Why everybody should keep gold in their portfolio

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I’m prepared to make a bet, you keep your U.S. dollars and I’ll keep my gold, we’ll see which one goes to zero first.

Everyone should keep gold in their portfolios as the precious metal will be able to offer value to investors even in a worst-case scenario, said Marc Faber, the publisher of the Gloom, Boom & Doom report.

“In the worst case scenario, in the systemic failure that I expect, it would still have some value,” Faber, who is also the founder and managing director of Marc Faber Ltd., said Tuesday at an event hosted by Evli Bank Oyj in Helsinki.

When “the system goes down,” and only plastic credit cards are left, “maybe then people will realize and go back to some gold-based system or such,” he said.

Sometimes I’m so concerned about the world I want to jump out of the window.

Faber said his outlook was so bleak that he is “hyper bearish. Sometimes I’m so concerned about the world I want to jump out of the window.”

In response to a question from Yale University’s Robert Shiller querying the recommendation to hold gold, Faber said: “I’m prepared to make a bet, you keep your U.S. dollars and I’ll keep my gold, we’ll see which one goes to zero first.”

Shiller, who is the co-creator of the S&P/Case-Shiller index of property values, also attended Tuesday’s event in the Finnish capital.

“I’m inclined to think gold prices after this crisis might return to a lower level,” he replied to Faber, saying the U.S. stock market currently offers a good investment case.

“Given the low yields of the alternatives, the valuation doesn’t look so bad,” Shiller said. “These are times when a reasonably normal application to the stock market is probably called for.”

Faber said his portfolio consists of 25% stocks, 25% company bonds from emerging economies, 25% gold and 25% real estate.

“I’ve taken an all-weather portfolio,” he said.

Bloomberg News | Jan 22, 2013 10:41 AM ET | Last Updated: Jan 22, 2013 11:04 AM ET

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