Jim Rogers: No Bubbles In Gold Or Emerging Market Shares
Unlike Nouriel Roubini, legendary investor Jim Rogers doesn’t see any bubbles forming in gold and emerging market equities. Bloomberg’s Mark Barton and Brian Swint wrote this morning:
Jim Rogers, the investor who predicted the start of the commodities rally in 1999, said that Nouriel Roubini is wrong about the threat of bubbles in gold and emerging-market stocks.
Many commodities are still down from record highs and equity markets aren’t on the brink of collapse, Rogers, chairman of Singapore-based Rogers Holdings, said in an interview on Bloomberg Television today. The price of gold will double to at least $2,000 an ounce in the next decade, he said.
Roubini, the New York University professor who warned in 2006 about the coming financial crisis, said on Oct. 27 that investors are borrowing dollars to buy assets and creating “huge” asset bubbles. Rogers said that he’s not buying stocks now, though he may buy more gold.
“What bubble?” Rogers said, when asked if he agreed with Roubini’s view. “It’s clear Mr. Roubini hasn’t done his homework, yet again.”
The former partner of George Soros argued his point about there not being any bubbles. From the piece:
Rogers countered Roubini’s arguments by saying that Chinese stocks and sugar, silver, coffee and cotton have all dropped from their historical highs by at least 50 percent.
When asked if gains made this year pointed to a bubble, he said: “It’s not a bubble if something is up 100 percent this year, but down 70 percent from its high. That’s not a bubble, that’s a good year. That’s a great year. Maybe it’s too high for this year, but that’s not a bubble.”
On the topic of gold, which reached a record $1,095.40 an ounce in London today, and a 24 percent gain for the year, Rogers said:
I suspect it’s going to go over $2000 some time in the bull market, but depending on what happens in the world it could go much, much higher. The old high, back in 1980 adjusted for inflation, would be over $2000 now, just to get back to the old high. So we’ll certainly get there some time in the next decade.
On emerging markets, he said:
I don’t know any emerging market stock markets that are so high I’d call them a bubble. They’re certainly all up a lot, maybe they’re too high, but being too high is not a bubble for anyone who knows financial markets.”
Rogers said the only bubble he sees right now in the West is U.S. bonds.
And just like Thailand-based adviser Marc Faber, he’s forecasting a rally in the dollar. From the piece:
“Right now, everybody including me is pessimistic on the U.S. dollar,” Rogers said. “That usually leads to a rally, whatever the asset is, and I would just suspect it’s going to happen again this time.”
“How long will it last? I don’t know,” he said. “It depends on how the world evolves. Somewhere along the line, I expect I’ll have to sell the rest of my dollars.”
Source:
“Rogers Says Roubini Is Wrong on Bubbles as Gold, Stocks Rally”
Mark Barton, Brian Swint
Bloomberg, November 4, 2009
