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Faber: Real Estate Provides Best Protection From Looming Collapse

Wednesday, 11 Apr 2012 07:54 AM

By Dan Weil

Asset prices will eventually collapse thanks to the Federal Reserve’s extremely over-accommodative monetary policy, and that will make homes the safest investment, says Marc Faber, publisher of The Gloom, Boom & Doom Report.

“I’m not saying this is a once-in-a-lifetime buying opportunity,” Faber tells Yahoo.

“But I think investors should start to think what investments will go down the least when the final crisis occurs and there is massive wealth destruction.”

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

And what are those investments?

“I happen to believe that home prices in the south of the U.S. — in Arizona, Georgia, Nevada, and so forth — are relatively inexpensive compared to other asset prices," Faber says.

The Fed’s monetary policy will cause grave damage to financial markets, though it’s difficult to know when, he says. It could be five or 10 years.

“But one day asset prices will collapse. In that scenario investors have to ask themselves what asset prices will be relatively secure,” Faber says.

“I happen to think real estate, which, because of its wide ownership, will be relatively safe compared to financial assets that are extremely volatile"

The S&P/Case-Shiller index of U.S. home prices dropped 3.8 percent in January from a year earlier, but the rate of decline narrowed from 4.1 percent in December.

“We have seen some slight progress from very depressed levels, but there’s still a long, long way to go,” Sean Incremona, a senior economist at 4Cast Inc., tells Bloomberg.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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