Dr. Marc Faber - Bloomberg

Dr. Faber is commenting on companies that provide dividend yields over and above treasuries, and how this provides some reassurance in the coming downturn.

Gold companies, for example like GBN.V, where they have good grade controls and have not borrowed excessively or attempted to draw as much ore as possible through their mill at the lowest grade possible, can pay a dividend that exceeds inflation, never mind treasuries.

He also talks about the 10-year case, meaning the Net Present Value of companies over the next ten years must provide for a return in yield over that time in the worst case scenario. This is a very tall order.

He also discusses currencies very briefly, where any asset denominated in currency is subject to predations of monetary inflation. Exposure to gold is pretty essential, though the focus everywhere is still asset price gains. Its as if a bear market isn't in vogue, though it's been underway for some time.

We are in a very serious bear market since 2008, in all asset classes, and few bull markets anywhere except treasuries and gold. The presumed bull market about to start in Nat Gas is probably more presumption than anything else, imo.

People have preferred the metal over the miner, its true, but they seem to prefer the commodity rather than the producer with a yield. The longterm copper chart shows this preference for the metal over the miner.

If the copper price declines in U.S. dollar terms, and the U.S. dollar continues its decline, this will make for a devastating collapse in yields and thus directly affect the Net Present Value.

Bloomberg Video

stockcharts.com Copper

-F6