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Jim Rogers: Gold to Have First Down Year in Over a Decade

Monday, 16 April 2012 07:43 AM

Gold prices are due for breather this year, says international investor Jim Rogers.

Gold has soared from below $300 an ounce in 1999 to over $1,600 today, briefly spiking above $1,900 in 2011.

It's time for a correction.

Editor's Note: Obama’s Economic ‘Fix’ is In . . .

"It's extremely unusual for any asset in history to move higher for 11 straight years," Rogers tells S&A Investor Radio.

"That's why I expect the recent correction in gold to continue."

Rogers has been a gold bull for years, especially since the downturn, when the Federal Reserve cut interest rates to near zero and injected trillions of dollars into the U.S. economy to better ensure price stability and optimal unemployment rates.

Such monetary policies weaken the dollar and fuel inflationary pressures, which make gold an attractive hedge.

The European debt crisis has pumped up the precious metal as well.

Investors shouldn't sell their gold, because the long-term trend is still bullish, but for those on the sidelines, a good entry point will come soon.

"I would buy gold if prices fall to $1,100 or $1,200 an ounce. A pullback of this magnitude is normal."

Others agree that gold is set to cool its meteoric rise, especially if the U.S. economy continues to gain steam.

"We expect the price of gold to ease from its current level as the recovery in the U.S. economy gains momentum and its currency appreciates, shifting demand away from gold and towards currency-based investments and equities," says Alexandra Knight, an economist with National Australia Bank, according to Reuters.

"The impact of an appreciation of the U.S. dollar on the gold price will be particularly pronounced, given that a large majority of gold is invested in the U.S."

Editor's Note: Obama’s Economic ‘Fix’ is In . . .

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