Faber: Sell Your Stocks, Gradually Build Up Gold
Since gold's peak back in the fall of 2011, investors have been trying to let us know what the yellow metal is going to do next.
Some forecast a plummet in price immediately, others played it safe.
But since that time one investor has had the same mentality throughout, Marc Faber.
The publisher of the Gloom, Boom and Doom report says that investors should be selling stocks and gradually stocking up on gold.
As he's said all along: in the long term, you can't go wrong with gold. Stocks will be on the decline while gold rises down the road.
But as for now, everyone does not need to panic or rush to the precious metal immediately.
He believes gold will see some corrections and stocks will even have some nice buying opportunities in the near future.
But like most commodities, you play the long ball instead of the short game. Buying gold for your portfolio is (and should always be) a long term venture.
Stocks have posted a “huge bull run” since 2009, the famed investor says. “I think the [stock] market is very overbought.”
In Faber's most recent newsletter he wrote, “Where investors were overly negative last year, they are now overly optimistic about the prospects for the U.S. economy.”
Since the record high in gold price hit in August at 1,889.70, prices have slowly dipped, especially over the past few months. Investors looking to cash in on the gold market could jump in now and wait out the prices. Faber points out that gold is not in a bear market but rather, is “still in a correction phase.”
“Individual investors should gradually accumulate gold,” Faber explains to Yahoo! Finance. “Hold some cash, hold some precious metals, hold some equities, and hold some real estate. If one asset class or the other declines substantially move money into that asset class.”
It sounds much easier said than done. But with the recent spike in gold prices coming off of the U.S. government's poor March jobs report, the correction phase looks to be the time to get on board.
The March jobs report revealed the economy only added 120,000 jobs, a figure much below expectations. With concerns that the Fed will intervene with quantitative easing, global markets were scared into a frenzy.
Many felt – and still feel – that if the Fed moves forward with quantitative easing that the gold prices will most definitely rise against the dropping price of the dollar. We have seen it before and it looks to happen again.
Even the big investment banks are still riding the precious metal train amid all of this uncertainty. In one Goldman Sachs' analyst's research note to Reuters, they explained, “We still prefer gold despite an extended period of profit taking in 4Q11 and renewed volatility in 1Q12.”
Don't let the price correction of gold impact your long term outlook on your investments. Follow Faber and Goldmans' lead and gradually add to your gold portfolio.