Jim Rogers "Gold Short Covering Rally Early 2014 Will Be Short Lived"

Legendary investor Jim Rogers predicts that as a response to significant drops in gold prices (i.e. 28% in 2013 and 37% since its peak), the precious metal will experience a short-lived covering rally. "So, it's overdue for a rally. We had a big drop in 2013. Everybody got negative, everybody got short." Last year, the high anticipation surrounding a tapering of quantitative easing policy by the Federal Reserve brought forth a decrease in investor inflation concerns and ultimately increased the overall sale of gold.

[youtube]http://www.youtube.com/watch?v=BZ_eNTpsZjo[/youtube]

Recently, this precious metal has experienced tremendous growth potential with its longest streak in over a year (i.e. a 4% increase this month following 4 consecutive weeks of rising prices). But these trends will not last long, and "after the rally, the year will see it going down again, and hopefully, finally we will make a nice bottom, and we can buy gold again." Mr. Rogers admits his preference for the value of gold (37% drop from peak) over silver (60% down from record high). Despite this preference, he has chosen to seize all gold and silver purchases, stating that he "won't buy [precious metals] just because they are down."

 

Roger's sentiment sounds about right.


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If the pattern in equities is any indication... buyers lacking confidence in the market wait for a correction which doesn't end up happening. And as the bull run continues more buyers who've been waiting on the sidelines end up joining in slightly later on as confidence builds, thus solidifying the bull trend upwards.

If the equities market corrects again in the next few months, I imagine more money will be moved back into precious metals to hedge.