-- Posted Thursday, 20 June 2013 | | Disqus

The global liquidity squeeze, either due to central banks losing control of their bond markets or actively trying to pull back on money printing, can only have one impact on equity markets and that is negative.

That’s what legendary investment adviser Dr. Marc Faber told CNBC yesterday (click here). It’s a point that many Wall Street shills miss in their analysis.

Liquidity drying up

The money flow is drying up and so the upward pressure on equities has not only gone but is thrown into reverse. Just look at how markets responded to Ben Bernanke’s talk about tapering QE yesterday. It’s worst in the emerging markets but the advanced markets are also falling

But Dr. Faber says he is personally buying gold stocks and physical gold because both of these asset classes are so deeply out of favor. He is also keen on US bonds, presumably because they tend to do well as equity markets sell off.

Famously contrarian in his approach, Dr. Faber is usually out of step with Wall Street but has an excellent reputation for calling the major market turns. He does not say he is shorting equities, though he notes emerging market equities and currencies are showing the first signs of a major correction.

Will he be right this time? Those selling down their ETF gold holdings to buy equities might live to regret their action. They are selling at the bottom and buying at the top.

-- Posted Thursday, 20 June 2013 | Digg This Article

About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link

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