Marc Faber says gold should be 25% of portfolios to shield you from central banks

How much of your investment portfolio is in gold? Five percent? Ten percent? One contrarian investor believes that the yellow metal should control one-quarter of your portfolio.

Speaking at a recent conference in Chicago, Marc Faber, the editor of the Gloom, Boom & Doom Report, encouraged investment professionals to have 25 percent of their portfolio in gold.

Faber defended this strategy by averring that bullion shields you from “a dangerous combination” of global government debt and bond-buying initiatives from central banks all over the world. He noted that investing in gold prevents you from being a victim of the central banks’ subzero interest rate policies.

He further explained that rates are so minuscule that investors can’t make any significant returns from bonds. Therefore, they head into the stock market, even when stock prices are highly inflated. Central banks, Faber said, had raised stock prices in order to present the illusion of wealth, which would then lead to more people spending their money.

The end result? Income inequality and investor resentment.

“Young adults will earn less than their parents and die with less than their parents. Young people don’t have money to buy condos and houses,” Faber said.

This environment, he added, is allowing millennials to overpay on rent with nothing left to save or invest. And this is the fault of the central banks, Faber stated.

“It’s ludicrous to think that slashing rates will get people to spend,” he noted.

By the end of Tuesday’s trading session, gold was up $0.58, or 0.04 percent, to $1,319.88 per ounce. Silver remained unchanged at $19.62 an ounce.

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