Tags: Rogers | gold | silver | price

Jim Rogers: Gold Headed for Short-Covering Rally

Wednesday, 22 Jan 2014 07:11 AM

By Dan Weil

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A short-covering rally is in store for gold after its 28 percent drop in 2013, says legendary investor Jim Rogers, chairman of Rogers Holdings.

Already, the precious metal has gained 4 percent this month, with the February Comex contract trading at $1,241 an ounce Wednesday morning.

Investors sold gold last year as anticipation that the Federal Reserve would taper its quantitative easing quelled worries about inflation.

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"There are huge shorts that have developed in precious metals," Rogers explains, according to The Economic Times of India.

"So, it's overdue for a rally. We had a big drop in 2013. Everybody got negative, everybody got short. So, we are going to have a rally."

But the upswing is unlikely to last, Rogers notes.

"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," he adds

Rogers says he prefers silver to gold, perhaps because silver is down 60 percent from its record high, while gold is down only about 35 percent from its peak. But he's not purchasing either at the moment.

"I won't buy just because they are down," Rogers said.

Gold has risen for four straight weeks, its longest winning streak since September 2012, benefiting from the fading stock rally this month.

But many experts say strong economic growth and rising interest rates will pull the metal back down. "In the long run, we are likely to see selloffs in gold, especially with more Fed tapering later this year," Thomas Capalbo, a precious metals trader at Newedge, told Reuters.

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