What’s Good for Gold in the Long Run?

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Financial author, hedge-fund manager and commodities guru Jim Rogers says that he’s waiting for this current drop in the price to cut deeper before he’ll be ready to increase his position by Buying Gold.

Co-founder with Hungarian speculator George Soros of the Quantum Fund in the 1970s, and creator of the Rogers International Commodities Index in 1998, Jim Rogers spoke about his Gold Buying strategy on CNBC on Monday. "In December you told me gold would consolidate," said anchor Maria Bartiromo. "It has certainly consolidated."

"I will add [to my position] somewhere along the line, but not for a while," explained Rogers. "Gold has been up 11 years running, that’s very unusual. Things should correct. "If gold went down 35% or 40% it would go to $1200…But that’s normal, markets correct.

"That’s the way things are supposed to work, and that would be good for gold in the long run."

Jim Rogers’ view contrasts with that of Frank Holmes, CEO of the $2 billion US Global Investors fund management group, who last week outlined 5 reasons why this price drop offers a good chance to start Buying Gold.

  1. Developed-world government debt has doubled in 3 years to $8 trillion;
  2. Real interest rates are below zero – and "historically, when the inflationary rate is greater than the current short-term interest rate, gold prices rose;"
  3. Emerging-market central banks are Buying Gold in greater quantities;
  4. China is overtaking India as the world’s #1 gold consumer market;
  5. India has reversed this year’s new excise duty on gold jewelry, responding to a sector-wide strike and so encouraging Indian households to Buy Gold.

"[But] now things are happening," counters Jim Rogers, pointing to India’s sharply higher Gold Bullion import duty – "strict measures to kill demand for gold" – because New Delhi fears India’s yawning trade deficit, and blames gold imports for widening it.

Also, "Some of the European countries may have to sell their gold too," Rogers adds. Such events "could surprise us all, even me, who’s looking for a correction."

Thinking about Buying Gold today…?

Reprinted from Bullion Vault Gold News.

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.

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