Friday, June 27, 2008

Commodity prices will come down, says Marc Faber

Commodity prices will come down, says Marc Faber

INTERNATIONAL. The price of commodities face a "correction" after a seven-year rally, which will help ease global inflation, reported Bloomberg quoting investment guru Marc Faber (see below).

"Commodity prices will come down in the next six months to one year," Faber, said at a briefing in Taipei today. Commodity prices will resume their gains after the correction, he said, with demand for oil doubling in the next 12 years.

Prices of commodities have continued to surge this year. The Reuters/Jefferies CRB Index, a measure of commodity futures prices including oil, has climbed 26% this year. Crude oil futures are up 100% in the past 12 months.

"Some inflation pressures will abate" as commodity prices decline, said Faber. "It doesn't mean I am bearish about commodities. I think commodity bull markets will last about 20 years," he said.

Faber said he's negative about the dollar in the long term, though the US currency may "strengthen somewhat" in the short term.

The index hit an historical low of 70.698 points on 17 March.

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Marc Faber Says Commodities Will Fall in Second Half (Update3)

By Tim Culpan

June 26 (Bloomberg) -- Commodities face a ``correction'' after a seven-year rally, which will help ease global inflation, investor Marc Faber said.

``Commodity prices will come down in the next six months to one year,'' Faber, publisher of investment newsletter the Gloom, Boom and Doom Report, said at a briefing in Taipei today. Commodity prices will resume their gains after the correction, he said, with demand for oil doubling in the next 12 years.

Faber said Taiwan equities will outperform global stocks, while China ``is not yet a buying opportunity.'' Taiwan's Taiex Index has dropped the least among Asian benchmark indexes this year and China's CSI 300 Index has slumped 44 percent.

Prices of commodities from oil to wheat have continued to surge in 2008 due to floods in Southeast Asia and the U.S. and demand from India and China. The Reuters/Jefferies CRB Index, a measure of commodity futures prices including wheat, copper and oil, has climbed 26 percent this year. Crude oil futures have doubled in the past 12 months.

``Some inflation pressures will abate'' as commodity prices decline, said Faber. ``It doesn't mean I am bearish about commodities. I think commodity bull markets will last'' about 20 years, he said.

``Corporate profits in China will by and large disappoint as well as in India, so overall I am not very optimistic about these markets,'' he said.

World's Worst

China's CSI 300 has tumbled the most in 2008 among benchmark indexes from the world's 20 biggest equity markets, as the central bank took action to curtail rising consumer prices. India's benchmark Sensex index has dropped 29 percent this year.

U.S. equities could `` outperform markets like China and India'' after underperforming in the past four years, Faber said. Japanese stocks may also beat peers, he said.

Faber said he's negative about the dollar in the long term, though the U.S. currency may ``strengthen somewhat'' in the short term.

The U.S. Dollar Index, which tracks the greenback against six major currencies, has fallen 5 percent this year to 72.904 points at yesterday's close in New York. The index hit an historical low of 70.698 points on March 17.

Faber also said he prefers Taiwanese to U.S. technology companies, although the outlook for the industry is ``bad.''

Last Updated: June 26, 2008 06:39 EDT

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