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Faber: Possible Wealth Destruction Ahead

Release Date: 
Tuesday, April 3, 2012

Gold moved higher today, trading at $1680.50 per ounce at 6:26 a.m. Pacific Time on the New York Spot Market with silver at $33.08 per ounce.

"We adhere to our medium-term bullish stance," Societe Generale analyst Robin Bhar said in a research note. "The markets remain concerned about the possibility of further quantitative easing/liquidity increases in Europe and the U.S., allied to negative real interest rates worldwide," he added.

Deutsche Bank analyst Daniel Brebner said he was bullish on gold in the long term and predicted an average price of $1,800 per ounce in 2012.

Marc Faber, editor and publisher of the "Gloom, Boom & Doom Report" anticipates the world could face "massive wealth destruction" caused by inflation or social unrest. "Well to-do people will lose up to 50% of their total wealth," he said.

"Somewhere down the line we will have a massive wealth destruction that usually happens either through very high inflation or through social unrest or through war or credit market collapse," he said. "Maybe all of it will happen, but at different times." Faber notes that uncontrolled levels of government debt will fuel the inflation and wealth destruction.

In the near term, Faber sees excessive central bank liquidity pumping up asset prices. He remains a long-term bull on gold. "I think that people should own some gold and I think that people should own some equities, because before the collapse will happen, with Mr. Bernanke at the Fed, they're going to print money and print and print and print," he said. "So what you can get is a bad economy with rising equity prices."

(Source: "PRECIOUS-Gold holds near $1,675/oz ahead of Fed minutes," Reuters, April 3, 2012; "Gold turns higher; copper adds to gains," MarketWatch, April 3, 2012; "'Massive Wealth Destruction' Is About to Hit Investors: Faber," CNBC, April 2, 2012; "Further Fed Easing to Boost Gold: Societe Generale," CNBC, April 2, 2012)

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