Gold prices fell 4.2% last week, silver prices plummeted 27%, and oil tanked 14.7%. As silver was smacked with an 85% increase in margin requirements in two weeks, Osama Bin Laden was killed removing some risk premium from the markets, over-crowded commodity trades shook out and the U.S. dollar index rallied, commodities took a nose dive.
TheStreet sat down in an interview with Rogers to see if the recent correction changed his view on the bull market in commodities.I wanted to start off with last week's commodity carnage, what does that tell you about the commodity trade? Rogers: Well, not much if you ask me. Markets correct all the time. Silver went down a great deal but if you raise margin requirements 150%-200% you would expect there's something to collapse. It's good for the market as far as I'm concerned. Silver especially needed a set back and a consolidation. I'm delighted to see everything.
So this wasn't one current bubble that then burst at that time? Rogers: I hardly see how silver could be a bubble when, even as its top, is still below it's all time high. That's not much of a bubble. A bubble is when things are screaming up every day and they go to new highs, two to three times their old highs. We'll have a bubble, we'll have a bubble in commodities, we're not there yet. What price do you think silver will hit that would make it a bubble? Rogers: Well, it depends on the timing. If it goes to $150 this year, all other things being equal, then I'd say you better sell your silver. If it goes to $150 in 10 years then I would say that's a normal progression up and that's the way things work. But if the U.S. dollar suddenly turns into confetti then you better hold your silver at $200. So it depends on the circumstances and the timing more than anything else. Now talking to a lot of technical traders when they looked at the silver chart, say over the last year, they saw that parabolic rise which made them really think it was a bubble. Also, to your point, we have talked about this before, when you hear people talking on the street about say pork bellies that means we are in a bubble. I heard stories of people talking on the street on their cell phones talking about silver last week hoping it would go higher so they could sell. Rogers: Oh, I was hoping it would go down so I could buy ...I was on some show talking about how this parabolic bubble better stop soon. But Ms. Steel, how many people do you know who actually own silver? I suspect you don't know man y people at all. I spoke recently at a conference [with] 400 big time money managers around the world.
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