Jim Rogers has long been a commodities bull who is not afraid to share his opinions with the rest of the world. While he admits that he is not one to endorse “top picks”, he does have specific asset classes and commodities that he likes to keep an eye on, one of which is the precious metals sector. Earlier this year, Rogers stated that he thinks gold will suffer a correction before heading back up, which prompted his statement that he owns gold, but is not currently buying or selling. But recently, Rogers pointed out a dangerous sign he sees developing for the precious metal [for more gold news and analysis subscribe to our free newsletter].
In a recent interview with Business Insider, Rogers gave his thoughts on the economy, with the usual shout-outs to the agricultural world. He went on to discuss gold and what trends he sees developing in that market. Rogers stated that he sees a dangerous sign developing for gold which consisted of two separate prongs. The first thing he pointed out was how rare it was for an asset to appreciate for 12 straight years as gold has done; not to mention the fact that it is on pace to rise for 2012.
The next point Rogers made is one that many investors tend to overlook, which is the fact that speculators have been piling into this precious metal as of late. Typically, that is not a great sign, as rampant trading can wreak havoc on prices and create volatility where there originally would have been none. The interviewer prodded Rogers to ask when he thinks gold will correct, to which he replied that the asset has been doing so since September of 2011, and these recent signs are just reasons to be bearish in the short term [see also Three Reasons Why Gold Is Overvalued].
As far as the long-term is concerned, Rogers is convinced that gold will rise along with a number of hard assets. The dangerous signs he noted only apply to a short term correction, hence the reason why he stated that he will be neither buying or selling the yellow metal anytime soon. It is true that gold has pulled back since the announcement of QE3, but is it a correction that will persist for a few months, or is gold ready to make another charge at $2,000/oz? Let us know in the comments below.
Disclosure: No positions at time of writing.