Buying Gold Is Best Bet in Worst-Case Scenario, Faber Says

Everyone should keep gold in their portfolios as the precious metal will be able to offer value to investors even in a worst-case scenario, said Marc Faber, the publisher of the Gloom, Boom & Doom report.

“In the worst case scenario, in the systemic failure that I expect, it would still have some value,” Faber, who is also the founder and managing director of Marc Faber Ltd., said today at an event hosted by Evli Bank Oyj in Helsinki.

When “the system goes down,” and only plastic credit cards are left, “maybe then people will realize and go back to some gold-based system or such,” he said.

Faber said his outlook was so bleak that he is “hyper bearish. Sometimes I’m so concerned about the world I want to jump out of the window.”

In response to a question from Yale University’s Robert Shiller querying the recommendation to hold gold, Faber said: “I’m prepared to make a bet, you keep your U.S. dollars and I’ll keep my gold, we’ll see which one goes to zero first.”

Shiller, who is the co-creator of the S&P/Case-Shiller index of property values, also attended today’s event in the Finnish capital.

“I’m inclined to think gold prices after this crisis might return to a lower level,” he replied to Faber, saying the U.S. stock market currently offers a good investment case.

“Given the low yields of the alternatives, the valuation doesn’t look so bad,” Shiller said. “These are times when a reasonably normal application to the stock market is probably called for.”

Faber said his portfolio consists of 25 percent stocks, 25 percent company bonds from emerging economies, 25 percent gold and 25 percent real estate.

“I’ve taken an all-weather portfolio,” he said.

(Updates with Shiller gold comments from seventh paragraph, Faber’s portfolio from ninth.)
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