Jim Rogers has long been one of the most influential names in the commodity world and he’s never been shy about vocalizing his love of precious metals. Last fall, Rogers expressed his concern that gold was now overvalued and would suffer a falling out with investors. Fast forward to 2013 and it appears that Rogers was right, as gold lost over 18% this spring, sending investors scattering. In a recent interview with USA WatchDog, Rogers explains why he thinks this loss was natural and necessary for gold investors.
Rogers Right on the Money
A few months ago, when gold was enjoying some of highest prices ever seen, Jim Rogers rained on investors’ parades, calling for a 20%-30% correction in gold prices. While he cited a number of reasons for this necessary correction, his main point was that gold had 12 straight winning years with only one correction over that period. This kind of growth was unheard of in the commodity markets, with Rogers assuming that the price of the yellow metal would eventually crumple.
Even with this pessimistic outlook, Rogers continued to hold the doomed commodity in his portfolio in hopes that after gold prices bottomed out they would return to a sustainable level.
Gold Will Rise Again
A record high 63,000 gold eagles were bought after last week’s panicked sell-off , with many investors scrambling to regain their losses and profit on gold’s new low. Rogers stated, “I expect gold to go much higher over the next decade, but it will not and cannot, until it starts having corrections,” as he noted that he is not convinced that gold has found its bottom just yet.
When asked what he thinks the eventual price level for gold will be, he stated, “Who knows how high gold will go, as long as we have mad men running the central bank.” For all that he is unsure about, Rogers consistently maintains his opinion that we will see a sustainable rise in gold over the long term.
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Editor's note: This article by Carolyn Pairitz was originally published on Commodity HQ.
No positions in stocks mentioned.