Marc Faber: Gold is “Dirt Cheap” — Price Could Reach $10,000 per Ounce

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Eleven years into a gold bull market, Marc Faber publisher of the Gloom Boom and Doom report still doesn't think gold is in a bubble. Joining us via Skype from Chiang Mai, Thailand Thursday, Faber told the Daily Ticker's Aaron Task there are fundamental reasons why gold, already nearly 30% higher for they year, will continue to gain value.

Faber admits the price of the precious metal may remain volatile; after hitting a new high of $1923.70 on Tuesday, gold has fallen about $100 per ounce.

But in the long-term "gold will be very well supported" because of global demographics and the continued debasement of fiat currencies, including the U.S. dollar. Compare gold prices to the amount of wealth created in the emerging markets over the last decade and the increase in the monetary base around the world, the price of gold is "relatively low," says Faber. Compare it to the quality of politicians and at $1,800 per ounce gold is "dirt cheap," he half jokes. He won't put a price target on the metal but he does say, "according to some statistics the gold price today should be worth between $6,000 per ounce and $10,000 per ounce." If that's true, then "dirt cheap" might be the right phrase.

Monetary policy is not only buoying the gold market, it's also responsible for the recent market turmoil, Faber says. "I have argued for years that the Federal Reserve with its artificially low interest instead of creating monetary and economic stability it has created more instability by creating the Nasdaq bubble, the housing bubble, the commodities bubble and now creating a giant government debt bubble."

That's not to say Faber is uber-bearish on stocks. He thinks stocks will remain range-bound for the rest of the year and that the see-saw market will persist for the foreseeable future. He predicts global stock markets will go up and down at least by 20-30% annually for the coming years.

For now Faber recommends investors stay diversified: 25% in stocks, 25% in real stocks, 25% in gold and silver and 25% in cash.

Gold could hit $6,200 an ounce

Gold could hit $6,200, Swiss investment manager tells CNBC

"This bull trend will end all the other major bull markets," Urs Gmuer says

Gold prices may reach $6,200 per ounce in a bull run which will "end all major bull markets," Urs Gmuer, asset manager at Dolefin, a Swiss investment advice firm, told CNBC.

Gmuer's prediction is based on analysis of the last major gold boom of the 1970s, during which gold prices rose from $35 per ounce to $850 per ounce. Gmuer said that in the current bull run, prices would be pushed upwards by a protracted period of global economic difficulty -- potentially lasting years -- during which investors would continue to search for so-called safe havens.

"Gold prices have risen over the last few years, as the macroeconomic picture has become worse. The deterioration of the fundamental situation has now gone even further.

"Purchases by investors of gold will be based on fears of systemic risk or banking crashes," Gmuer said.

The investment manager said that as no "safe" currencies remain, cautious investors had no choice but to opt forprecious metals.

"The ultimate currency, which has stood the test of time, which has no political support behind it, is gold. Nobody can print gold out of a machine or a PC.

"What the Swiss National Bank did two-and-a-half weeks ago, increasing the supply of the Swiss franc, means the safe currencies are all gone. That is why gold will have a revival," he said.

Gmuer said the precious metal had entered a "super-cycle," which he likened to the 1998-to-2000 boom in technology media and telecommunications.

He added, "This bull trend will end all the other major bull markets," and singled out debt capital as an asset class for which demand and prices would decline.

However, Gmuer denied that high and rising gold prices could be indicative of a bubble. "If everybody is saying a particular asset is a bubble, that reflects the fact that most people have disposed of it," he said.

Other calculations indicate that gold prices could peak at $3,500 or $4,000 per ounce. This is based on historical data regarding the long-term ratio of gold prices to the global money supply.

In addition, Gmuer said silver is set for an even greater upward run than gold, with the market due to correct a distortion in its pricing of silver in relation to gold.

Gold and silver currently price at a ratio of around 45:1. However, Gmuer said declining silver output over the last 60 years -- as a result of inventory depletion and mine closures -- meant silver supplies currently outnumber gold by a ratio of less than 10:1, thus indicating a market correction is due.

Once this occurs, Gmuer said that silver prices would settle at 10 percent-to-15 percent of gold. This implies that if gold reaches $6,200 per ounce, silver will peak at between $620 and $930 per ounce.

Asset Manager: Gold Will Hit $6,200 an Ounce

Gold prices, which are surging close to $1,900 an ounce, have a long way to climb and will eventually break $6,200 an ounce, says Urs Gmuer, asset manager at Dolefin, a Swiss investment advice firm.
A weaker dollar and economic uncertainty have sent gold prices skyrocketing lately, although it won't be the first time the precious metal has soared.
In the 1970s, when economic conditions deteriorated and investors flocked to gold as a safe haven as they are doing now, gold went from $35 an ounce to top off at $850 an ounce.

(Getty Images photo)

Today, world economies will battle uncertainty after uncertainty, which leaves already high gold prices with one way to move: up.
"Gold prices have risen over the last few years, as the macroeconomic picture has become worse. The deterioration of the fundamental situation has now gone even further," Gmuer tells CNBC.
"Purchases by investors of gold will be based on fears of systemic risk or banking crashes."
Investors need to be careful to avoid looking for safe currencies.
"The ultimate currency, which has stood the test of time, which has no political support behind it, is gold. Nobody can print gold out of a machine or a PC."
Other experts agree that gold has much more room to climb, especially if the Federal Reserve keeps interest rates low, which it has said it will.
"We had an end to the last gold cycle by jacking up interest rates, and that’s clearly off the table for the next couple of years," Rick de los Reyes, who manages $800 million at T. Rowe Price Groups Global Metals and Mining Fund in Baltimore, tells Bloomberg.
"We are going to be in a negative real-interest rate environment. The price can go significantly higher."