Monday, November 21, 2011

Jim Rogers on the Silver Price

If traders like gold at today's prices, then silver should be bought first, says famed commodities bull Jim Rogers.

Speaking with India-based Economic Times (ET), Rogers, the man who looks and dresses like a gentleman plantation owner from Mississippi (without the accent), said, of the two precious metals, gold and silver, he prefers silver at this time.

“I would prefer silver because it is still depressed on a historic basis. Silver is 30 percent below its all-time high, he said. “Gold is 10 percent below its all-time high. I would prefer one just on relative value, silver is probably better.”

Talking like a bona fide billionaire, Rogers isn't going to play with charts and suggest a time frame for gold's ascent above the magical $2,000 mark. Instead, the alumnus of Balliol College at Oxford went out on the limb and expects gold to reach $2,000 by 2020.

Like many people in Asia, especially in India, where the audience for the Economic Timesis largest, he owns gold because he wants it—just as he likes all commodities that he can trade in a futures market. India is expected to import more than 1,000 tons of gold this year, according to the World Gold Council (WGC)—that's an equivalent amount of Switzerland's total gold reserves—imported into India in one year.

“Gold would certainly go to 2,000 [USD]. I do not know when it is going to go to 2,000, but I know it certainly would during this decade,” Rogers sidestepped the question of when he thinks gold breaks the 2k mark. “Whether it's an asset class or a safe haven is irrelevant, the fact that I own it is because I want it. The price would go higher.”

Maybe Monday's interview with Fox Businesswas a more suitable place to break any bad news from the 69-year-old father of two toddler girls. In India, the population isn't happy with high gold prices, as a lot of the precious metal is bought for ceremonial and cultural reasons.

In the Fox Businessinterview, Rogers warned of a coming meltdown next year (or 2013) in the world markets, much worse than 2008-9. As he has repeated said for several years, it's the US dollar that's the most troubled currency today, though blowups in other currencies throughout may precede the fall in the Greenback.

“We still have serious problems throughout the world. The U.S. is in fact in worse shape than Europe,” Rogers said, Monday. “Europe is getting the press these days because the debts are coming due but America is the largest debtor nation in the history of the world.”

And as far as the euro is concerned, Rogers believes the currency won't make it, which adds another 27 percent to the dollar's 61 percent of total reserves held by central banks expected to decline in purchasing power throughout this decade. Under that thesis, he believes investors need to hedge themselves through commodities holdings.

“I own the Euro, but longer term it is going to be a disaster for all of us, the whole world, especially for Europe, because this is not solving the problem,” he told ET. “A year from now there is going to be more debt in Greece and in Europe. Two years from now, there is going to be more and more debt. Debt just keeps going up and nobody addresses the real fundamental problem.”