Roubini Says Rogers’s Forecast of $2,000 Gold ‘Utter Nonsense’

Discussion in 'Wall St. News' started by WallStWhizKid, Nov 4, 2009.


    Nov. 4 (Bloomberg) -- Nouriel Roubini, the economist who predicted the global economic crisis, said a forecast by investor Jim Rogers that gold will double to at least $2,000 an ounce is “utter nonsense.”

    There is no inflation or “near-depression” to drive gold prices that high, Roubini said today at the Inside Commodities Conference in New York. If a severe depression came to pass, with investors buying canned goods and hiding out in log cabins, “maybe you want some gold in that scenario,” Roubini said.

    “Maybe it will reach $1,100 or so but $1,500 or $2,000 is nonsense,” Roubini said. Gold rose to a record $1,096.20 today on the New York Mercantile Exchange’s Comex division on speculation that central banks and investors will purchase the metal to hedge against a declining dollar.

    Rogers, who predicted the start of the commodities rally in 1999, said in an interview on Bloomberg Television today that Roubini is wrong about the threat of bubbles in gold and emerging-markets stocks. The price of gold will double in the next decade, he said.

    In his New York speech, Roubini repeated his assertion that asset prices have risen “too much, too soon, too fast.” He’s a New York University professor and chairman of New York research and advisory firm Roubini Global Economics.

    The S&P-Goldman Sachs Commodity Spot Index is up 47 percent so far this year. Oil has risen 80 percent and gold is up 23 percent. The U.S. economy grew 3.5 percent in the third quarter after shrinking since the second quarter of 2008. Government incentives that spurred consumers to buy homes and cars boosted the recovery, the Commerce Department said on Oct. 29.

    Justifying Prices

    “It is very hard to justify oil going from $30 to above $80 based only on the fundamentals of supply and demand,” Roubini said. Prices are “in part” a bubble, he said.

    Position limits on oil trading, if they helped reduce volatility, may be “beneficial” because the swings in oil prices have been “destructive” to the global economy, Roubini said.

    Roubini predicted in 2006 the financial crisis that spurred more than $1.6 trillion of credit losses and asset writedowns at global financial companies.
  2. lol.

    I bet Roubini is angry at Rogers because Rogers called Roubini a clown for wanting to close the stockmarkets.:)
  3. S2007S


    gold is still cheap, once the dollar collapses gold will be over $1500 an ounce for sure.
  4. LOL. I'd take the other side and bet gold falls to $500 next year. Dollar weakness is only from the interest rate parity of rates being so low. They're not going lower, so betting on long term weakness makes no sense. I actually think the dollar has held up and will continue to hold up very well.
  5. India and China will take big hits on their purchases, then. Please explain the scenario that will cause gold to drop $600 to $500.

    I am curious.
  6. jprad


    If gold was the true storage of wealth that the goldbugs would have you believe then the central banks wouldn't be selling part of their inventory.

    It's a speculative bubble that's going to end worse than the oil bubble for the simple fact that gold doesn't have the commercial demand to backstop this rise in price.
  7. jprad


    Keep dreaming.
  8. harkm


    What central banks are selling part of their inventory? It doesn't take a gold bug to realize that gold has been used as money for thousands of years. Also, the "oil bubble" hasn't ended yet. Central banks are trying to diversify out of dollars. They are buying Yen, Euros, Gold, and Oil.
  9. Isnt it pretty well known that when nations invest heavily in anything it is typically a top?
    #10     Nov 4, 2009