Best of the Week
Most Popular
1.Gold Price Trend Forecast, Where are the Gold Traders? - Bob_Loukas
2.Stocks Bear Market of 2017 Begins? Shorting the Dow At its Peak! - Nadeem_Walayat
3.Betting on President Trump Leaving Office Early, Presidency End Date - Betfair Market - Nadeem_Walayat
4.Why Stock Market Analysts Will be Wrong About 2017 - Clif_Droke
5.Is This The Best Way For Investors To Play The Electric Car Boom - OilPrice_Com
6.Silver Price 2017 Trend Forecast Update - Video - Nadeem_Walayat
7.Gold Price Set For Very Bullish 2017, Trend Forecast - Austin_Galt
8.10 Things I learned From Meetings With Trump’s Transition Team - - John_Mauldin
9.How Investors Can Profit From Trumps Military Ambitions - OilPrice_Com
10.Channel 4 War on 'Fake News', Forgets Own Alt Reality Propaganda Broadcasting - Nadeem_Walayat
Last 7 days
Brent Crude Oil Price Technical Update: Low Volatility Leads to High Volatility - 20th Feb 17
Trump’s Tax System Could Spark The Wave Of Self-Employment - 20th Feb 17
Here’s How to Stay Ahead of Machines and AI - 20th Feb 17
Warning Signs Of Instability In Russia - 20th Feb 17
Warning: This Energy Investment Could Wreak Havoc On Your Portfolio - 20th Feb 17
The Mother of All Financial Bubbles will be Unimaginably Destructive when it Bursts - 19th Feb 17
Gold’s Fundamentals Strengthen - 18th Feb 17
The Flynn Fiascom, the Trump Revolution Ends in a Whimper - 18th Feb 17
Not Nearly Enough Economic Growth To Keep Growing - 18th Feb 17
SPX Stocks Bull Market Continues to make New Highs - 18th Feb 17
China Disaster to Trigger Gold Run, Trump to Appoint 5 of 7 Fed Governors - 18th Feb 17
Gold Stock Volume Divergence - 17th Feb 17
Gold, Silver, US Dollar Cycles - 17th Feb 17
Inflation Spikes in 2017, Supporting Gold Prices Despite Increased Odds of March Rate Hike - 17th Feb 17
Roses Are Red... and So's Been EURUSD's Trend - 17th Feb 17
Gold Trade Note Sighted - 17th Feb 17
Gold Is Undervalued Say Leading Fund Managers - 17th Feb 17
NSA, CIA, FBI, Media Establishment 'Deep State' War Against Emerging 'Trump State' - 16th Feb 17
Silver, Gold Stocks and Remembering the Genius of Hunter S. Thompson - 16th Feb 17
Maps That Show The US’ Strategy In Asia-Pacific - 15th Feb 17
The Trump Stock Market Rally Is Just Getting Started! - 15th Feb 17
Tesco Crisis - Fake Prices, Brexit Inflation Tsunami to Send Food Prices Soaring 10% 2017 - 15th Feb 17
Stock Market Indexes Appear Ready to Roll Over - 15th Feb 17
Gold Bull Market? Or was 2016 Just a Gold Bug Mirage? - 15th Feb 17
Here’s How Germany Buys Time From China - 15th Feb 17
The Stock Trader’s Actionable Guide to Trump - 15th Feb 17
Trump A New Jacksonian Era? The Fourth Turning (2) - 14th Feb 17
Stock Market Yet Another Wall Street 'Witch's Brew' - 14th Feb 17
This Is Why You Don’t Own A Lot Of Stocks - 14th Feb 17
Proposed Tax Reforms Face Enormous Headwinds - 14th Feb 17
BBC Inside Out Tesco Rip off Offers - Determined to Lose Big Spend Customers! - 13th Feb 17
Is the UK An Economy Built on Debt? - 13th Feb 17
Stock Market VIX Cycles set to Explode in March/April 2017 – Part 2 - 13th Feb 17
Stocks At Record Highs - Will Uptrend Accelerate? - 13th Feb 17
US Dollar: 'Rumors of My Death are Greatly Exaggerated' - 13th Feb 17
Is This The Top Commodity Play For 2017? - 13th Feb 17
Trump a New Jacksonian Era? - 13th Feb 17
Stock Market at High Tide - 13th Feb 17
Channel 4 War on 'Fake News' Ends - The New News Age - 12th Feb 17

Market Oracle FREE Newsletter

State of Global Markets 2017 - Report

The Roubini - Faber Gold Debate

Commodities / Gold and Silver 2013 Jun 05, 2013 - 04:30 PM GMT

By: BATR

Commodities

Two of the most provocative and incendiary economic prophets are Nouriel Roubini and Marc Faber. As with most oracles, the denominational sect of doctrines often determines the forecasts. This especially applies to economic prognosticators. Roubini has evolved into an establishment darling working with central bank governors and finance ministers. Faber remains a contrarian investor earning his designation as the genuine "Doctor Doom". Who is right, depends on the immediate and final outcomes of the international financial troubles. Money markets volatility and fiscal debt obligations are integral components of commercial transactions and political economic policy.

The barometric gauge of financial health and stability has invariably been the price of gold. Often overlooked is that the price is reflected by the exchangeability into different currencies. Therefore, any valid assessment of the true value of gold must factor in the real purchasing power within the coinage of local tender.

The Business Insider provides a summary of Nouriel Roubini: Why Gold Will Plunge To $1,000.

Gold spikes during extreme crises. The crises are over.

Gold does well during periods when there's a risk of high inflation. That clearly is no longer a big worry, given how much central banks have unsuccessfully tried to stoke even modest inflation.

Now with the economy recovering, nobody wants to be in rocks that don't pay any dividends.

Real interest rates are rising. That kills gold.

Governments with debt issues are selling gold.

Gold was juiced by right-wing fanatics in the US. That boom is over.

Contrast this viewpoint with the Zero Hedge article, Marc Faber: "People With Financial Assets Are All Doomed"

"Faber explains, among other things, the fallacy of the Fed's help "the problem is the money doesn't flow into the system evenly, how with money-printing "the majority loses, and the minority wins," and how, thanks to the further misallocation of capital, "people with assets are all doomed, because prices are grossly inflated globally for stocks and bonds." Faber says he buys gold every month, adding that "I want to have some assets that aren't in the banking system. When the asset bubble bursts, financial assets will be particularly vulnerable."

The preliminary appraisal of what seemingly are contradictory positions is that both are correct, depending on the current location of the time continuum for world financial markets. The overriding ability of central banksters to paper over catastrophic crises and deflationary dislocations, seem to be unlimited. Coordinated rescue plans are frequently disguised by currency fluctuations and equity swings, but the real measure of maintaining financial solvency requires that bond rollovers and new floats be sold in the marketplace. With the immergence of the Federal Reserve purchase of government debt, as an essential resort to keep the funding game going, the era of rapid devaluation, has begun.

Does this necessity sound like an environment where the "crises are over"? As for the "risk of high inflation no longer a big worry", depends greatly on the credibility level of government reporting statistics. Just maybe Roubini’s incorporation into the Davos jet set means that his distance from middle class experiences reflect his newly found associations. Where is this vaulted economic recovery and a proliferation in the consumer spending? Dividends seldom trickle down to the vast numbers who abandoned Wall Street investments. If real interest rates were truly rising, when will the saver see a better return on their money? Roubini fails to mention that China and India have been buying gold, but in a recent article about Russia – we find out that the biggest country in the World might as well be the biggest buyer of gold. Finally, gold was juiced by right-wing fanatics in the US! Hence, we are supposed to believe that the globalists’ paper debt created system is rational and that Austrian School economics are extremists. So much for the wisdom of Roubini and the reason, the old Dr. Doom finds the moniker wearisome and says it no longer accurately reflects his opinions.
Coherent and objective analysis from The Economic Collapse argues in the Top 1% Own 39% Of All Global Wealth:

"So exactly how have the global elite accumulated so much wealth? Well, one of the primary ways is through the use of debt. There is about 190 trillion dollars of debt in the world but global GDP is only about 70 trillion dollars. Our debt-based global financial system systematically transfers wealth from us and our governments into the hands of the global elite. And of course the gigantic banks and corporations that the elite control are constantly gobbling up everything of value that they can find: natural resources, profitable small businesses, real estate, politicians, etc. Money, power, ownership and control are becoming very, very tightly concentrated at the top of the food chain, and that is a very dangerous thing for humanity."

No honest person can dispute Faber’s claim - "the majority loses, and the minority wins". What is still debatable is the timing of the looming break down of the fiat financial structure. The prospects for the inevitable, seems prudent, "When the asset bubble bursts, financial assets will be particularly vulnerable." How long can 190 trillion dollars of debt be serviced, when it is impossible to grow the world economy out of a mathematical impossibility?

The overriding issue in not about the current convertibility of gold into whatever paper species is still solvent. The conclusive finality is that a newly issued medium of exchange will be imposed under a terminable collapse of the world economy. All signs point that gold will be part of a desperate attempt by central banks to launch a world currency. The ultimate risk that outlaws gold, as once was the case in the U.S., for private ownership, is the gravest danger.

The Roubini model excludes the financial doom that Faber believes to be unavoidable. As long as it lasts, careerist economists will enjoy the payoffs from the paper-banking establishment. Yet in the end, the authentic "Doctor Doom" will prevail.

James Hall – June 5, 2013

Source : http://www.batr.org/negotium/060513.html

Discuss or comment about this essay on the BATR Forum

http://www.batr.org

"Many seek to become a Syndicated Columnist, while the few strive to be a Vindicated Publisher"

© 2013 Copyright BATR - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors

BATR Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife