real estate, and it's written about in newspapers everywhere: in America, in some cities, there are properties being sold for 10-20% of what they cost in 2018.
So, in other words, you print money, and something doesn't become more expensive. And recently, housing prices have also gone down. They are not growing, they are falling in most cities. Not everywhere, but in most cities they are decreasing. Well, a crash usually occurs when prices stop rising. The problem is , and this is very important to understand: when you print money, you can theoretically keep stock prices down because there is no other alternative.
When you actually print money , the money becomes worthless. So people invest in assets that usually increase in value due to money printing, such as gold, silver, sometimes real estate, and sometimes stocks. But printing money can only raise asset prices in nominal terms. Nominally, and then we have to measure the real value.
Real value is an inflation-adjusted figure . But the government manipulates the figures it publishes regarding inflation. The inflation I can vouch for for any of your viewers is not 3 or 4% at all. Inflation, the increase in the cost of living, ranges from 7 to 12%. depending on whether they have children, where they live, but it's not 3 or 4%.
So when the 10-year bond yield or the Fed rate is below 5%, interest rates are effectively negative, and when rates are negative in real terms, taking inflation into account , it stimulates inflation, so it accelerates. Faber also focuses on real interest rates. He argues that when interest rates remain below the actual cost of living increase, investors may lose purchasing power by owning traditional fixed-income assets.
He believes that the real increase in the cost of living is much higher than the official inflation figures indicate. In his opinion, negative real interest rates may prompt investors to seek assets such as gold, silver, stocks and real estate as potential protection against declining purchasing power.
His concerns become more serious when he discusses the stability of the financial system. Faber says banks could face significant problems if a major systemic crisis occurs. It also suggests that governments may take extraordinary measures during a crisis, including intervening in privately held assets.
These comments are hypothetical scenarios, not predictions that such actions will necessarily occur. Faber also warns that geopolitical risks should not be ignored. He says investors are overconfident about the possibility of a major war, although he doesn't predict it will necessarily happen. For him, the combination of financial instability, high debt, monetary expansion, and geopolitical uncertainty makes it especially difficult to predict which assets or markets will perform best.
Let's get back to the interview. Governments in Western democracies borrowed money to maintain the living standards of people, government officials, etc., and to continue corruption schemes. Therefore, the public debt as a percentage of the economy is now very significant, and this debt bears interest rates.
Good. And if interest rates rise, government debt payments, interest payments, also rise. And this is all in the USA, already over 1 trillion dollars a year. This will be the government's largest expenditure item in the future. So the deficit cannot be reduced. in fact, the deficit is so large that it will grow and force more money to be printed.
Banks are n't that safe either. I own shares in banks and so on, some of which are cheap relative to the rest of the market. But as a depositor, if the system breaks down, the banks will disappear too. So the only thing you can probably keep is your gold. But then the government can come and say that because of the state of emergency, you have to return the money, the gold to the state , as well as your bitcoins and everything else.
You understand that the system is on very thin ice right now, and the ice is melting , and soon the people skating will fall into the pond because the ice is too thin and there are too many speculators. In my opinion, an investor, not knowing how crazy the world is going to get in the next few years...I mean, people are incredibly carefree about the possibility of a major war.
I think we are very close to that. I'm not predicting that this will happen, but it's possible. And all of these things combined make me believe that the best thing to do is to be diversified. Have some cash and bonds, own stocks, precious metals, and real estate. Then we have to decide where, and ideally diversify some in Latin America and some in the US.
I don't have any assets in the US, but I do have some in Europe, Asia, etc. For this reason, Faber's investment approach focuses on diversification. Instead of relying solely on gold, he recommends holding a mix of cash, bonds, stocks, precious metals and real estate. He also favors geographic diversification, mentioning regions such as the United States, Europe, Asia, and Latin America.
Faber's overall message is not that investors can confidently predict the next crisis. Instead, he believes that the financial system faces extremely high risks and investors should prepare for a variety of possible outcomes. His optimistic view on gold reflects these concerns. But his emphasis on diversification suggests that wealth protection requires more than just betting on a single asset.
Could persistent debt, inflation, and geopolitical uncertainty make diversification increasingly important for investors seeking to protect their capital? Stay tuned for more market analysis and financial insights. If you enjoyed this video, . Only 2.7% of our viewers are subscribed. Help us reach 1000 followers. Thank you for your support, see you in the next video.
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