"Allocate 25% to Gold Bullion", says Faber

Unprecedented levels of borrowing will leave governments with no choice but to monetize their debts – in effect printing money – according to Marc Faber, publisher of the Gloom Boom & Doom Report. "The best thing an individual investor can do right now is to hold 25% of his assets in equities, 25% in real estate, 25% in gold, and 25% in cash," said Faber last week. "If equities, real estate, or gold drop another 10% to 20%, put more cash in." Although he remains bullish on Gold Bullion, Faber warned last week that "we are still in a correction mode" following the start of September when the Gold Price "peaked out" at $1920 per ounce. "Everybody should accumulate some gold over time. I'm not saying that today is the best buying point...[but] I would recommend people to buy every month some gold forever."

"Its quantity cannot be increased at the same rate as you can print money." Faber added that he believes the US Dollar will be substantially weakened as the US authorities respond to rising public debt levels. "We went into this crisis with an unprecedented debt level," he said. "If you compare, for instance, the depression years, in the depression years we didn't have credit cards, and we didn't have unfunded liabilities from Social Security, from Medicare, from Medicaid. "These are all debts that will come due, that will have to be paid by the government...in ten years' time I would estimate that between 30% to 50% of tax revenues will be spent on the interest payments on the government debt and that will then prove to be a huge problem and necessitate the monetization, essentially, of the debt and that will lead to a weak Dollar."

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