A WELL-KNOWN contrarian investor does not believe Gold Prices are in a bubble.
Swiss fund manager and investment guru Marc Faber, best known for his Gloom, Boom & Doom Report, believes gold remains cheap, despite Dollar Gold Prices hitting record highs last week.
"If it were a bubble a lot of people would have gold. The whole world would be trading gold 24 hours a day," he said in an interview with CNBC. "But I don't think it's really a bubble. I think gold is maybe cheaper today than it was in 1999, when it was $252."
Faber acknowledges that Gold Prices may see a correction, but believes Gold Investment is a good long term play.
"We live in very volatile times; a correction could be 10%, 20%. I would on any weakness accumulate gold. The long-term outlook for gold is favorable," he told Fox Business Network last month.
In Faber's opinion, an interest rate hike by the US Federal Reserve would have little impact on Gold Prices.
"One day they will increase it by a quarter percent. But what does it mean when commodity prices are going through the roof, energy prices are going up, health care costs are going up, insurance premiums are going up?" he said. "Everything is going up. Only at the Federal Reserve is there no inflation."
Faber's latest comments come as the US Dollar continues to show signs of weakness. The US Dollar Index, which measures the strength of the Dollar against a basket of six foreign currencies, has fallen 5% since start of the year. Currency analysts believe the Dollar's weakness is set to continue.
"The U.S. would like to keep interest rates as low as possible for as long as it can," said Kit Juckes, London-based head of foreign-exchange research at Société Générale.