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Jim Rogers on Gold: Continues to Have a Long Overdue Correction

Daily Ticker

It’s been a rough week for gold. Prices fell for a seventh day in a row Friday morning, marking the worst slump since March 2009, according to Bloomberg Businessweek. By mid-morning gold futures were trading at $1,362 an ounce, down almost 2% from the previous close and 28% from the September 2011 high of $1,920.

Related: Gold Tumbles Again: Is the Era of Gold Over?

Explanations for the latest dive range from the strengthening U.S. dollar to the shrinking holdings of gold exchange-traded funds, which are not offset by increased demand from India and China.

The latest drop extend's gold’s plummet in mid-April to just below $1,400 an ounce, which put the yellow metal technically in bear territory.

Meanwhile, commodities guru Jim Rogers, in an interview with The Daily Ticker, maintains that gold’s move down was not unexpected.

Related: Gold Prices 'Still Very Inflated': Talking Numbers' Brian Sullivan

“Whenever things go down, people look for reasons,” says the famed investor and Streets Smart author. “But the main reason is…gold was up 12 years in a row without a down year--that’s extremely unusual.” And he should know. The legendary commodities investor correctly called the commodities boom that began in 1999 as well as the housing bust of 2007-2008 well before they happened.

Rogers says gold is having a “long-overdue correction,” which he warned about long before the precious metal’s plunge last month. He says he would start to be concerned that this was more than just a correction if gold drops to $800 or $600 an ounce. But, as he's said before, he would buy more gold at $1300 and $1200 an ounce.

Related: 12 (Misguided) Commandments of Gold Bugs: Barry Ritholtz

Rogers concedes that continued central bank "[money] printing” in the U.S. and now the Bank of Japan is “good news” that should move gold prices higher.

“One of things I’ve learned in the investment world, when something is ‘good news’ for [some asset] and it goes down, you better be very worried, so of course it looks bad for gold right now,” Rogers tells us. “There’s massive amounts of ‘good news.’ It should be going up.”

On the flip side, Rogers says India, the biggest buyer of gold in the world, is doing everything it can right now to “kill gold,” referring to the country's tax hikes on gold imports and restrictions on gold imports by banks. “If India really does a lot, who knows how low gold can go,” he says. “But if it happens, buy all the gold you can.”

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