Taking stock of bullion: Rogers says monster correction for gold possible

According to a report Tuesday on Yahoo Finance, commodities guru Jim Rogers sees potential trouble ahead for gold. Rogers said two likely triggers could cause the plunge in price, which he predicts could drop as much as 40% to 50%. One would be a curtailing of the hording of gold in India. "There's an element in India in the last several months which is very strongly saying we've got all this money tied up in gold which is not good for the economy. If we could just get the money into circulation instead of locked up on Indian wives or Indian vaults it would be good for the economy. And there's also a huge group saying that one of the big reasons we have this huge balance of trade deficit is because we buy all this gold and put it in the closet. Let's stop that. Now if they did that it would be devastating for gold." The second trigger? Europe. "There are also Europeans who are talking about the need to sell their gold or at least to start offering gold backed-convertible bonds, bonds convertible into gold, which would be a way to free up their central bank holdings without dumping gold," he said. Rogers also told Yahoo Finance that gold has only had one substantial correction since 2001. Thus, by his lights, a sizable correction in the price of bullion wouldn't be such a bad thing. All those advisers out there who have put their clients into gold might have a slightly different take on the subject.