Oliver Disler: What is your opinion about the US Dollar?

Marc Gugerli: The question is always compared to what? I believe that basically most industrial countries are trying to weaken their currencies with the goal to boost exports. To remain competitive other countries needs to do the same and start the money printing press and the devaluation carousel is launched.

Central banks are devaluating their currencies against limited available and tangible hard assets like land, commodities and precious metals like Gold or Silver. The ECB is far behind the curve and the printing machine runs slower than the one of the Federal Reserve. But all this can change very fast.

Oliver Disler: What is your opinion about the slogan too big to fail?

Marc Gugerli: You know, that in the United States everything has been undertaken to prevent a recession. Just little signs of a weakening economy and Greenspan started to pumb money into the system and reduced interest rates immediately. Economic problems have been suppressed artificially for years.

This is the reason why many thing became „to big to fail, safe and solve“. Since decades the formula is the same: There is a problem, money will be printed and debts increased and interest rates go down afterwards. This is the main reason for the actual financial and economic crisis but one day the bill MUST be settled.

Oliver Disler: What do you think about how or if the debts will be paid back?

Marc Gugerli: There are three possible outcomes:
1. They will really pay back. But in the actual situation this is impossible.
2. They will default and declare bancrupty. But this is not what they want - "too big to fail", examples are the automobile or banking industry
3. Or through inflation, you can bet on this.

Oliver Disler: Is there a risk of inflation, since economies are cooling off or are already in a recession?

Marc Gugerli: I believe the correct description what we have to expect in the very near future is inflationary recession or some other may call this stagflation. As I mentioned already, everything will be done to stop the deflation. I expect that we are getting back inflation especially in the food and energy sector. I expect that yachts and Porsches become rather cheaper.

Oliver Disler: What shall investors buy right now?

Marc Gugerli: This year several 1‘000 billion US Dollars rescue packages will be rolled-out. The biggest part of this fresh money will pour into infrastructure projects. Of course there will be companies which will benefit from this. During German “Weimarer” hyperinflation period some stocks of industrial companies perceived 70% of the purchasing power.

Cash and government bonds became worthless. Remember, in which asset classes are investors mainly invested those days? My top choices are companies in the commodity, food and energy sector.

Oliver Disler:What about gold mining shares?

Marc Gugerli: Good point! Have a look at industrial metals like nickel, zinc or crude oil. Some of them dropped more than 70% from last years peaks. The industrial metals mining companies share prices tumbled 50 to 70%. The price of Gold is trading only 10% below its highest level and as mentioned already reaching new highs calculated in many other currencies. But gold mining shares are still trading XX% below its peaks.

I consider this to be a miss-pricing and a big buying opportunity. Due to lower price for energy, production costs are falling substantially and Gold price close to its highest level means that profitability of gold mining companies will increase substantially. The Philadelphia Gold Index (XAU) is trading at an attractive level and could double easily. From a historical valuation point of view and compared with the price of Gold the XAU is very cheap and my favorite investment 2009.

Oliver Disler: Dear Mr. Gugerli, thanks for your time and the interesting interview!

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