Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Jim Rogers Sees Gold Cross $2,000, and My Contrarian View on Silver

Commodities / Gold and Silver 2010 Oct 05, 2010 - 05:23 AM GMT

By: Dian_L_Chu

Commodities

Best Financial Markets Analysis ArticleIn an exclusive interview with CNBC on Monday, Oct. 4, Jim Rogers talks about commodities, bond and the currency market.

Commodities to Outshine Stocks and Bonds

Because of the global central banks’ money printing express, Rogers says commodities will outperform equities regardless if the economy recovers or not.  However, not all commodities are created equal, he points out in the case of aluminum, whose price is lagging mostly due to the increased capacity in China.


He advises investors to look for commodities that are still cheap. From that perspective, he sees opportunity in sugar and rice. Overall, Rogers thinks agriculture has a "wonderful future" in the next 5-15 years due to diminishing farming activity around the world.

Rogers also sees a U.S. bond bubble and indicates although he is not shorting the U.S. Treasury in any "significant way" yet, he may not wait much longer.

Gold - $2,000 in Five to Ten Years

"Gold is going to go a lot higher over the next decade. It may slow down for a while because it's run up so dramatically here in the last few weeks. But gold's going to be much higher. Adjusted for inflation it should be well over $2,000 now."

Rogers says gold will continue to gain on the failed monetary policies of the U.S. government. In precious metal, from a valuation standpoint, he thinks silver would be a better investment than gold right now as it is still 60 percent below its all-time highs, while gold keeps making all-time highs. But he also tells investors holding onto gold and not to take profit at this juncture.  He owns both metals.

On U.S. Dollar & Brazil

Rogers said based on experience, he's found in life it is better to be a contrarian. Applying that philosophy, Rogers does not think he would sell any more US dollar at this time, and if anything, he might contemplate buying instead, since everyone is so pessimistic about the dollar right now.

He also said he owns some Chinese, Malaysian shares and some international airlines, but cautions against jumping on the "moving ship" of Brazil.

My Contrarian Take on Silver

Rogers has been quite consistently long on agriculture, gold and silver for the past year or so. I generally tend to agree that gold and commodities could head higher driven by the fear factors like currency debase and inflation arising out of the global monetary QE1 and incoming QE 2.

However, with regards to silver, I am going to be a contrarian this time around.

Gold has had a spectacular 20% run-up this year hitting new all time highs, but it pales in comparison to silver. On Monday, spot silver prices shot up to $22.13 an ounce, a fresh 30-year high, up a staggering 31% this year.

On the surface, Rogers has a point that silver is still a long off its all time high, which was reached in 1980 when the Hunt brothers decided to buy up almost a third world’s deliverable supply of silver as a hedge against inflation. Within one year, silver went from $5 to peaking at $54 in 1980. Ultimately, COMEX and Federal Reserve intervened resulting in the collapse of the silver market.

Now that we've had a crash course on the history of sliver, it should not take long for one to realize that, in contrast to gold, there’s very little chance for silver to touch, let along surpass that all-time-high mark.

Furthermore, since both gold and silver are part of the precious metals family, silver has been attracting interest of fund managers as a cheaper alternative to gold. But unlike gold, silver is also a base metal, since around 40% of the silver supply in 2009 was used in industrial applications such as electronics manufacturing.

So, silver, more base metal than precious metal, has essentially been piggyback on gold as an investment metal based on attractive valuation relative to gold.  However, silver is called “’Poor Man’s Gold” for a reason, as it has by no means the similar stature and glitter of gold in terms of wealth preservation and being the ultimate safe haven.

And as the current price level seems to suggest quite a bit of "faux" fear premium has built in, the white metal appears overbought and could be heading towards a bubble stage.

 

Video Source: CNBC

Disclosure: No Positions

Dian L. Chu, M.B.A., C.P.M. and Chartered Economist, is a market analyst and financial writer regularly contributing to Seeking Alpha, Zero Hedge, and other major investment websites. Ms. Chu has been syndicated to Reuters, USA Today, NPR, and BusinessWeek. She blogs at Economic Forecasts & Opinions.

© 2010 Copyright Dian L. Chu - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in