War Of The R'n'R Pundits: The Rogers-Roubini Conflict Escalates; Will Gold Hit $2,000?

Tyler Durden's picture

Earlier today Jim Rogers took a stab at Roubini saying that the NYU professor is wrong "about the threat of bubbles in gold and
emerging-market stocks." In addition to claiming that commodities are still down and the equity markets are firing on all cylinders, Rogers added that the price of gold will double to $2,000 an ounce in the next decade. As a reminder, lately Roubini has been warning about the threats of the biggest every carry trade being established: that of shorting the dollar. Rogers seems to disagree: “What bubble?” Rogers said, w,hen asked if he agreed with
Roubini’s view. “It’s clear Mr. Roubini hasn’t done his
homework, yet again.”

Never one to back down from a public confrontation Roubini retorted promptly at today's Inside Commodities Conference in New York. Roubini claimed Rogers' $2,000/ounce forecast is "utter nonsense." As Bloomberg reports:

There is no inflation or “near-depression” to drive gold
prices that high, Roubini said today at the Inside Commodities
Conference in New York. If a severe depression came to pass,
with investors buying canned goods and hiding out in log cabins,
“maybe you want some gold in that scenario,” Roubini said.

“Maybe it will reach $1,100 or so but $1,500 or $2,000 is
nonsense,” Roubini said. Gold rose to a record $1,096.20 today
on the New York Mercantile Exchange’s Comex division on
speculation that central banks and investors will purchase the
metal to hedge against a declining dollar.

Roubini shared some additional insights into what he believes are bubble markets:

In his New York speech, Roubini repeated his assertion that
asset prices have risen “too much, too soon, too fast.” He’s a
New York University professor and chairman of New York research
and advisory firm Roubini Global Economics.


“It is very hard to justify oil going from $30 to above
$80 based only on the fundamentals of supply and demand,”
Roubini said. Prices are “in part” a bubble, he said.

Position limits on oil trading, if they helped reduce
volatility, may be “beneficial” because the swings in oil
prices have been “destructive” to the global economy, Roubini

Ah, the good old days, when pundits only quarreled about whether or not subprime was contained (with the consistent chiming in of the Soothsayers of the Fed that not only had they not created a housing or credit bubble, but that everything is under control - just consider the following absolutely moronic quote from the fossil that destroyed capitalism: "Indeed, recent research within the Federal Reserve suggests that many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade, though this would not have been the case, of course, had interest rates trended sharply upward.... American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home." - Alan Greenspan, 2004). Now that the goldbug camp has such vocal and publicity eager (pr)opponents as Roubini, Rogers and Rosie, expect speculation on gold speculation to reach unprecedented levels.


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ghostfaceinvestah's picture

How much money does Roubini manage?

Anonymous's picture

Roubini also said at one point that unemployment would peak at 9%. He's good, but he's not THAT good.

kaiserwongze's picture

Academia vs. A proven successful investor.  What a joke.  Is it even a real matchup?

Anonymous's picture

So you're saying that investors are always right? Hmmm. You're a smart guy, must be an investor. Ex-Lehman engineer maybe?

Roubini is right about gold.

Anonymous's picture

Roubini went to the same Keynesian Schools as Bernanke and the other Wall Street Bozo's.

Sir John Maynard said "In the end we are all dead" We are approaching this period in time.

Got gold?

snorkeler's picture

Think for yourself

Question authority

SWRichmond's picture

gold will double to $2,000 an ounce in the next decade

More than that, in less than that.  JMVHO.  Short term?  Who knows.

ghostfaceinvestah's picture

I figure gold to 2000 an ounce by April, after Zimbabwe Ben announces his continued and unending support of Fannie/Freddie MBS.

Gordon_Gekko's picture

Actually, it will reach $2k next year.

chumbawamba's picture

Easily.  On its way to $10,000.

I am Chumbawamba.

Anonymous's picture

Hey you're right!! I had a prophetic dream that gold went to $8,000 and the gov't offered to buy it from investors by sweetening the pot by paying $9.000. The trick is that they will be paying with "new money" or a new currency which is still largely fiat money (but backed by a small percentage of gold - 2-3 %). Anyway, this all happens shortly after (within a month) of Obama's oath of office anniversary (Jan 20th, 2010). The US will have a three year depression followed by growth. This was brought on by bad, toxic, bank debt gone south and a really bad mortgage real estate crash. Look back at the Dow gold ratio historic charts. Gold spiked in the 70's or 80's and it will happen again. If dollar crashes, there's no telling how high gold could go!! Hey, don't laugh about the dream. Two weeks before 9/11 I dreampt that a jet hit a skyscraper & then the dream repeated. How weird is that? About 3 weeks ago, I told an aquaintance not to let her grandson go 4 wheeling. A week & 1/2 ago, he was killed when the 4 wheeler flipped crushing his head. I could go on, but you get the point. If not convinced, wait till gold hits 2,000 then get in for all your worth. The spike won't take long. It's going to be the ride of a lifetime. If you get in now, you'll end up making almost 900 percent!!

Unscarred's picture

Great trade idea, Anon:

Short reality, go long dreams...  Wait.  That trade is already on, and getting quite crowded, too.

Anonymous's picture

Just don't agree to having a particular number put on your hand or your forehead, in order to buy or sell.

BobPaulson's picture

One of the toughest things for an academic to digest is that things don't always operate according to models or smooth functions. Like many posters here, I think the big new bit of data is the potential for demand of physical metal over futures and paper gold. I tend to listen very closely to Roubini because I think he's very smart, but there is a potential black swan if delivery of physical gold is clogged up because some organizations actually have less gold than they say.

Anonymous's picture

"One of the toughest things for an academic to digest is that things don't always operate according to models or smooth functions."

This is true however according to my model $2000 Gold is attainable before June 2010 as we are setting up the parabolic move that has occurred every 2 years since 2001. Though $1600 is more fitting. However, One of the toughest things for a Goldbug to digest is that things don't always operate according to the speculations, rumors and half truths put forth by the Gold Conspiracy Set. I know from being a hardcore goldbug since the late 90's as I watched so many "sure thing" scenarios disintegrate before my eyes.

At some point the true hyperinflation will occur and take gold to the stratosphere. I just don't think this is that time. We are in a deflation while the Fed is throwing everything at it they are getting very little traction. As we endure another period of asset mark down all assets will be sold to raise cash to clear debt. All of this will bare fruit in 2 years when we make the next parabolic move but this with years of Fed stimulus searching for a home and an Inflationary environment in which to truly Flourish.

Anonymous's picture

We may have a small rise in the dollar in the near term, but gold is for real this time.

It is becomingly increasingly clear that the life supporting 'wealth' of the planet has peaked. Slowly realizing this, humans are starting to move their wealth from the abstract back to the real. Time to batten down the hatches. It won't matter whether there's inflation or not.

A Man without Qualities's picture

Economists gamble with their reputation, speculators gamble with their money.



cougar_w's picture

You can always recover your money at a later date.

BorisTheBlade's picture

While the reputation is like virginity - gone once and forever.

Anonymous's picture

But a lot more useful.

Unscarred's picture

Actually, reputations AND virginities can be sold for a handsome sum by their respective owners.  Just look at Natalie Dylan...


...OR, RNC Chairman Michael Steele, for that matter.


snorkeler's picture


One takes advantage of desperation. The other is desperation.

Miles Kendig's picture

That is IF you subscribe to the notion of a window dressing world.  Humans, by our very nature fuck up.  It is in how we deal with both success and failure that makes or breaks a reputation in my book

BorisTheBlade's picture

You're right. I wasn't serious though, just forgot to put some nasty smile in the end.

lsbumblebee's picture

Roubini's a gatekeeper. If he truly lived up to his MSM moniker "Dr Doom" he wouldn't be allowed on teevee. At least not on the General Electric Channel.

cougar_w's picture

Don't know about that. Seems like they bring him on so they can point at the geeky professor and say "explain to us again how you missed teh Rally!" and laugh behind their hands. It's class warfare, except that he's right and he's just trying to save the financial world for future generations, and they're just trying to make monthly ratings.

They'll be the first against the wall when the revolution comes.


Anonymous's picture

My copy of the reservation list calls for (1)David Rockefeller Sr.(2)Henry Kissinger etc.

I don't have the CNBC talking heads on my copy of the official list until sometime after we have all members of the Bilderburg Group and the CFR taken care of.

But, we could bump them up, if we have the time.

BorisTheBlade's picture

“It is very hard to justify oil going from $30 to above $80 based only on the fundamentals of supply and demand,” Roubini said. Prices are “in part” a bubble, he said.

Ok, but then it should be almost impossible to justify why it went down from $147 to $30 a bbl in less than a year (just by looking at fundamentals of supply and demand). One of the two: either it is not about the fundamentals, or the fundamentals that professor is looking at are not the same as those affecting the oil market.

Green Sharts's picture

The price of oil dropped from $147 to $30 during a period when the global economy collapsed and oil supplies went from very tight to a glut.  The increase from $30 to $80 has occurred with global economies remaining weak and without any tightening of oil supplies.

Of course, oil didn't trade very long at either of those extremes, which were almost certainly a result of momentum and leverage.

If the major oil companies thought $80 oil was justified by the fundamentals they would be ramping up their exploration and production budgets, which they're not doing.


BorisTheBlade's picture

Ok, fair enough. Oil producers are not increasing their budgets and expecting that price of oil price is not going to sustain current level and will have to go down.

However, what if the opposite is true and they do not expand oil production because current price of $80 is lower than what is perceived as a justified level? Why would you increase output at a level of $80 a bbl if you can do so at a level, say $100? If price of oil went up from $30 to more than $75 before any economic recovery, then how much higher it can go if there is a recovery. And remember - recession is over, Roubini said so.

brandy night rocks's picture

Anyone think there's a possibility the Administration has been working on the Fed and Treasury to let the dollar sag to crisis levels, only to be miraculously firmed up in early 2010?  It would certainly boost the credibility of the Obama/Reid/Pelosi hydra if, after Labor Day and heading into the final mid-term election sprint, that three-headed monstrosity could croak out self-congratulatory fluff about having "pulled the dollar back from the brink."

And if something like that were to happen, where do commodities go?


All speculation, I know.  But you know this crowd is going to do something to pump the financial picture going into the fall - I've just been trying to figure out what it is.



Edna R. Rider's picture

Oil at $100 will warrant a response.  So would gold over $1200.  But it will be a tepid "planned" response and likely serve to just stall the dollar.  My view is the administration, especially Timmy's crowd, are all like computer network engineers, tweaking things every day to keep things going at about the same (lousy) level, when in fact throwing away a bunch of machines and starting over is the smarter approach.  There is no throwing away in this administration.

Anonymous's picture

Roubini's $1100 'perhaps' number is near breached already. Maybe he was misquoted and meant to say $1200. Hopefully he has put his money where his mouth is and has bought gll all the way up!

Anonymous's picture

That is such a great quote by Big Alan Greenspan during what turned out to be the hight of the housing bubble.

And here is another...
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said”

Anonymous's picture

"That's part of the normal manner of a chairman, to appear to be saying something while you're saying nothing at all," commented the Nobel laureate economist Robert Solow.

"Alan is the passed master of this. It's what central bankers do. They're like squid, they emit a cloud of ink and move away."

snorkeler's picture

From what I have read, he purposely created large sections of his "fedspeak" statements to sound complicated but mean absolutely nothing. And he thinks it was funny.

Its easy to be funny when you know exactly when the house is going to collapse.

Hondo's picture

Rogers is an idiot on this one. His implication that there is no bubble because a commodity like oil hasn't risen to the previous high of 145 is utter nonsense and shows economic stupidity.  Maybe, just maybe the previous high was a bubble also....what an idiot.

Anonymous's picture

I think there's a legitimate case to be made that the 2008 price spike was not primarily a bubble phenomenon. Here is an excerpt from an article by Steven R. Kopits I originally saw in Energy Current. It is no longer there, but is reproduced at ASPO:

Peak oil, not speculation

"...After many years of solid growth, oil production plateaued in October 2004. Regardless of the price level, the oil supply simply stopped responding, and from then on, the world had to make do with broadly flat supplies. Ordinarily, the expansion of the world’s economy would be accompanied by increased energy consumption and an inelastic oil supply might have been expected to hinder economic development. It didn’t. In the four years to mid-2008, the world economy expanded by 18%. The global economy boomed, even without new oil.

However, this came at a price. In the absence of oil supply growth, demand accommodation was required. This was achieved by secular prices rises averaging 25% per annum from 2003 to the end of 2007. In other words, the price of oil went up, and this constrained consumption by causing the marginal consumer to drop out of the market. This proved a workable solution for a time, but the global economy could not sustain 25% annual price increases indefinitely, and by second half 2007, the situation was becoming critical. Consumption was being maintained by continuing draws on inventories averaging 1.4 million b/d, and virtually every producer, with the possible exception of the Saudis, was running flat out. By early 2008, even the Saudis were throwing the kitchen sink at the market - all to no avail. On paper, it looked like a peak oil nightmare.

Of course, consumers were responding. From 2005, the EU and Japan began to shed consumption and, from late 2007, US consumption also began to decline as the US consumer sought to escape high oil prices. Notwithstanding, developed economy consumers were not abandoning the market as fast as Chinese consumers were entering it, and prices continued to rise. In early 2008, prices took off and some argue that speculation took over. Still, as inventories continued to fall until May 2008 and all the oil producers were running at full output, the case for market manipulation at that time is hard to make. Indeed, the market was in backwardation most of this time. In backwardation, futures prices are lower than spot prices, the equivalent of the market saying, “Well, prices are high now, but they’ll be lower later.” The market - those very speculators - believed that oil was over-priced but was continually surprised as demand kept pushing up prices.

Prices did ultimately fall, but not because the supply situation eased, nor because speculators fled the market, and not because inventories were released. Prices fell because the global economy collapsed. ..."

cougar_w's picture

There are a few people who comment here who I can tell understand complex systems and emergent properties. It's not a subject gamblers would find interesting, and most day-traders are gamblers. Not trying to pick a fight, just making a useful generalization.

I promise you, Roubini absolutely gets it. Rogers I suspect doesn't get it. It doesn't matter, it won't change anything in the end, it ain't a beauty contest. It's just a good idea to know who's looking at it from which angle.

Things are not as they appear; we are no longer the masters ,assuming we ever were. I get the feeling that the financial system as now wired up is set to kill us. It wouldn't have done that before, this is a new thing, something we created ourselves. It's like some animal made entirely out of blades that nobody can manage now and we created Her and there is no escape, She is on her way. Those "financial weapons of mass destruction" are only part of the problem. The dollar carry trade is becoming another. The flight to risky assets with borrowed money, yet another. Paying debt with debt, even worse. Monetary policy see-saws and exit strategy dithering will become the blunt tools that cut the chains and liberate the beast. And when the bitch finds herself free everything within a very large radius is going to be turned instantly into sausage.

Good luck trading around that one, sirs.


Anonymous's picture

This doesn't really make things a lot clearer, Cougar.

Not sure you get it either. (I certainly don't).

Stevm30's picture

Thank god that you're here to clarify things for us Cougar...

cougar_w's picture

Wasn't meant for you. The lecture you need to attend is a little later.

Anonymous's picture

I wish this site had more cougar's instead of all the dumb-dumb movie characters.

snorkeler's picture

I think this is very well put. Things are certainly not as they appear at all.

When the whole thing obliterates there will be many saying: "what just happened???"

Anonymous's picture

Maybe Rogers is just another variation of Jim Cramer? A pumper for gold? Never give a sucker an even break.

chumbawamba's picture

I agree, Rogers is not all that much smarter than Roubini.  A good trader, perhaps, and lucky for the most part, but he doesn't seem to see the macro picture very clearly sometimes.

I am Chumbawamba.