Book Summary: Tomorrow's Gold: Asia's Age of Discovery

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Tomorrow's Gold: Asia's Age of Discovery
by Marc Faber
Published in 2002

I read this book a few years ago and found it is quite fresh. Marc Faber, aka Dr. Doom, is a superbear who runs his operations from Asia. Like most bears, being bearish means that you are bullish on something. In his case, he happens to be bullish on commodities, gold, and Asian in general. This is what this book is about.

I am heavily influenced by Marc Faber. I heard his (along with Jim Rogers) interview by Jim Puplava on financialsense.com broadcast a few years ago and have been interested in his views ever since. I actually became bullish on commodities because of Marc Faber (and Jim Rogers). Unfortunately--or fortunately--I got out last year after becoming concerned with valuations. I have since switched to a more value-oriented focus, and away from sector rotation. Nevertheless, I find Marc Faber's comments unique and well worth listening to.

The book presents a bullish case for Asia, commodities and assets like gold. Marc Faber does a good job explaining his reasoning and illustrating concepts by going through past history. I found the historical details quite fascinating.

If there is one thing to learn, it's that change is a certainty. Cities that used to be #1 a few hundread years ago aren't anymore. For instance, some German and Dutch cities that were near the top have been eclipsed by, what used to be no-name, American cities. Faber thinks that future wealth generation will be in Asia. He does not think developed countries, like USA, have much potential. His view is that money flows from USA (and other countries) to Asia. This was quite a contrarian view several years ago but it is the consensus now. When the largest investment banks, like Morgan Stanley or Goldman Sachs, release reports saying that commodities are the place to be, and that Asia is going to outperform everything else, or that oil is going to $100, you know it isn't contrarian anymore.

Given the massive run-up in commodities, gold, and Asian equities (as well as other emerging market securities) in the last few years, I am not sure if some of the original arguments in the book have been weakened--at least for the near and intermediate term. Faber was a contrarian back in 2002 when he was bullish on gold, for example, but given the big run-up in gold, it is not much of a contrarian asset right now. Similarly, commodities have done extremely well in the last few years, and they are the top performing sector in the S&P 500 (energy and materials are the top 20 in the last few years). All of Wall Street, and by design the hoard of passive index investors and performace-chasing hedge funds, are all over these sectors. I think some of the areas Faber originally suggested look risky to me right now. However, his arguments for the long term are pretty valid and worth paying attention to.

I think anyone interested in the bull case for commodities or Asian assets should read this book. It is well written and presents the case clearly. I also think the book is quite useful for someone that is interested in some historical facts. History never quite repeats but it does rhyme, or so said Mark Twain, and it's worth paying attention. I found the book interesting and well worth the read.


Rating: 80%