INTERNATIONAL. Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers warned that if silver continues to go up like it has been over the past 2 or 3 weeks and reaches triple digits in 2011, he will probably start to think about selling because then 'you've got a bubble'.
Speaking to Financial Survival Radio, Rogers said: " My hope is, silver and gold and all commodities will continue to go up in an orderly way for another ten years or so, and eventually the prices will be very, very high".
"I hope something stops it going up in the foreseeable future and we have a correction," he added.
Explaining his wish, Rogers warned that "a parabolic move and all parabolic moves end badly".
Most investors don’t notice something until there’s a good, nice bull market in place, such as with gold and silver, he said, adding after ten years of price rises in gold, people are starting to notice.
"Eventually, everybody’s going to be owning gold, and then we’ll all have to sell our gold. But that’s a long way from now, he predicted.
The legendary investor doesn't consider the recent increases in precious metals as parabolic.
"If silver continues to go up like it has been over the past 2 or 3 weeks, yes, then it would get to triple digits this year. And then we’ll have to worry. It’s not parabolic yet".
"There’s never one in history that hasn’t popped," he noted.
The price of gold bullion jumped above US$1500 per ounce on Wednesday, setting new Dollar and Sterling highs but falling sharply against the Euro as the single currency rose to its highest level since 2009.
"Silver prices remain very strong, but seem to have run ahead of the fundamentals," says bullion bank Scotia Mocatta's latest Metal Matters monthly.
With silver setting its 8th new 31-year high in 13 trading days so far in April, "If gold corrects expect silver to follow," says Scotia. "Longer-term [gold] investors generally seem comfortable to hold their existing positions...[yet] the level of interest is low considering how much uncertainty there is in the market and how weak the dollar has been."
Rogers advises watching the dollar and the price action in deciding when it is time to exit precious metals.
"Maybe the US dollar is going to become confetti in 2011, and if that’s the case and silver goes to US$150, then obviously I wouldn’t sell my silver. It would be the US dollar which is collapsing. But if silver goes up... without currency collapse, I would be very worried," he told Financial Survival Radio
"There’s no question in my mind that all commodities will be a huge bubble someday. But I don’t think that bubble is going to happen in 2011," Rogers added.
Following last week's news that the University of Texas' endowment managers have switched from a derivatives to physical allocated gold position, "One of the most interesting highlights is the massive growth in physical gold bar investment," writes David Wilson at French bank Societe Generale, commenting on the 66% jump in gold-bar sales reported by the GFMS consultancy for full-year 2010 worldwide.
"If suddenly all the pension funds wake up and say, I’ve got to own gold, they may start thinking about it more and more. But the thing that’s been getting people’s attention is the fact that gold has been going up so much. That’s the wrong way to invest. Where were these guys five, ten years ago? asked Rogers.
"That’s when they should have been doing all of this".
To hear the interview, please click here.
Notes: Rogers has spent a career being one step ahead of mainstream investment thinking. Amongst his many accomplishments, Rogers was co-founder with George Soros of Quantum Fund. During his ten years with the fund, the portfolio gained more than 4,000%, while the S&P rose less than 50%.
Rogers retired from Quantum in 1980 and became a guest professor of finance at Columbia University Graduate School of Business and in 1989 and 1990, the moderator of The Dreyfus Roundtable and The Profit Motive with Jim Rogers.
Underscoring his convictions that future prosperity will come from China, Rogers' two young children speak Mandarin.