Gold will crack US$1000 ($1579) an ounce, the man who foresaw the start of a commodity rally in 1999 predicts.
Jim Rogers, a former George Soros partner, said yesterday the boom in energy and raw material prices would continue, driving gold through the US$1000 mark.
"The shortest bull market for
commodities lasted 15 years, the longest 23 years," Rogers, 63, said. So if history was any guide "they've got a long way to go".
Prices of crude oil, copper and zinc are at records, and other commodities are at multi-year highs, as speculators and hedge fund operators try to find places to park money which yields more than bonds and stocks.
Global demand led by China has outstripped supply curtailed by lack of investment and output disruptions.
"Supply and demand is terribly out of balance for nearly all commodities right now. This is not a bubble."
Spot gold reached a 25-year high of over $640 ($1012) an ounce, still below an all-time peak of US$850 for spot gold in 1980. Crude oil peaked to a record US$74 a barrel in New York before closing slightly under and copper gained the most in nine years.
"Economies around the world, especially in Asia, are growing rapidly," said Rogers, who co-founded the Quantum hedge fund with Soros in the 1970s.
"Nearly everything makes a new all-time high in a bull market."
Lack of investment in new supply is driving up oil prices. "Nobody has discovered a major oilfield in over 35 years," Rogers said. "All the major oilfields are in decline.
"Unless someone does something quickly, the price of oil is going to go a lot higher over the next decade."
He depicted a similar scenario for metals. "Nobody has opened any major mines anywhere in the world for many years and it takes a long time to bring new mines on stream.
"All the old mines are in the process of being depleted and demand is continuing to grow."
He thinks agricultural commodities will offer new investment opportunities as "that's where prices have moved least".
Cotton prices were more than 50 per cent below their all-time high; soybeans 60 per cent below their peak and sugar 80 per cent.
"These agricultural commodities are very cheap on any historical basis," he said. - BLOOMBERG
