Thursday, March 05, 2009

Faber Says Buy Gold Explorers Backed by World’s Biggest Miners. TNR.v,, ABX, RMK.v, BTT.v, GBN.v,,,

Faber Says Buy Gold Explorers Backed by World’s Biggest Miners
By John Kipphoff
March 5 (Bloomberg) -- Marc Faber, the investor who advised buying gold in 2001 before it tripled, said he owns Ivanhoe Mines Ltd., NovaGold Resources Inc. and Gabriel Resources Ltd. because explorers will gain the most as bullion rallies.
Commodities will be the first assets to rally when growth returns after a credit collapse led to the worldwide recession, Faber said. Gold explorers backed by larger miners are less expensive than bigger firms and have the financial support to stay in business should the economy worsen, he added.
Precious metals will climb as other assets decline, Faber said. The 82-company Bloomberg World Mining Index advanced 31 percent since falling to a four-year low on Nov. 20 and prices for the metal climbed 21 percent through yesterday, compared to a 6.4 percent decline in the MSCI World Index of stocks. Yields on 10-year Treasuries dropped 1.3 percent in the same period.
“The mining stocks, especially exploration companies, are relatively attractive, but you have to buy the ones that have a strong backer,” Faber, 63, said in an interview in Toronto. “A lot of companies will run out of money. The ones that have a strong backer will be OK.”
Ivanhoe is developing a copper and gold deposit in Mongolia with Rio Tinto Group, the world’s second-largest iron ore producer. NovaGold is collaborating on projects with Barrick Gold Corp., the largest bullion miner. Gabriel’s second-largest shareholder is Newmont Mining Corp., the top U.S. gold company.
Faber, the publisher of the Gloom, Boom & Doom report, advised buying gold at the start of its eight-year rally, when it traded for less than $300 an ounce. The metal topped $1,000 last year and traded at $906.70 an ounce yesterday. He also told investors to bail out of U.S. stocks a week before 1987’s so- called Black Monday crash, according to his Web site.
Faber said that he owns Brazil’s Cia. Vale do Rio Doce, the world’s biggest iron-ore producer, and sold Newmont, which rallied 80 percent from a six-year low on Oct. 27.
To contact the reporter on this story: John Kipphoff in Toronto at Last Updated: March 5, 2009 10:37 EST
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