LONDON - Two influential personalities in the investment world made the case on Thursday that the recent dip in commodity prices was not bound to last and that metals from gold to platinum would soon continue their climb skyward. Jim Rogers and Warwick McKibbin may have a point: the dollar fell away from its rising trajectory for the second time this week, as commodities started jumping.
Light, sweet crude for September delivery rose to $116.73 a barrel in electronic trading on the New York Mercantile Exchange Thursday morning. Gold, meanwhile, rose nearly 2.0%, to its highest price in a week, in morning trading in London, hitting $824.20 an ounce--though that was still well below the all-time high of $1,030.80 struck in March.
According to TradeTheNews.com, investment guru Jim Rogers said Thursday that the recent drop in commodity prices was a correction in a bull market and that they would continue to rise because of short supply. He added that he was mulling buying metals again. Last June, Rogers helped set up a share index that tracked the performance of companies dealing in commodities (rather than the commodities themselves). (See "Jim Rogers's New Way To Ride Commodities Boom.")
Warwick McKibbin agrees. The Australian National University economics professor and board member of the Reserve Bank of Australia seconded Rogers on Thursday, according to TradeTheNews.com, in remarking that fears that the commodity boom was coming to an end were overdone. He said growth and subsequent demand for metals and other raw materials from China and India would continue to support prices.
The commodities spike had a noticeable effect on the dollar in Thursday trading. The euro bought $1.477, up from $1.468 late Wednesday in New York. The greenback also fell by 1.0% against the Japanese yen, buying 108.79 yen in late trading in Asia on Thursday, down from 110.00 yen late Wednesday.
Adding to the downward pressure on the greenback are persistent worries about the health of America's financial sector, particularly of the mortgage finance giants Fannie Mae and Freddie Mac. In addition, a report in the Financial Times said Thursday that Lehman Brothers had tried to sell half its shares to China's CITIC Securities and the state-owned Korea Development Bank but that both investors had balked at the high price.
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