Jim Rogers Out of Step with KWN Gold Bugs

Speaking with Investment Week, Jim Rogers of Rogers Holdings said he doesn’t expect gold to surpass $2,000 in 2012, putting him on the other side of the boat of some well-known analysts.  Sign-up for my 100% FREE Alerts

“I do not think it will go to $2,000 this year, no,” said the 69-year-old American expatriate living in Singapore.  “I own it and I am not planning on selling it. It will go over $2,000 one day, but not this year.”

No elaboration on Rogers’ latest take on gold was contained in the Investment Week article of Feb. 10.

In sharp contrast to Rogers’ sentiments about the yellow metal, almost every regular guest on King World News, save Marc Faber, has come out with some bullish expectations for the gold price in 2012.  One in particular, Matterhorn Asset Management Founder Egon von Greyerz, told Eric King this week that he expects gold to reach $5,000 per ounce within 24 months, with a reasonable assumption gleaned from his forecast that he expects gold to clear $2,000 by the end of this year.  Otherwise, is von Greyerz suggesting a triple in price for gold during 2013, alone?

Rogers, who said late last year, that he would “get excited” if gold dropped to $1,200 and is hopeful that he will be smart enough to buy the yellow metal at that bargain price.

Today, the gold trades at $1,720, 16 percent from the $2,000 mark.

With Fed Chairman Ben Bernanke poising markets for a high probability of formal QE3 announcement sometime this year in his effort to combat further deflationary forces in asset markets, from where will this gold-negative event come that would exact a steep drop in the gold price?

Sharing Rogers’ concern for Europe, author of Red Alert, Stephen Leeb, said a Greek default in the Eurozone could trigger a sell off in gold, not unlike the 2008 sell off following the collapse of Lehman, though Leeb proffered the odds of Europe losing the battle with the Greek protesters as somewhat small, less than 20 percent.

“If something goes awry in Europe, that could easily lead to a very sharp and very big sell off in gold, just as was the case in 2008 when the world starting coming apart,” Leeb explained in an interview with KWN.  “People sold gold because they needed liquidity and gold went done sharply and then it went zoom, like a rocket ship on the way back.  That could happen today”

In October 2008, gold dropped to $680 per ounce during the panic following the fall of Lehman.  Four months later, in late February 2009, gold settled briefly above $1,000 again.

Leeb said another sell off in gold precipitated by a Greek tragedy would offer another stellar opportunity for investors to accumulate more of the precious metal, a suggestion echoed by Thailand’s Gloom Boom Doom publisher Marc Faber.

Though Rogers told Investment Weekly that he’s encouraged by the developments between Greece and the Troika, he believes that after Greece the restructuring and ‘austerity’ measures needed at the rest of Europe’s PIIGS won’t progress well.

“Europe needs to stop bailing out Greece,” Rogers said.  “The real issue is are they going to change their ways in future? If they do that, the situation will improve. Just sorting out Greece is not enough, if they were to address the problems in other countries then that would be exciting. But I do not think they will.”

In addition to the implied relative dollar strength against the euro in a Rogers scenario, he thinks the U.S. will muddle through 2012 without much incident.  But after 2012, the presidential election is over, and the sovereign debt problems in Europe will have moved to the United States, according to Rogers.

In the U.S., “things look better, but whether it is actually real or not is the question. I am worried about the U.S., especially in 2013 and 2014,” Rogers said, adding that, at some point the U.S. Treasury market “bubble” will pop.

“In the U.S., they are going to continue printing money and sending out good news to win votes this year,” Rogers said.

If January’s BLS jobs report serves as a prelude to a trend of outlandish propaganda about the state of the U.S. economy through to Election Day, Rogers’ case for a relatively firm dollar could very well extend into early 2013.  Then, the big reset to begin the ‘second half’ of an Obama presidency.  Gold could be the only fungible asset left standing.  Sign-up for my 100% FREE Alerts

Lehman-like Meltdown Looms Large

Greece may be a small European nation with small financial problems when compared to a backdrop of a quadrillion dollars of accumulated global debt (according to the Bank of International Settlements), but Greece has also become the litmus test for the resolve of political leaders to fix the problem with the euro and its dependent counter-parties worldwide.

As the pressure from the IMF on the Greek president intensifies while the crowds on the streets of Athens grow in size and violence, traders have been monitoring sovereign debt interest rates for signs of contagion amid the crisis in Greece.

Signs have appeared in the European bond market, whereas the yields on Greek, Irish and Portuguese 10-year sovereign debt have all surpassed the 10% print, with all three moving higher every week to levels which are now higher than the lofty rates of March 2010 when the Greek crisis emerged in earnest.

What everyone seems to fear is another Lehman-like meltdown.  And for good reasons, too.  But this time crisis could be much worse.  A major financial institution failing is one thing.  It’s together another story if the ones doing the bailing out need bailing out.  And as the crisis deepens, the loan amounts grow while the number of pockets left to guarantee the additional debt grows smaller and smaller.

Germany and France are financial backbones of the EU, and both countries’ politicians feel pressure from those determined to keep the euro together as well as from constituents who want nothing to do with bailing out “lazy” Greeks.

Asked if the markets need to fear a Greek debt default, Belgian finance minister Didier Reynders told Belgium’s RTL Radio, “We can indeed fear it because that’s what we experienced in 2008.”

“Remember — the collapse of an American bank, Lehman Brothers, Reynders continued.  “Everyone said ‘OK, a bank’s gone under.’ But that triggered a collapse in confidence right through the financial sector and banks could no longer borrow money amongst themselves. And we saw what that meant.”

Reynders warned of a repeat of another contagion if Greece, the EU, and the IMF cannot come to a deal on tranche number two of the original Greek debt restructuring agreement reached last year—which Greece had failed to achieve key financial metrics stipulated within the initial terms for a second tranche.

“If we turn our backs on Greece, it won’t be able to repay its debts to banks and therefore savers in our country (and savers, globally),” he said.  “The domino effect will begin and there will be consequences in Ireland, in Portugal and perhaps even here (in Belgium).

A collapse of Greece and the contagion that is sure to follow could happen “tomorrow,” bullion expert Jim Sinclair told Eric King of King World News.

“It’s just that bad . . . this thing can blow at any time,” Sinclair continued.  “Wiemar Republic had no more problems than we have right now.”

The saga in Europe continues next week as German Chancellor Angela Merkel and French President Nicolas Sarkozy meet today before they head off to an EU summit scheduled for next week.  Merkel wants one-third of the bailout package to come from banks, while Sarkozy’s French banks seeks a resolution as well after downgrades of French banks were issued by credit rating agencies this week.