Marc Faber indicates stocks are in bubble territory, urges play for gold

Marc Faber, the editor of the Gloom Boom & Doom Report, spoke to CNBC on Friday and warned that the stock market is currently in a bubble and pointed to several figures to make his case: last week, there were 400 new 12-month lows on the New York Stock Exchange.

“That is remarkable,” said Faber, who has been quite bearish on the United States even prior to the economic collapse. “That shows that the internal picture of the market is very different than what the indices show. The indices Nasdaq, S&P, Dow are driven by just a few stocks that are very strong. They are in bubble territory.”

Faber indicated that there have been weaknesses in several sectors, including airlines, home builders, food companies and retailers – Faber noted that he recently bought stocks in Newport Mining, Freeport-McMoRan and Barrick. He believes these types of conditions would be a perfect opportunity to acquire precious metals.

“First of all, I have a preference for physical gold, held in a safe deposit box outside the United States, and preferably in Asia, for a variety of reasons,” he said. “About 10 days ago, all shares became incredibly cheap in terms of their valuation compared to the gold price, and, as you say, some experts don’t like gold.”

Despite the corrections in the gold market, Faber later took a jab at those who didn’t take advantage of the enormous gold bull run from 1999 to this year, in which it jumped from $251 per ounce to around $1,900. He added that he doesn’t listen to the supposed financial experts.

“But I know other experts who are actually very positive about gold and own it for other reasons than just the price going up,” the finance guru stated. “They want to have some cash in an asset that is not a financial asset.”

Faber’s comments come as the World Gold Council (WGC) recently published a report that found physical gold demand increased 53 percent in the second quarter of this year with India, China and central banks being the largest buyers of the yellow metal.

In the Monday morning trading session, gold is down $1.70 at $1,369 (at the time of this writing).

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