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Marc Faber: Gold Is Not in a Bubble

Marc Faber has been extremely bullish about gold. Gold prices climbed above $1,900 an ounce today. But Marc Faber, publisher of the Gloom, Boom and Doom report, does not think that gold is in a bubble because of the continuing easy monetary policies of the central banks. “When you buy gold, it’s an insurance against systematic failure and problems in the financial markets”, Marc Faber said in a phone interview with Bloomberg yesterday.

Marc Faber Consistently Bullish on Gold

Marc Faber expressed similar opinions in his interview with Insider Monkey three month ago (see our interview with Marc Faber). He encouraged investors to own assets such as real estate, precious metals or commodities rather than cash and government bonds, especially when you are negative about the world and the geopolitical trends.

It is very likely that the slowing manufacturing and economy in US, Europe and Asia will force central banks to apply explanatory policies. After the $1.25 trillion in the first round quantitative easing, the Federal Reserve completed the second round of quantitative easing in June, and the central bank bought another $600 billion of Treasuries from November 2010.

Bloomberg data shows that on August 8th, holdings in products backed by gold rose to 2,217 metric tons. Additionally, according to Jeremy Hughes, Singapore-based spokesman of CME Group Inc, trade volume of COMEX gold futures and options went up to a record of 593,405 contracts on August 24.

A growing number of investors add gold to their portfolios as they try to diversify their investments. During the past decade, gold has been rising every year. Because of the speculation that the European debt crisis will be worse, investors tried to protect their wealth by increasing their investments in gold, which pushed the gold price to records in Euros, Swiss franc, British pounds and Canadian dollars.

Gold outperformed global stocks, treasuries and commodities this year as investors bought more gold and central banks added to their reserves. Despite the recent increases in gold price, “I’d buy every month a little bit of gold,” Marc Faber said.

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