Jim Rogers, in a recent interview with the Wall Street Cheatsheet on 23 Dec 2009 was asked about his recent statement on Bloomberg that ' Nouriel Roubini did not do his
homework regarding the asset bubbles about which he is now warning ' , Jimmy Rogers had this to say :"All of it. How can you talk about a bubble when assets such as silver are 70% below their all-time high? Same for coffee, sugar, cotton, natural gas, and many more. I have a problem talking about a bubble when assets are this depressed from their all-time highs.
A bubble is when assets are screaming to new highs everyday, everyone is talking about them, and everyone owns them. Right now, virtually no one owns commodities. So for Mr. Roubini to talk about a bubble in commodities defies comprehension. It proves he does not understand markets.
I am flabbergasted at Mr. Roubini’s comment about bubbles because there is not a single market in the world making all-time highs except Gold, US Government Bonds, Cocoa, and the Sri Lankan stock market. That’s hardly reason to call for a bubble. So, I am most perplexed about this alleged bubble which is out there.
If an asset rises 100% in one year, that’s a great year, but not necessarily a bubble. Look at oil. It’s up huge off the bottom but nowhere near it’s old highs. Look at Citigroup. The stock is up 3 or so times off the bottom …"
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Who is right?
ReplyDeleteynwestor, Poland 51 N 17 E
nouriel roubini is a Guru. lets put facts on the table.
ReplyDeletegold is affected by many factors, including demand and supply, the us economy + USD, emerging markets growth (especially china)
its true that demand is increasing, as central banks are diversifying away from $. however, lets take the other way around: what are the possibilities that they keep purchasing gold? i beleive that if they buy, they wont buy the same they did few years back, as the amount of gold purchased are enormous (india increased its gold reserves by 50% in 2009, etc...).
another issue concerning demand is individual investors, who wont find the gold so tempting buying it at high prices compared to last year, and still below all other commodities yearly performance (oil, palladium and other commodities overcame 100% in revenues). investments should be directed towards more profitable asset classes.
lets look at the us economy, interest are as low as 0%, the government is looking for stimulus packages (though this might be temporar effect), the $ is being depreciated by around 10% in 2009. however all of the above are considered an opportunity as the us economy is coming out of recession due to many factors. once interest starts to rise, expected in 2H10, the economy would have been boosted enough to attract new investors. i beleive the us economy has hit the bottom, and a recovery is on the way.
they are talking about an 8% growth in china. WTF? look at the eocnomic indicators in china, china is lagging in many areas, and the situation in china is similar to the US couple of years ago. look for a bubble in china! yes that's possible.
saying that, i would not say gold is in a bublle, but it is overpriced.
sorry for putting this comment on jim rogers blog! hope it is not a breach or something to jim's point of view.