Gold Prices Could Still Correct 50%: Rogers

Investors can expect to see more volatility in gold prices in the next two years as the yellow metal forms a “complicated bottom,” said famed investor and author Jim Rogers. Rogers was one of the keynote speakers at FreedomFest, an annual convention that looks to gather free minds for open discussions on politics and the economy.
In an interview with Kitco News’ Daniela Cambone, Rogers said he doesn’t think that gold has found a bottom despite the fact that prices managed to rally after comments from Fed Chairman Ben Bernanke, who said on Wednesday that a “highly accommodative policy is needed for the foreseeable future.”
On Thursday spot gold managed climb to $1,298 an ounce, its highest intraday high since June 24. However Rogers said he doesn’t care what the Fed does as it only knows one thing which is to print money.
“I bought a little more at $1,200 just in case but I don’t think we made the final bottom,” he said.
Rogers added that gold has been an anomaly as it has rallied for 12 straight years before hitting its top in 2011; he added he would expect the correction to be just as unusual.
“It will take a year or two to make a bottom just because it took so long to make a top,” he said.
Spot prices hit a high of $1,920 in September 2011 and since then prices have dropped 33%. In the second quarter alone, gold corrected 23%, the biggest quarterly correction in a generation; however, Rogers thinks that prices could fall as low as 50% from the 2011 high and trade between $900 and $1000 an ounce. “It’s not at all unusual to have something go down 50% in a bull market,” he said.

The biggest factor that is dragging down gold is there is very little buying in India, the biggest consumer of the yellow metal. Rogers said that the Indian government has been aggressively encouraging the public not to buy gold in an effort to lower its massive current account deficit.
In the last few months the Reserve Bank of India imposed heavy restrictions on gold imports and the government has raised the duty on gold import. The country’s finance minister has also pleaded with the nation to restrict its gold purchases.
The aggressive tactics appear to be working according to the latest trade data; gold imports fell fell to 31.5 metric tons in June after a record 162 metric tons in May.
However, India is not alone in its negativity towards gold; Rogers said both the French and German governments are targeting gold as a way to boost their nations’ coffers.
“The French, they’ve got this socialist Prime Minister who is doing everything he can to soak out as much money from the poor tax payers as he possibly can and gold is an easy thing to attack. Likewise in Germany,” he said.
Although Rogers bought some gold and silver during the last price drop, he said he prefers to sit on the sidelines.
“Eventually I will start buy again,” he said. “But I’m not selling my gold by any stretch of the imagination.”