I can’t help but admire anyone who rides a bike for long distances, and Jim Rogers is one of those who takes the cake. I met him in Scotland at the Chartered Financial Analysts Institute’s Annual Conference (2010). Although my own journeys have hardly been as worldly as Jim’s has, I also have a pic of the “Kangaroo Crossing” sign in my own trip-photo collection.

At the conference, I told Jim that i was concerned about the high-flying commodity (resources in particular) sector. Mr. Rogers, in his usual ‘abrupt’ fashion more or less suggested I knew nothing about commodities and said I was simply wrong.

Roughly a year later, the S&P500 Metals & Mining sector had fallen roughly -30%, Energy was in the red with Oil & Gas Exploration and Production down >-15% and Coal related stocks off a whopping -50%. I was right after all? Well Fertilizer & Agriculture (his favoured commodity play) managed to do well over the same time period, so Jim was sort of right also. We may have been talking apples and oranges in that instance, but more recently we both seem to have been expecting the fallout in gold.

I saw this quote this morning:

“Jim Rogers Correctly Predicted Gold Would Fall To $1200, And Now He Thinks It Could Go As Low As $900.”

I am on record for having been bearish gold since the peak of its popularity (and perhaps even a bit early but there’s a price to pay when one leaves a raucous party too late). On January 8th I published a commentary entitled: Why the price of gold skyrocketed and why it’s over! The gold price had just begun it’s decline from the $1800 level. In April I posted a follow-up discussion with more precise targets. Here’s what got me in trouble with a whole bunch of the gold bugs that read my blog:

“As I type this, gold is $1424/oz. and silver is $23/oz. Therefore the ratio of gold to silver is >60. I find that 40 to 1 has got to be coming (no real reason, why not?) suggesting a target price for gold of $920/oz.” April 24, 2013.

Gold bugs are a stubborn lot for sure. Most of the comments I received were similar to this one:

“Dear Mal,

You are wrong. The global financial system and the whole planet is going into a major depression.

Silver will be at 40$ and gold at 2000$ within 18 months”

This comment was from a respected and very bright senior financial advisor. For some reason, folks become emotionally attached to gold and perhaps this clouds their judgement to some degree.

I am in the same camp as Jim Rogers, and not just because he seemed to like my own book about riding and investing. There are situations when the urge of investors to own a security (Apple?), a sector (Real Estate?) or a currency (Gold?) becomes overzealous to the point of ridiculous (anyone remember Cabbage Patch Dolls?)

The reverse is also true. I believe we are on the cusp of another boom in commodities fueled by the slow recovery in the global economy. Will gold prices stop falling and rise with the prices of energy, copper, nickel and other economically-sensitive commodities? Most probably! and It is not altogether impossible that the price of gold does reach $2000 within 18 months as my gold bug-friend suggested. I’d just rather sell when the bugs are swarming and buy when its as low as it can go….and we will get there.

The market correction will be done very soon, and it might be useful for you to read again:

“Global resources boom imminent!”