Famed investor Jim Rogers says he is worried about silver continuing to surge too highly and quickly and warns that if it hits triple digits in price this year, it could collapse the dollar.
He said there's no bubble in silver yet but should the precious metal hit or top $100 an ounce this year, he will sell before the bubble bursts.
Silver's move "is not parabolic yet," Rogers tells gurufocus.com. "I hope something stops it going up. All parabolic bubbles pop. All parabolic moves end badly. Maybe the U.S. dollar becomes confetti and silver goes to $150 — that would be a U.S. dollar collapse."
“I’m worried about silver,” he said. “If silver continues to go up the way it has been in the last two or three weeks … then it will get to triple digits this year,” he said.
“My hope is for silver and gold and all commodities is that they will continue to go up in an orderly way for another 10 years or so … eventually the prices will be very, very high,” he said.
Rogers shorted gold when it went parabolic in 1980. “It eventually collapsed,” says Rogers. He said gold and silver will be a bubble some day, as he says all commodities will. But he doesn’t think it will happen in 2011, but likely in a few years.
|Jim Rogers (Getty photo)
What has gotten people’s attention is that gold has been going up and up, according to Rogers.
“That is the wrong way to invest,” he says. “I own gold and silver, but it was five and 10 years ago that they should have been buying gold and silver.”
“Most investors don’t notice something until there is already a nice bull market under way. There will be more people buying gold, eventually everyone will own gold and then we will have to sell our gold. But that is a long way from now.”
The Wall Street Journal reports that investor appetite for a safe haven from inflation has sent gold and silver prices to new records.
The front-month contract, for April delivery, settled up $1.597, or 3.4 percent, at $46.062 per troy ounce, a 31-year high, still short of the 1980 record of $50.360 set when the Hunt brothers from Texas attempted to corner the silver market.
Meanwhile, the U.S. dollar sagged to a three-year low against major currencies Thursday as investors flocked to investments that are less reliant on the U.S. economy.
The negative sentiment on the dollar intensified this week on signs of a slowing U.S. economy and Standard & Poor's warning Monday that it might take away the United States' coveted AAA credit rating within two years if Washington fails to achieve a plan to slash its $14 trillion debt load, Reuters reported.
The dollar has already been bogged down by the Federal Reserve's near-zero interest rate policy and overseas central banks' ongoing diversification from the U.S. currency.
Emboldened investors are now piling back into riskier assets, though some analysts advised caution as worries about the euro zone debt crisis and problems in the supply chain following the Japanese earthquake stayed in the background.
Expectations the Federal Reserve will keep U.S. interest rates at near zero for the foreseeable future, even as other major central banks raise rates or are about to tighten, have pressured in the dollar in recent weeks.
With little chance of the Fed raising interest rates this year, the dollar index was down by 0.4 percent to 74.080 after falling to 73.735, its lowest level since August 2008. Light holiday trading volume magnified foreign central banks' gradual reduction of the U.S. dollar from their reserves. Technical charts suggested the index could move towards a record low of 70.698 hit in 2008.
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