Transcription
These wars can last a long time because there's no damage. Mr. Trump and his relatives will eat steaks every day and get petrol every day. But the people, they suffered.
We entered the war with a high gold price. What the war did is it reduced the cash flow of Middle Eastern countries. So, a lot of people had to sell gold because they needed the money.
Okay, ladies and gentlemen. So, today we have Mark Fabber back on the show who is the editor and publisher of Gloom, Boom, and Doom Report. And today we will cover a whole range of different topics. We will talk about precious metals, energy, Iran war, and many other very interesting topics. Mark, thank you so much for being here.
It's my pleasure. Thank you.
It's a pleasure to have you back, sir. So, if we could start by looking at precious metals first, of course, we will get to the Iran war and all the other topics, but you know, the last time we spoke was about two months ago, just after that huge crash. So, how are you viewing precious metals in the current environment? Because many people would have expected them to perform differently during wartime, right?
Yes. I always tell people if you talk about anything during war times you have to consider what the price was before the war. Say if the stock market was very cheap because before a war like before World War II the stock market in the US was relatively low. So during the war it didn't go down and in fact the war, uh, because the US was coming out of a depression, the war stimulated the economy. But if the stock market is very high before the war, a war has usually negative implications on stock prices and similar on precious metals.
The precious metals market, like any market, is a discounting mechanism. In other words, people buy something because they expect something to happen. So before the war, I think there was sentiment among gold buyers, maybe among other people who didn't own any gold, not but among gold buyers. The sentiment was that inflation would accelerate and that more and more people would buy gold. So, uh, we entered the war with a high gold price and then the war occurred.
What the war did is it reduced the cash flow of Middle Eastern countries. You understand? Say you own a property in Dubai. Suddenly the property is empty because everybody is leaving and then the property has a lower value and you're earning less rent on your property or or or no rent and so forth. So a lot of people had to sell gold because they needed the money and so the gold price corrected.
But now it seems the gold price is again stabilizing. I'm not suggesting that it will go up a lot from this level, but it may go up a lot. And I always say I own gold not because I think that it necessarily goes up, but because I think it's a safe way to own, uh, to place your savings somewhere. And I, I'm emphasizing here it's a safe way because paper money, you can print it and you can increase the quantity, uh, any way you like and, uh, for cryptocurrencies, you have to rely on the internet that it works, that you can use it. But with gold, I don't need to rely on anything. I just need to have it in my pocket. And there are some disadvantages to owning gold. But basically, it's a very safe way to, uh, as a store of value. Let's put it this way.
And if we look at the big picture, so some people might look at gold in cyclical terms. Would you say that the conditions for gold are with everything with all the chaos, wars, deglobalization are still favorable for many years ahead?
I have to laugh at this question because I think anyone who looks at Mr. Trump and who looks at Mr. Biden before, I think anyone would say, "Yes, I'd rather own gold than US dollars." But you know, I, my view is that the conditions for war have improved a lot over the last say 10 years. Uh, there's always danger for war, but now the danger for war to actually spread and become bigger has increased a lot for a variety of reasons. And in that environment, I think anyone who doesn't own any gold is taking a huge risk. I mean, I also, I also own stocks and I own bonds and I own properties and so forth, but, uh, I feel the most comfortable with gold at the present time. Not to make money, but also I advise people to consider the following.
For the last 40 years, people have made money through capital gains. Stocks went up, paintings went up, collectibles went up, wines went up, cryptocurrencies went up, bonds went up until 2020. And commercial properties went up until 2018, but they've come down now. But I think there is a possibility that everything will go down. And if everything goes down, you and I, we must ask ourselves, how do we lose the least money? You understand? It's not a question to make money, it's to say I have a hundred. In five years' time, many people will have zero. I still want to have 80 because if everybody loses 50 and goes down from 100 down to 50, and we are, we, we are still at 80 or maybe at 100, we, we're very fortunate. We're very good investors. This is my view about gold. I said it will go down less than other things will go down.
Okay. So you believe that, you know, we could have this deflationary period, but if we look at the Fed, Mark, with their usual playbook, uh, they will very likely try to do whatever financial gymnastics they can to save the market, save the rich, print more currency and inflate everything else. So do you see that that happening after, if we do get this, uh, deflation, would that be the next step after?
We don't have to think, uh, will we see it? We are seeing it right now. You can see that the US is, uh, supporting the stock market. When Trump says we're going to be out of the out of Iran within two or three weeks, he's making it. He's trying to support asset prices right now because his rich friends and he, he himself are a bit shocked that stocks went down so much, so quickly. They lost billions of dollars overnight and so they are trying to support the market, as you say.
But I'd like to introduce here a thought. You know, rich people, they have for years and years invested their money in commercial properties. They buy a whole building in Manhattan. They buy a whole building in Frankfurt or Munich or London or Dublin, where you live, or and so forth. But despite that, commercial properties are down meaningfully. In in America, many, many cities, the commercial property is down 70, 80%. And residential properties also go down. The problem today in cutting rates, say I mentioned to you that I own bonds. Now, I don't think that bonds are a good investment, but you have to understand, I own bonds for the following reason. The Fed is likely to cut rates, okay, or not increase them when they should increase them because of inflation. And so the bonds will not be good.
But what happens to the economy if instead, as everybody believed, interest rates go down? That was the belief. But if interest rates go up, do you think stocks will go up? I don't think so. And do you think that properties will go up? Residential properties? No, I don't think so. So I think maybe to own stocks is to own bonds is maybe not the worst idea. I mean, since the beginning of the year, I just written about this. The TLT ETF. This is a long-term bond, uh, Treasury ETF in the US that everybody looks at. The long-term Treasury ETF is down 1.6% since the beginning of the year, and the S&P is down more than 6% and the NASDAQ almost 9%. So what do you rather own?
I mean, I don't think that bonds are a good investment, but to my worries, I always have cash and the cash is invested in a bond portfolio of consisting of short-term treasuries, deposits, three months, six months, nine months, then short-term bonds up to three years, medium-term bonds up to eight years, seven years, and long-term bonds, 10 years up to 30 years. My worry is the short end, the cash. Now gives me, say, I put a deposit with the bank at the moment, it yields around 4%. A little bit less because the banks all try to cheat, you know, individual investors. And then, uh, my worry is that the Fed could, in theory, I don't think they'll do it, but they could, in theory, they could push short-term rates to zero. And then you and I on our deposit with the bank, we get maybe 10, 1% interest. So you own, I own some bonds of different maturities and hope for the best, but it's not a good investment, but it may be a, as I said, I'm looking at how do I lose the least money.
Yeah, that makes a lot of sense. Thanks for sharing that, Mark. Okay. So you have mentioned, we talked about gold, uh, being, you know, one of the safest assets in this environment. What about silver and platinum? How would you view them, uh, right now?
I mean, I own also silver and platinum, but you understand, let's, let's talk about the case of an emergency in the world. The Americans in their unlimited intelligence drop bombs on your house and my house and everybody's house throughout the world, and, uh, there is massive destruction and the electricity doesn't work, the internet doesn't work, and nothing works. And you go to a shop or a warehouse and they sell potatoes or rice or meat, and you want to buy something, and you arrive with your mobile phone, and the mobile phone doesn't work. How are you going to pay? But I arrive with a gold coin. The gold coin is worth say $10 or $20. And I show it to the seller of potatoes. He will accept it because he also has to buy food for his wife and his daughter and relatives. So that is the difference between arriving with a coin that has some value to anyone who sees it. He can bite it and see that it's gold, and someone who arrives with a mobile phone that doesn't work. That is the difference.
Right.
Now you may say, because you may be a great believer in cryptocurrencies, you may say, Mark, if you have gold and you're an old man, you may not arrive anywhere because people will knock you down and steal the gold from you. Yes, that I agree, that is the risk. But is less the risk that the criminal will do it than that the government will do it. That is the risk. The governments, that is the worst class among society. The businessman works, the workers work, the teachers, they work. The government is there to destroy everything.
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Right. Uh, so if we could now move towards the Iran war, Mike or Mark, so you know, so much chaos, so much uncertainty with what's happening. Of course, we have issues with the Strait of Hormuz. The way I sort of received, you know, if this war does not, if nothing major happens in the next few weeks and it just continues, that's very negative for the whole world, especially for countries who are not energy sufficient, like most of Europe. Um, how would you, how are you viewing this whole, uh, chaos, Mark?
I view it negatively, of course, and I've been to Iran and so forth. There's a lot of misinformation about the Middle East and about Iran and about Syria and everything. Uh, so it's actually tragic because it was not necessary. It is not a necessary war. And, uh, clearly Israel and the US, they started the war, and clearly Netanyahu is actually a, a war criminal. Yes, that is the word. He's a war criminal. He should be in jail. He started the war. And, uh, I think sadly that it will go on and on and on because when you look at it, for the Israelis to just walk away would be a major defeat. They want to change the regime. They want to change the country. But Iran, they may not be a very prosperous country, and the government may be very bad, the Mossad, I agree, maybe, but it wasn't very good under the Shah of Iran either, you understand? It, it got bad and it remained bad. But who supported all these changes to a large extent? America. To a large extent, America.
So my view is, it's very unfortunate. It's actually saddening for me to see this happening because the lives of so many people and the properties of so many people. You own a house and it's destroyed. You have nothing left. You understand? A lot of people lose everything. And then there are other people in the Middle East. They had businesses. They had, you know, employment and so forth. Of course, they're worried about their families. Then they go back to somewhere else. And maybe their lives are better, and maybe it's worse. I don't know. But it has, the war is a horrible experience. Horrible. And it should be avoided at all costs. But unfortunately, some people nowadays, you understand, at the time of the Roman, of the Babylonians, of the Greeks, Alexander the Great, he was in the front line, he fought himself. And Caesar as well. These were fighters. And nowadays, these idiots, they sit in comfortable leather chairs in Washington and, uh, in Jerusalem, and they say, you go and fight the war. They themselves are never on the front line. Never. And their sons and the sons of their rich relatives, they are all protected. They don't need to go.
So in my view, these wars can last a long time because there's no damage. Mr. Trump and his relatives will eat steaks every day and get petrol every day. But the people, they suffer because the, the war obviously is increasing the cost of living. You just said it in Ireland, the prices have gone up a lot. Yes, they have gone up a lot. They will go up everywhere. But the rich people don't care. It's the workers. Their salaries don't go up as much. So they're being squeezed. Then the interest rates go up. They're being squeezed from the interest rates. They're being squeezed left, right, and center.
Yes, unfortunately, that's the case. And I'm, I'm originally from Ukraine as well, so I would know a lot about, you know, property and life destruction.
Sure. It's absolutely terrible. If we look at this from the energy side, Mark, from, you know, the Strait of Hormuz, uh, how, so you've mentioned that you believe that unfortunately this war could, could last for a long time. If that's the case, how would that affect the energy prices? Because we have seen Trump mentioned a few days ago that well, Iran is defeated, we will just leave and Europe can deal with the Strait of Hormuz or whatever he said. So how do you think that could play out?
I think first of all, it's very difficult to measure the price of everything because clearly prices are going up, but they're not going up all at the same time by the equal amount. So if I measure say a barrel of oil in different currencies or in different commodities, say I measure gold, I take gold and then I measure oil in gold, then oil is cheap and gold is expensive. Or I could take oil and wheat, then, uh, oil is cheap. You understand? It depends on the movements. And in my view, oil at the current level, even it's gone up, is not expensive. I think it will go up more. But I would not put all my money into oil stocks. I have oil stocks because if I look at the S&P in 1980, the last time oil became very expensive, in 1980, oil stocks as a percent of the entire S&P were 35%. Now they're less than 5%. So the, the investors don't own many energy stocks, partly because of these idiots, the called the greens. They want clean energy. What is clean energy? The blades of windmills are very difficult to produce and you can't recycle them. So it's not clean. And I think the oil, relative to everything else, you know, is relatively cheap. Not as cheap as, uh, nuclear power, but is relatively cheap.
Right. And
so my view is investors should own some oil.
Right. Uh, and what about some of the other commodities? So you mentioned nuclear, uranium, copper. So of course, you know, copper looks good from the fundamental perspective, but it's, I think it's called, you know, Dr. Copper for a reason. If we do get weakness, that could also affect a lot of those copper and base metals as well.
Yes, I don't own, uh, copper as a commodity, but I own some companies that own copper mines, including Newmont and Ivano. But Ivano has another problem. They are located in in the Congo, principally in the Democratic Republic of the Congo, DRC. And there the climate for investors is not very good at the present time. But the mines are very large, very substantial, and of very high quality. This is, but you know, people always ask me about commodity sense and I tell them, some commodities will go up more than gold. That I agree. You know, two years ago it was cocoa, last year it was coffee, and so forth. But you and I, as an investor, how do you want to store a ton or 10 tons of coffee in your house? Do you, is it a bit difficult? But I can store a ton of gold in my house. I don't do it, but I can. And that is the difference that, you know, also with copper, you can buy copper, but you, it's more difficult than to own gold. Now, you can buy copper shares, but the shares of a company is different than, uh, owning the physical. I explained to you how in an emergency situation, you can go with a small coin of gold and buy something. Can you go with a ton of copper and carry the copper? You understand? This is the, the difference between the, the gold and silver and the copper and the coffee and so forth.
Right. Could I ask
that's why gold has throughout the ages been considered as money. But the price that the cotton and the coffee is not money. What is also money in in war times and during, uh, in, uh, prisoner camps, concentration camps, cigarettes. That is money. You know this from Ukraine. You can exchange a pack of cigarettes for anything. Not for a Rolls-Royce car. You need quite a lot of packs of cigarettes. But for a bread, you can tender it with a pack of cigarettes.
Very good point, Mark. Um, could I ask you this question? You know, would you expect the stock market to be higher or lower? Let's say two to three years from here.
This is a question that I'm concerned with. Of course, I think there are many aspects to this and we don't know. But I agree with you that they will print money. So I don't think that the stock market will necessarily go down in nominal terms a lot. But I think, you know, the stock market consists, say the S&P, of 500 stocks. It could be that 100 stocks go up, or it could be that 300 stocks go down and so forth. My view would be that, uh, you shouldn't own semiconductors. You should not own the fun related stocks like Facebook, Amazon, and so forth, and Netflix. And, uh, you should own value stocks. The same, I think if I look at all the markets in the world for the last 15 years, the US market has outperformed just about everything, and some markets have become relatively cheap. I mean, I live in Southeast Asia, in Thailand, in the north. Uh, Indonesia is relatively low. Malaysia is relatively cheap. Thailand is relatively cheap. Hong Kong was very cheap a year ago. That was our principal recommendation. Hong Kong properties, and I still think it's relatively cheap. Uh, and so Latin America is relatively cheap. Uh, we had Argentina on our list to buy, and also Brazil and Colombia. Some of these markets have gone up already a lot, but some are still okay. And, uh, I also own some banks. I would like to buy Russian shares. You understand? And a friend of mine, he's starting a property fund in Ukraine to buy properties. I think it's interesting. So we have to be very careful what to buy. But I, for the, for a large portion of my money that I still need until I go somewhere else, I don't know whether it will be upstairs or downstairs. But wherever I go, I want to have enough security. Now, you know, as I said, you can be knocked down by someone. But I, I, I like gold as a pillar of my assets. And unfortunately, now I have to say goodbye to you and to your viewers and listeners.
Yes, Mark, thank you so much for your time. If anyone would like to follow Mark's work, I will have the link in the description below. And again, Mark, thank you so much for your time.
It's my pleasure. And I wish you and your viewers all the best. It will be, as you said, very unsettling times because we are ruled not by people who want to do the best for for the people. Democracy has developed into a sort of aristocracy of idiots who want to enrich themselves at the cost of the working man in the world.