Marc Faber's April Outlook: Rally to Continue--But Get Out Before May Sell-Off

by Black Swan Insights
Apr. 25, 2011

The always insightful Marc Faber is out with his latest issue of the Gloom, Boom, Doom report. Here are a few highlights:

1. Stocks–World markets are likely to continue their recent rallies, due in large part to non-stop liquidity from central banks. Furthermore, April is seasonally a good time for stocks, which provides a favorable background for rising stock prices. However, Faber is looking for a correction in May/June and advises investors to sell their winners in anticipation of lower prices. He would not be adding to positions at this point. If the market does fall, as Faber expects, then prepare for QE 3,4,5,etc. by the Fed to support asset prices.

2. Gold and Gold Stocks–Continue to accumulate gold. The best way is to dollar cost average every month. Gold may decline in the short-term, but the long term trend is up. Faber also mentions that gold remains undervalued compared to the egregious amount of fiat money which has been printed by central banks worldwide. If the US ever needed to back the dollar with gold, it would take a price of $7500 per ounce of gold to accomplish this. Thus, gold remains an attractive asset. Furthermore, gold is still under owned by individuals and institutional investors. Regarding gold stocks, Faber is buying Newmont and Barrick.

3. Japan post earthquake/tsunami—Faber has been getting more bullish on Japan over the last few months, citing attractive valuations after a 20-year bear market. Even after the Japanese earthquake, Faber likes Japanese equities, but he thinks they will fall in the short-term. This will represent a good buying opportunity for investors. He still hates the Yen and believes recent BOJ money printing will lead to a lower Yen longer-term (bullish for Japanese equities).

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