Faber Bullish on European Stocks, Gold

Wednesday, 08 Aug 2012 03:27 PM

By Dan Weil

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Marc Faber, publisher of the Gloom Boom & Doom Report, is optimistic about European stocks, despite the continent’s ongoing financial crisis.

He also expects gold to eventually resume its rally.

On the stock front, “for first time in my life I have been buying some European shares,” Faber tells Yahoo. He’s dipping into the markets of Italy, Spain, Portugal, and France.

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.

The U.S. stock market has outperformed Europe for the last 12 to 18 months, Faber notes. But that has pushed U.S. stocks to high valuations relative to their European brethren.

Now, the trend is starting to reverse, and he wants to get on board.

“Problems in Europe are miles away from being solved,” Faber says. “But suddenly these depressed European markets have begun to outperform the U.S. in the last three to four weeks.”

When it comes to gold, “the fundamentals are still intact,” Faber says. Presumably he means global monetary easing.

The precious metal, which recently traded at $1,615 an ounce, could fall another 12 percent to $1,420, Faber says. “But from a longer-term perspective, I want to have at least 25 percent of my money in gold and gold-related equities.”

Many experts are less enthusiastic about European stocks than Faber is.

“We’ve had a fairly disappointing earnings season, which will downgrade earnings expectations for 2013,”Jeremy Batstone-Carr, head of research at Charles Stanley Group, tells Bloomberg.

Recent European stock gains stem from expectations of more central bank stimulus that may not come, he said.

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.

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