Legendary commodity investor and hedge fund manager Jim Rogers recently pointed out that silver prices are 50% below all time highs.
He’s talking about the brief momentary highs of nearly $50 an ounce back in 1980. With silver currently selling for less than $24 an ounce, Mr. Rogers is technically correct. But priced in 2010 dollars, the inflation adjusted high for silver would be closer to $124.
So if you believe that silver prices will make new inflation adjusted highs, then you’re expecting to see a five-fold increase in the price of silver.
Silver has already trounced just about every other asset so far this year — it’s up 40% since January 1st.
I believe that silver is due for a correction. If you’ve read any of my articles this week, you’ve heard me talk about Ben Bernanke and the upcoming Federal Open Market Committee (FOMC) meeting where he will announce the next round of Quantitative Easing.
Ben’s announcement could strengthen the dollar, which would be bearish for all commodities, not just silver. As I said, silver is due for a correction. Bernanke’s announcement could be a catalyst for silver prices to drop 5—10% in the short term.
That would create an excellent buying opportunity for people like me, who are long term bullish on silver.
Jim Rogers has taught finance at Columbia University’s business school and is a media commentator worldwide. He is the author of Adventure Capitalist, Investment Biker, Hot Commodities, A Gift to My Children, and A Bull in China. See his website.