I enjoyed speaking with Marc Faber on Paradigm Press’ YouTube Channel last week. If you haven’t had the chance to watch it yet, please head here.

Before you head over to watch the video, here are some prize quotes from Marc.

On Milei, Argentina, and Its Stock Marketsub

Well, my best guess is that the stock market will continue to move up for a while, although it is up already substantially from the lows. It's no longer as cheap as it was say 12 months ago. But I think there is some momentum, and as you say, a lot of people believe that things got so bad in Argentina that they can only improve. I would agree that conditions will hardly get any worse, but the program Milei has set up the removal of various agencies, and dollarization are not practical.

On paper, they could be realized, but in reality, they won't be realized. And so I think that the initial bout of strengths in the market will be followed by disappointments.

How The World Benefits From the Argentine Election

I think it's important for the world to have seen in reality how the public feels about their governments.

Everywhere in the world, ordinary people are really annoyed by their government officials who are complete hypocrites, who live a relatively comfortable life, take continuously wrong decisions, but nobody's ever penalized for these wrong decisions. You understand?

You are a businessman. I'm a businessman. If we make a wrong decision in the stock market, we lose money.

The small businessman who has a retail shop or whatever manufacturing company, if he makes wrong decisions, he's penalized by a breakdown of his profits or maybe even through bankruptcy, but he is responsible for his business. And if it's not successful, he suffers.

But government officials, no matter how unsuccessful they are, how dumb they are, or how stupid policies they introduced, are never penalized. They retire with a fat pension that the other government officials do, and over time, it increases.

So there's no risk for these bureaucrats, and most of the bureaucrats nowadays have not worked in the private sector. I'd like to say they've been to some sort of a university taught by socialists, communist professors in political science. Then they went into the government, but they never worked in a private sector job. And that I object strongly to, and I think as long as we have these bureaucrats running the show, there'll be no economic growth.

Marc’s Travel History and International Diversification

I moved to Hong Kong in 1973, and then in ‘73 and '74, the US bear market began, and by ‘74, emerging markets were extremely depressed compared to the US.

And they stayed depressed. Hong Kong took off until 1981, ‘82 had a boom, and then there was a property market decline after 1981, but the country did okay between 1980 and ‘89.

The market that it particularly well during that period of time was Japan. And then money flowed out of Japan and into other markets in Asia like the Philippines, which was very depressed in ‘84, ‘85… in Thailand, which was also depressed.

And then at the end of the eighties, the markets that opened up were India and Indonesia. These were new markets and also China. By 86, ‘87, the Asian markets were expensive, and I predicted the crash.

But in 1986 I started to travel to Latin America because, and this is important, I had read a book titled The Economics of Inflation.

And here he was an employee at the Reichs Finance ministery in Germany between 1918 and ‘24. He wrote about inflation and the impact of inflation on everything: on society, on the currency, on the exchange rate, on the stocks, and so forth and so on. One observation he made is that in high-inflation economies, stocks tend to become very cheap in real terms because the currency collapses.

I always look and calculate in US dollars, because you could have a market like Turkey in local currency, it's up in the sky, but in dollars, it's down. That was the case end of 2021. So in ‘86 Argentina, the total stock market capitalization, there was a large economy and still is a large economy, was less than 500 million USD. The Philippines was at 350 million USD.

And so when you look at these things in US dollars, you realize what is cheap.

And I traveled to Latin America. The first country I went to was Chile and then Argentina, and then I started to invest because Argentina was really dirt cheap, dirt cheap. So I've been keeping in touch with Latin America and from time to time investments in bonds and stocks.

But recently, as I said, I became attracted to stocks because they were very low. Say you look at Petrobras in Brazil, still an inexpensive company, or in Colombia, you have very inexpensive companies at the present time. So that's what I'm looking at.

In Asia because of high inflation, the Sri Lankan stock market had collapsed, but now it's also recovered quite a bit. And also Pakistan is very inexpensive relative to the rest of the world.

On Gold

I would like to answer this question by stating that gold and precious metals are a large position among my assets. So among my assets, I kind of have 25% in stocks, 25% in cash and bonds, 25% in precious metals, and 25% in real estate. It varies a bit roughly, roughly. And so the 25% in gold is very large for me. So in a way, I'm a true believer in gold,

But I'm not a true believer that gold will go through the roof because I grew up in the fifties. So in the fifties, if I buy a pack of cigarettes or if I buy a bread or crust or a can of soup and so forth, I know the price in the fifties and I know the price today and I know the appreciation roughly, roughly they'll say 20 times or 10 times. In the case of Switzerland gold in the 50 60 until 71 was $35 an ounce. It's now close to 2000. Is it a bad performance? No, it's kept, its purchasing power. That's what I want to say. It's not extremely cheap and it's not terribly expensive compared to the collapse in intelligence of central bankers. Yes, gold should be at a hundred thousand if you would have an inverse relationship to the intelligence of central bankers. But otherwise, compared to your daily expenses, gold has kept roughly its purchasing power,

But I am a large holder and I will never sell my gold. But then we have to address the question, where do you hold gold and will the government take it away from you one day? And then you understand this is another issue. It's like real estate. Do you own real estate in the city centers or do you own real estate in the countryside? All different stories, but I believe that gold mining shares are today incredibly low compared to the price of gold. You understand? We can establish ratios going back to 1960. So in 1979, gold shares were high compared to the gold price. Now the gold price is high compared to gold shares. Absolutely. It's like real estate. Hong Kong properties are now, the properties are not particularly cheap, but they've come down. But the property stocks sell at 70, 80% discount to the asset value.

Wrap Up

Marc’s knowledge and wisdom come to the fore in this great chat. Head over to Paradigm Press’s YouTube Channel to watch this wide-ranging interview right now.

It’s a great way to supplement your knowledge and get a firsthand look at what one of the investing masters is doing right now.