Garrett Baldwin writes: In October, legendary Quantum Fund manager Jim Rogers made a prediction about gold prices that left many gold bugs shaking their head.
Although Rogers admitted he wasn’t going to be selling his hard assets, he predicted further consolidation and a near-term correction in the metals markets.
Predicting this short-term downturn, Rogers cautioned that gold had been on the rise for twelve consecutive years, a streak that was unparalleled. That was then.
This week, his prediction rang true as gold and silver prices took another huge hit. In the aftermath, gold prices are now down approximately 30% since reaching an all-time high in August 2011.
According to Rogers gold prices have even further to fall.
“I have repeatedly babbled about $1200-1300/oz., but that is just because that would be a 30-35% correction which is normal in markets,” he told Business Insider this week. “But I am a hopeless market timer/trader.”
Rogers cites four key forces fueling the current gold sell-off:
- India raised its gold import tax from 4% to 6%, which has limited the demand for gold in the world’s largest market for the metal.
- Technical analysts and chartists have been arguing that prices would fall.
- The collapse of the Bitcoin over the past two weeks coincides with many of the digital currency’s owners also owning gold.
- Finally, Rogers believes Germany’s demand that Cyprus sell part of its holdings in gold to alleviate debt concerns added to the sell-off.
Naturally, Rogers can bask in the moment. His gold call was right on the money.