The price of gold is due for a correction and this could be used as an entry point by investors eager to get exposure to the precious metal, while the dollar is likely to strengthen as there has been too much pessimism about it, famous investor Jim Rogers told CNBC Tuesday.
Gold hit record after record high this year as investors scared by central banks printing money around the world and by the protracted debt crisis in the euro zone sought refuge in precious metals.
"I own gold and I'm not selling my gold," Rogers said, but pointed out that the price of the commodity has been up for 11 years in a row.
He advised that a drop in price wouldn’t be such a bad thing. "Somewhere down the line gold will have a correction. Gold will continue to do what gold does best. Just give it a chance."
If the gold price retreats towards $1,200 per ounce, Rogers said he would get "extremely excited."
"I'd probably get more interested at $1,600. At $1,710 or whatever it is today I'm not buying gold, I'm just watching. And likewise for silver ," he said.
“If I had to buy one today, I would buy silver just because silver is 40 percent below its all time high, gold is 20 percent near its all time high. But I’m not buying any of the four precious metals today.”
On currencies, Rogers explained why he bought the US dollar .
"I own the dollar, I own some other currencies as well," he said. "A year ago everybody was pessimistic about the dollar, including me…when everybody is on the same side of the boat, you go to the other side of the boat for a while."
But Rogers warned against piling into one currency. “If you have all of your money in anything, be very careful. Some are going to totally disappear.”
Rogers said he also owns the Chinese renminbi and the Japanese yen and criticized governments for their ongoing drive to print money and inability to cut debt.
“Governments around the world continue to print money. Paper money everywhere is being debased. If the US dollar turns into confetti, there is no high for the price of gold, because the dollar will become worthless,” he warned.
Europe Getting 'Out of Control'
Rogers also said that no solution would be found for the ongoing crisis as long as European powers remained so heavily debt burdened.
“The solution to too much spending and too much debt is not more spending and more debt. Nobody shows debt going down," he said.
“This situation in Europe is getting out of control. It already is out of control in the US. You’re going to have to take your pain sometime. If you did it now, you could ring-fence everybody; the system would survive. Right now governments have some credibility left…if you wait a year or two or five, when the market forces you to deal with reality, then the markets and the banks have no credibility."
“I’d rather take the pain now, rather than the markets force us to take the pain. And that could be the end of the system,” he said.
Rogers pointed to the Scandinavian banking crisis of the early 1990s, saying that difficult policies enacted at the time to allow some banks to fail went on to save the long-term future of the region.
“It was a horrible two or three years, but since then Scandinavia – especially Sweden - has had a wonderful rise for the last 15 years or so. And Sweden is one of the most stable and solvent countries in the world."
“The world is full of risk right now. I own Scandinavian currencies because they are probably less risky,” he said.
Rogers is still optimistic on commodities and said it was understandable that in the wake of major financial derivatives broker MF Global’s recent bankruptcy there would be some uncertainty.
“When a huge player goes bankrupt, it has a lot of ramifications. Once this is past, I would suspect that commodities would continue to go higher and that you would continue to see more inflation. I own all commodities; I especially own food and precious metals,” he said.
What is Rogers' tip for a high performing asset class over the next three to six months?
“I am wildly bullish on Myanmar, if I could find a way to put all of my money into Myanmar, I probably would. It is at the place where China was in late 1978; they are opening up, they’ve changed. They’ve got 60 million people, they are right there between China and India," he explained.
“I cannot think of anything in the world about which I’m more bullish than Myanmar.”
Antonia Oprita contributed to this article