GOLD PRICE NEWS – The gold price dropped $9.00 to $1,364.50 Friday morning, sending the price of gold down 4.0% thus far in 2011. Better than expected sovereign debt auctions in Spain and Italy and hawkish comments on inflation from European Central Bank (ECB) President Jean-Claude Trichet weighed on the gold price yesterday. As stop losses are hit in COMEX gold futures, gold continues to sink. The euro surged higher against the U.S. Dollar yesterday, rising 1.6%, to 1.334 and traded near that level heading into the open on Wall Street.
Silver moved lower in concert with the gold price once again, falling $0.10 to $28.58 per ounce. Shares of gold and silver companies were weaker in pre-market activity after posting considerable losses on Thursday. The Philadelphia Gold & Silver Index (XAU) retreated 3.4% to 208.74 yesterday with notable decliners including XAU components Barrick Gold (ABX), Kinross Gold (KGC), and Silver Wheaton (SLW). Shares of ABX, KGC, and SLW finished lower by 5.1%, 3.2%, and 5.9%, respectively.
The gold price also came under fire on comments from legendary investor Jim Rogers, who stated in a presentation to business professionals in Chicago that the yellow metal is “overdue for a rest” and likely headed lower in the shorter-term. Rogers, who founded the Quantum Fund with George Soros in the 1970s and correctly predicted the start of the commodities bull market in 1999 has been bullish on the gold price for the better part of the past decade.
While Rogers has noted in the past that he is a “terrible market timer,” he still sees the price of gold moving south in the months ahead after a relentless run to new highs in the second half of 2010. However, although gold “may go down for awhile,” he reiterated his prediction that the gold price will surpass $2,000 “in this decade.” The Chairman of Rogers Holdings did not say if he is planning to sell any of his gold position due to his bearish near-term forecast.
Rogers continued his discussion in an interview with the Economic Times, where he stated his preference for other commodities over gold at this time, particularly silver and rice. “I would rather own agriculture and so other commodities in 2011, but silver may outperform a lot of things…Silver is still 40% below its all-time high. So silver has not been any sort of great bubble compared to perhaps some other assets we know. As a class between agriculture, energy and metals, I would rather own agriculture and by the way of the precious metals, I would rather own silver than gold.”
As for governments and central banks in many developed economies, Jim Rogers once again strongly criticized their decisions and cited their misguided policies as a primary catalyst for his bullish long-term gold price forecast. “Central banks around the world scare me. They are doing, not all, but many of them are doing, foolish things and we are going to have serious problems down the road. I do not know how they plan to get out of what they are doing.” The Federal Reserve “spent huge amounts of money. I do not know how they are going to get out of this problem without causing serious problems for everybody…All of these guys, especially Americans and Brits who have been printing money and buying absurd assets, are going to cause many more problems in the end than they are solving.”