Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers has been talking about the recent ‘upbeat’ US economic data and bullish expectations for gold. He dismisses the first as "juicing up" the economy to win the election and calls for caution on the yellow metal.
Speaking to India’s ET Now, Rogers said: "You have the American government spending staggering amounts of money right now, printing a lot of money and getting ready for the election".
"You have to remember the election in America in November…they do their best to get the economy juiced up so they can win the election," he added.
Rogers has been warning that the problem of too much debt can’t be solved by more debt and that the next recession will be worse because the debt is going through the roof and in his words "we’re shooting our bullets."
Rogers has long distrusted the Federal Reserve and the monetary policies it has been pursuing, claiming that "everything is worse instead of better."
The legendary investors’ solution? "Let people go bankrupt. Let the system clean out and start over."
"2013 and 2014 are what I am most worried about because this year everybody is trying to just get through the next election…Everybody is going to do their best to get us through the election. Watch out for 2013, Rogers told ET Now.
When asked specifically about gold, he presented a more cautious view.
"I own gold and I am not selling gold by any set of imagination," he said, adding that if the yellow metal rose in 2012, that would make it 12 years in a row that it would be going up. "That is very unusual for any asset."
"It would not surprise me if gold continues to consolidate. Maybe by the end of the year, it will start rising again and maybe even have another up year in 2012, but gold needs to continue to consolidate," the renowned investor said.
"I want it to consolidate," he added, stressing that this would be best for the metal in the long-term as it will would allow it to rise higher.
Gold traders are the most bullish in two months. Eighteen of 23 surveyed by Bloomberg expect the metal to gain next week, the highest proportion since November 11.
Spot gold prices dipped to US$1,637 an ounce this morning London time – a 1.4% fall from Thursday’s high.
Bullion rose 10% last year on the Comex in New York, beating the 1.2% drop in the Standard & Poor’s GSCI Total Return Index of 24 commodities and the 9.4% decline in the MSCI All-Country World Index of equities. Treasuries returned 9.8%, Bloomberg reported quoting a Bank of America Corp. index.
U.S. Gold Corp Chief Executive Rob McEwen said he expects global financial worries to push gold prices above US$2,000 an ounce in 2012 and much higher in the next few years.
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.