Dr. Marc Faber, an investor analyst and entrepreneur known as “Dr. Doom” for obvious reasons, predicted this week that World War III will occur in the next five years. His stated concern is China, he told Barron’s financial magazine in its annual roundtable discussion at the beginning of the year.
“On another optimistic note,” Dr. Faber said sarcastically, “World War III will occur in the next five years. That means the Middle East will blow up. New regimes there will be less Western-friendly. The West has also figured out it can't contain China, which is rising rapidly and will have more military and naval power in Southeast Asia. The only way for the West to contain China is to control the oil tap in the Middle East.”
The “good news” in Faber’s eye is that World War III will be good for the stock market. “It is very positive for stocks and negative for bonds, because debt will grow dramatically,” he explained.
Another participant in the discussion, Felix Zulauf, opined that a war will be good for stocks because “unused capacity in an economy can be directed to the defense and war industry. That will be paid for by new government debt, and that keeps the economy growing."
More optimistic was investment manager Scott Black who told Dr. Faber, "If Israel strikes Iran's nuclear facilities, they will use air power. They aren't going to commit ground troops. It won't be the kind of conflagration you're thinking."
In last year’s Barron’s roundtable discussion, Dr. Faber stated that investors should "want to be hedged for complete disaster – World War III…. Eventually, we will have a war, big time. Maybe you don't have divisions of tanks facing each other, but it should be clear that China is an active supporter of North Korea and the Taliban. And now with the US endorsing a seat for India on the UN Security Council, the Chinese are getting closer to Pakistan."
With gold trading near the $1,650 level and silver at $30, King World News interviewed legendary technical analyst, Louise Yamada, of LYA Advisors, to see where she sees gold, silver and stocks headed. Louise surprised us when she discussed the bear market in stocks lasting until 2022. Here is what she had to say about the 20 and 40 year cycles: “These cycles do not bottom together again until 2022, technically leaving an outside possibility that this structural bear cycle may become extended and an ultimate beginning of the next structural bull may not manifest until 2022. The overall market, as defined by by the Dow Jones Industrial average, might not get through the 2007 peaks for a significant period of time into the future.”
Today James Turk informed King World News that we are now headed into a vortex, and the Lehman event was a warm-up to a much deeper, widespread crisis and collapse which lies ahead. Here is how Turk described the warning signs and what to expect: “There are all of these warning signs out there and few people are paying attention. For example, hardly anyone cares that the US has lost its AAA rating and most dismiss it as a non-event. But even a cursory look at the US government’s financial position should raise investors concerns that it will not be able to meet all of its obligations.”