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My view is the world is grossly grossly underweight precious metals and by the time this bull market in precious metals or I say the bare market in paper money value and I think the paper money will go down to zero value by the time it's over. the world will own gold to a heavier amount. I've seen in the 70s, I remember the typical portfolio allocation was to have 10% of a client's money in gold.
That hasn't happened yet. Over the 25 years from 2000 to 2025, gold has demonstrated remarkable resilience and consistency as an asset class. In fact, there have been only two major years of negative returns, underscoring its strength as a long-term store of value and hedge against economic uncertainty.
Veteran economist and fund manager Mark Faber predicts that as paper money continues to lose value, more capital will flow into gold with the world currently heavily underweight in precious metals. Reflecting on the 1970s, Faber recalls a time when a 10% gold allocation was common in investment portfolios, something he believes hasn't yet returned, but will happen again before this cycle ends.
Similarly, the 1970s stagflation era saw gold rise 2,300% during a decade of negative real rates and economic malaise. This pattern has continued into recent history with gold performing exceptionally well during periods of monetary expansion and fiscal stress. In his analysis, Faber points out a striking global trend.
Despite gold's proven resilience, very few individuals or institutions hold a meaningful allocation. Faber estimates most individuals hold under 1% of their wealth in gold, while institutions and sovereign funds allocate just 1 to 2%. Gold reserves remain a cornerstone of national financial strategies with central banks collectively holding approximately 20% of all gold ever mined.
These reserves serve as a critical buffer against economic instability, currency volatility, and geopolitical risks while preserving liquidity and long-term value. With over 40 years of conviction, Faber remains a steadfast gold holder, valuing its enduring stability. He explains that gold's rise reflects the fall of paper currencies, not its own surge.
Japan provides a contemporary example, having implemented yield curve control in 2016 to target 10-year government bond yields at 0%. Since then, the Japanese yen has declined 35% against major currencies, while gold has surged 180% in yen terms, illustrating precious metals effectiveness during periods of yield suppression.
Before diving into Mark Faber's sharp insights from his latest interview, hit that subscribe button and tap the bell icon so you never miss a moment when truth meets the markets. I'm a a very consistent person and I've been consistently holding gold and uh I like it uh for the last 40 years or so. But um obviously as the price of gold is stable and the paper money depreciates in other words optically it looks as if gold would go up but in reality is the paper money that goes down.
Uh my view is that near term it is at a relatively high level. You understand? Say oil would be much cheaper than gold at the present time or food. I mean wheat, corn, soybeans would be very cheap compared to gold. But uh it's difficult for for ordinary people to store say a ton of oil is easier to store a ton of coal.
It's only about the size of a cube. But I don't think the price is particularly cheap. Having said that, when you go to a party, say anywhere in the world and you ask people, well, what do you do with your money and so forth? And then you ask them, do you also own any gold? And then of course the wife says, yes, you have gold.
And so, but when you dig that down into how much they own, I tell you, most people don't even own 1% of their wealths in gold. not even 1%. And financial institutions, the mutual fund industry and the fund managers of sovereign funds and so forth if they have one or two% that would be the maximum. So my view is the world is grossly grossly underweight precious metals and by the time this bull market in precious metals or I say the bare market in paper money value and I think the paper money will go down to zero value by the time it's over.
the world will own gold to a heavier amount. I've seen in the 70s, I remember the typical portfolio allocation was to have 10% of a client's money in gold. That hasn't happened yet. In a candid assessment, Mark Faber criticizes the current US administration for its interventionist policies and economic miscalculations.
With $9 trillion in US debt maturing this year, Faber warns refinancing will likely come at higher interest rates, increasing pressure on the Treasury. President Trump's tariff plan is projected to raise significant revenue over $5.2 trillion over 10 years on a strict conventional basis and $4.2 trillion on a partially dynamic basis commonly used with tariffs.
This revenue could be used to reduce federal debt, thereby encouraging private investment. Confidence in the US economy is plummeting as investors dump government debt amid growing concerns over the impact of Donald Trump's tariffs. Governments sell bonds, essentially an IOU, to raise money from financial markets for public spending, and in return, they pay interest.
Concurrently, Faber believes this will lead to inevitable money printing. Ultimately, Faber sees continued weakness in the dollar and strength in precious metals as the central theme going forward. Let's get back to the interview. Well, my take on it is that uh the current administration in the US is an inter interventionist administration including the Treasury Secretary and uh but they don't know exactly what the consequences of their actions are and I think they frequently misread uh what the consequences are will be.
So as an example, the view may have been yes, we impose these tariffs. Uh but the stock market isn't going to go down as an example, but certainly the stock market went down a lot or they may have introduced the tariffs and they they expected bonds to actually rally and not to go down, but no, the bond market went down.
So you understand in economics it's easy to take uh to intervene into the free market but you never know precisely what will happen and quite frankly I think this administration was very surprised that the stock market went down since essentially since the time Trump was elected and the Treasury Secretary he was very surprised that bonds didn't rally but went down because the the objective of the Treasury is actually to refinance the debt.
They have about $9 trillion coming due this year. So they'd like to refinance it at lower interest rates, but likely what will happen is that they will have to pay higher interest rates than they projected. So it's a mess and it also shows that Trump basically has no backbone basely. So he immediately resins the measures he took.
uh it's for foreigners or for international investor it's not exactly a sign of a strong administration. It's a sign of weakness. Actually my view would be that the market is going to defy Mr. Trump very badly. And what happens when the United States has to roll over $9 trillion into a 10 year you into a 10-year yield effectively priced at over 4%.
Well, the idea was that the expense, the interest expense on the government debt uh would come down. But I think that is out and uh the refinancing will be the cost will be very high and it will necessitate the central bank actually to print money and therefore we have this uh dollar weakness at the present time and we have strength in precious metals.
I mean that is the most obvious that the dollar will continue to lose value against precious metals. Right. So you but but to answer your question precisely the problem with government interventions is that it makes the forecasting even more difficult. Even in a free market, forecasting the future is next to impossible.
But when you have the government interventions and especially by people who have basically no economic knowledge, you understand these clowns in government. They're not businessmen per se and so forth that have dealt with multinational corporations and in currencies and in in international affairs. They are ignorant people to a large extent including Mr.
Trump. He's not an academic. He's he's not a great thinker. Actually for me as an outside observer it's almost laughable that someone like Mr. Trump and I would have voted for him. You don't misunderstand me. I think it's the better option but it's still distressing that someone like him leads still the most powerful country in the world.
Recently, gold constitutes 10 to 20% of total reserves in major economies such as Germany and France, highlighting its diversification benefits. During heightened geopolitical tension, gold reserves provide sovereign states with a financial backs stop outside the traditional banking system, forecasting future prices of gold for the next 10 years is expected to indicate an increase in value potentially resulting in profits.
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