Tuesday, February 14, 2012

Jim Rogers Out Of Step With KWN Gold Bugs (GLD, IAU, SGOL, GDXJ, AGOL) - ETF Daily News (blog)

Dominique de Kevelioc de Bailleul:  Speaking with Investment Week, Jim Rogers of Rogers Holdings said he doesn’t expect gold to surpass $2,000 in 2012, putting him on the other side of the boat of some well-known analysts.


“I do not think it will go to $2,000 this year, no,” said the 69-year-old American expatriate living in Singapore.  “I own it and I am not planning on selling it. It will go over $2,000 one day, but not this year.”  No elaboration on Rogers’ latest take on gold was contained in the Investment Week article of Feb. 10.


In sharp contrast to Rogers’ sentiments about the yellow metal, almost every regular guest on King World News, save Marc Faber, has come out with some bullish expectations for the gold price in 2012.  One in particular, Matterhorn Asset Management Founder Egon von Greyerz, told Eric King this week that he expects gold to reach $5,000 per ounce within 24 months, with a reasonable assumption gleaned from his forecast that he expects gold to clear $2,000 by the end of this year.  Otherwise, is von Greyerz suggesting a triple in price for gold during 2013, alone?


Rogers, who said late last year, that he would “get excited” if gold dropped to $1,200 and is hopeful that he will be smart enough to buy the yellow metal at that bargain price.


Today, the gold trades at $1,720, 16 percent from the $2,000 mark.


With Fed Chairman Ben Bernanke poising markets for a high probability of formal QE3 announcement sometime this year in his effort to combat further deflationary forces in asset markets, from where will this gold-negative event come that would exact a steep drop in the gold price?


Sharing Rogers’ concern for Europe, author of Red Alert, Stephen Leeb, said a Greek default in the Eurozone could trigger a sell off in gold, not unlike the 2008 sell off following the collapse of Lehman, though Leeb proffered the odds of Europe losing the battle with the Greek protesters as somewhat small, less than 20 percent.


“If something goes awry in Europe, that could easily lead to a very sharp and very big sell off in gold, just as was the case in 2008 when the world starting coming apart,” Leeb explained in an interview with KWN.  “People sold gold because they needed liquidity and gold went done sharply and then it went zoom, like a rocket ship on the way back.  That could happen today”


In October 2008, gold dropped to $680 per ounce during the panic following the fall of Lehman.  Four months later, in late February 2009, gold settled briefly above $1,000 again.



Leeb said another sell off in gold precipitated by a Greek tragedy would offer another stellar opportunity for investors to accumulate more of the precious metal, a suggestion echoed by Thailand’s Gloom Boom Doom publisher Marc Faber.


Though Rogers told Investment Weekly that he’s encouraged by the developments between Greece and the Troika, he believes that after Greece the restructuring and ‘austerity’ measures needed at the rest of Europe’s PIIGS won’t progress well.


“Europe needs to stop bailing out Greece,” Rogers said.  “The real issue is are they going to change their ways in future? If they do that, the situation will improve. Just sorting out Greece is not enough, if they were to address the problems in other countries then that would be exciting. But I do not think they will.”


In addition to the implied relative dollar strength against the euro in a Rogers scenario, he thinks the U.S. will muddle through 2012 without much incident.  But after 2012, the presidential election is over, and the sovereign debt problems in Europe will have moved to the United States, according to Rogers.


In the U.S., “things look better, but whether it is actually real or not is the question. I am worried about the U.S., especially in 2013 and 2014,” Rogers said, adding that, at some point the U.S. Treasury market “bubble” will pop.


“In the U.S., they are going to continue printing money and sending out good news to win votes this year,” Rogers said.


If January’s BLS jobs report serves as a prelude to a trend of outlandish propaganda about the state of the U.S. economy through to Election Day, Rogers’ case for a relatively firm dollar could very well extend into early 2013.  Then, the big reset to begin the ‘second half’ of an Obama presidency.  Gold could be the only fungible asset left standing.



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Jim Rogers

Warren Buffett

Nouriel Roubini