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Jim Rogers Sees Gold Cross $2,000, and My Contrarian View on Silver
By Dian L. Chu, Economic Forecasts & Opinions
In 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?
Dian L. Chu, Oct. 4, 2010
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I believe Rogers is wrong when he claims that there will be LESS agricultural production. Look at these recent Economist articles on Brazil:
What "Food Shortage".
http://www.economist.com/node/16886442 and http://www.economist.com/node/16889019 Note the potential undeveloped acres that have nothing to do with the precious rain forest. The potential for developing and delivering food from Africa is many multiples of the Brazil potential. That is only if the Africans quit burning out the population every few years. If they don't, they won't have as much food demand anyway.great article, Augustus. thanks for that.
you may be right short-term, but Jimmy will be right long term as population will expand again to put pressure on the additional food supply. So, its not LESS absolute agricultural production, but rather LESS relative agricultural production.
betting against a Malthusian catastrophe may not only put you in the poorhouse but could cost you (or your offspring) your life if you are ill-prepared, Augustus. I agree, though, technological developments do cause "big pullbacks" in prices. call them buying opportunities. :)
What a dipshit. Could this please be the last guest post by the illustrious Ms. Chu?
Warren Buffett bought 129.7 million ounces of silver in 2001. That should say it all.
I think that I have read Bill Gates is also a large holder of physical silver.
...yes, that article completely misses the mark on silver. Also, a slow down in the world economy will mean less demand for copper, lead, and zinc...which will significantly reduce the amount of silver being produced as a bi-metal to these others.
http://www.sharelynx.com/chartsfixed/1SilverBullionInventory.gif
If anyone has a more recent bullion supply chart that includes 2000 - 2010 it would really pound the point home.
Chart: Silver
Ditto.
http://99ercharts.blogspot.com/2010/10/silver_05.html
Someone's got a serious buy program in effect. Water filters use silver. :D
Anyone who starts off a Jimmy Rogers-related post by saying that his CNBC interview was "exclusive" is not worth reading. Good as he is, the man says more or less the same thing all the time, which is frequently. Hardly "exclusive". Thus I didn't read on.
He's a retired millionaire with a solid track record of profiting on the long wave cycles. He goes off fundamentals (inventory levels, investment in supply infrastructure, weather effects on crop yields, etc). I also recall reading in his book on commodities that he made his millions by going opposite the crowd in '80, (bullish on stocks) and again in '99 in commodities. He took it all to the bank.
I don't agree with him on China, however.
Sometimes times are different.
Silver is cunsumed by industry.
Never happend before so yes this
is of course very positive for future
price.A lot of the use is high tech
wich won't hurt.
Gold will make you wealthy,
Silver will make you rich.
All-in 50%/50%
Don't let no one fool you; buy
the real thing.Fck future promises,
they will be broken.
Mister Rogers,
Is SO far off of his 5yr period for $2k Gold, it's not even funny.
Of course he likely said that, to not be seen as over board.
IMHO, We see $1,800.00 by Dec 31st,unless something drastic happens for the better.Where is it coming from?..I am clueless.
What about the Kitco daily pm brief and "technical analysis"?
http://www.kitco.com/reports/template_jimw.htm
Also, Jon Nadler emphasized how late September and early October are statistically bull periods for the pms:
http://www.kitco.com/ind/nadler/oct042010.html
Hell, my 3yr old grandaughter knows that.
GoNad-ler GoNad-ler its yah birthday... we gonta party like its yah birthday :D
Silver will be the metal du jour when the new 1099 reporting law goes into effect January, 2012. Sell $599 here, $599 there, never get reported.
I like the post, but freaking love your handle.
Ticked off that it didn't occur to me. If I were wearing a cap, I'd tip it to you.
Chart: Gold
"Take some profits."
http://99ercharts.blogspot.com/2010/10/gold.html
Written like a rat from the pack.
What you fail to appreciate is that silver is a poor man's insurance policy... the mad rush into the metal is because of impending fear of collapse of the USD.
Stop thinking like a rat... er traitor, I mean trader and take a look at COMEX data, contact Kitco for delivery or visit a coin shop. They can't keep enough of the stuff around. If you don't believe me, go to any grocery store and look at what bread, pasta and milk cost. The average person understands this because they don't live in an ivory tower and write nice articles all day - they get out into the real world. The average person know inflation and hyperinflation is coming.
In the event of a USD collapse, bars are useless, gold is out of reach for most people, so silver is a transactable alternative... it has been used for thousands of years.
Keep sticking your head in the trap... the bar will come down on you once default happens.
Yes, sterling piece from Chu here... reminds me of this one...
http://www.youtube.com/watch?v=AqWzUQ8lp3M
Wrong on farming ... you have nearly 20million (now ... perhaps 40m by 2012) ready, willing and able workers who will eventually be marched out of their Obamavilles and into the fields to work the Obamafarms to feed the more deserving third world. Sure, less efficient than mechanized farming, but never underestimate the ability of the Average Joe American to feed the world.
"However, silver is called “’Poor Man’s Gold” for a reason,"
$1,000 of gold costs the same as $1,000 of silver.
where silver prices are now that man is no longer poor (relative to fiat holders), so what was the point again?
And you can't fit it into your pocket ... yet!
"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. ", says Dian
Nothing but propaganda, with an assumed "close".
Anyone who thinks that being an industrial metal that gets used up and go extinct as well as being a precious metal isnt positive - needs a time out in the corner.
That coupled with the continued new uses being discovered is icing on the cake
Cramer just said he told us to buy gold. Us bears who didn't buy gold are idiots? I hate Cramer.
I have it on good sources, Crammer had a Lobotomy, many years ago,plus he's Bi Polar...............bear.
I assume you are listening to Cramer because you misplaced the remote?
Or, are you listening so you can short whatever stock he recommends?
If you watch the interview, Rogers is also recommending farming as a focus of investment. He is very bullish on wheat and agricultural commodities.
Russian millionaires know alot about gold!!!!!!!!!
http://www.youtube.com/watch?v=AkMsSIjQXxo
There is no way that gal with the platter of gold could lift that so easily. I laughed at that when I first saw this commercial.
When I read idiotic analysis like this, I laugh. Silver is not a base metal. To suggest it is simply illustrates how worthless this article is. In 1980 there were 4.5 billion humans and in 2011 there will be 7 billion. During that time applications for silver have exploded via clothing, medicine, technology, and in jewelry. Silver is a diminishing resource and the odds are it is much less plentiful than the comex and lbma are letting on.
I laughed as well. So if 40% of silver was used in industry, the other 60% must have been used in... Hmm... Gee I wonder what they did with the other 60% of available silver?
OH YEAH, SOMEONE PROBABLY BOUGHT IT FOR INVESTMENT PURPOSES...
Now, palladium and platinum? Those really are very expensive industrial metals. But silver? It's money (that sometimes gets used for other things).
Wait until the majority of vehicles are converted to electric, and do not need Pal, or Pt.
Pt will always be valuable because of scarcity........
I remember back in '98-/99, when Pt was only about $40-50oz more than Au.
Pt under $500.00..............
Errr...$54 in 1980 == $140 today...even if you discount some for the attempted Hunt corner, you're still talking a top-end value of $80-$120/oz for silver in 2010.
Errr...$54 in 1980 == $140 today.."
This assume you are using the BS inflation statistics that have been put out since the 80's. Choose your barometer but to me inflation has been well over twice the government published rate, putting the actual inflation adjusted high at closer to $300. I follow www.shadowstats.com in reaching my conclusions.
Silver is becomming increasingly valuable for RFID, water purification, medical hygene and of course the increasing use of alternative energy products such as solar. Investment demand is also soaring. Taking this into account with the shrinking supply of bullion (see below), the fundemental case for silver just keeps getting better. Personally, I believe silver is a buy anywhere below $100 and maybe higher. Yes, there will be volatility and the powers that be will continue to intervene but with more and more market participants realizing the ultimate game is in taking deliver of physical silver, the derivatives manipulation game is going to create a massive parabolic climb and we are in the inflection point region now in my opinion. Ride the volatility by holding the physical for the very long term and without margin because the giant paper players will influence the COMEX margin calls as part of the strategy. Millions of small investors deciding to have real money to protect savings are what will ultimately prove the downfall of the long term manipulation of both gold and silver in my opinion.
The above chart is from:
http://www.sharelynx.com/chartsfixed/1SilverBullionInventory.gif.
Silver is largely a byproduct of other industrial metals and any slow down in the global economy will result is lower net silver productions in all likelyhood.
I read where Rogers had said that, but then the article went on to say it would do that sometime in the next ten years.
Oh, nevermind then.
Watch it for yourself, very good interview:
http://www.cnbc.com/id/15840232?video=1607111488
And just for giggles, watch this at 3:45:
http://www.businessinsider.com/jim-rogers-cnbc-is-a-pr-agency-2010-7
Hey Conrad, read "Investment Biker" if you haven't already.
Why has Silver and Gold been spiking on Tuesdays for the recent past? I'm puzzled. Any Ideas?
SILVER:
http://finviz.com/futures_charts.ashx?t=SI&p=h1
Gold:
http://finviz.com/futures_charts.ashx?t=GC&p=h1
Hassle-man, Jim Willie was on Max K and talked about the "Gold Vigilantes". So describing bazillionaire Arabs and Asians putting the squeeze on the London boys. Willie said they are operating on a 7-14 day schedule...I think it's 7 days. Run a 240 min Gold chart...look at the green candles on Sep 7,14,21,28! Kudlow just called for a dollar "anchored" to Gold. He said it again!...we need a "golden anchor"...did he read road to roota ?
Dian, you madame, are an IDIOT!!
Typical dame.
HE: "Honey, would you like the gold ring at $2300 or the silver ring at $450?
SHE: "Listen, you cheap bastard, you bring home that sliver shit and your moving your fat ass to the garage."
If I were really mean I would say she also mis-spelled CONTrarian.
not to mention her agrument about sliver...
"But honey, how are we ever going to feed the chilrun in the coming years if we don't sock away a real chunk of change now?"
With the huge amount of silver that is shorted, don't you think the recent price levels were artificially supressed, thus the price now is barely normal and just starting to rise? How can you not address that?
You need to up your game.
Check the LONGS, to the SHORTS on Slvr now.........
Your mind will be blown.
I agree with that assessment. That's has been the the buzz in PM for some time. But forgiveable here.
These guys have too much down side. They steer clear. He runs a fund and can't be perceived as a quack if he's ever proven wrong or gets in a controversy.
"junk silver" (pre-1965 coins) can serve a number of uses that gold bars can not. At some point, since they are familiar to all Americans, these coins might be very useful as a bartering tool for basics. Gold is a great store of value but difficult to use to buy soup.
Agree. I use silver to buy groceries. I use gold to buy more silver.