Jim Rogers is still bullish on agriculture, calling it a great place for investors to be for the next two decades. Prices of agricultural commodities are still relatively cheap compared to those of metals and energy, and the world is scrambling for arable farmlands to feed a growing population
Jim Rogers is worried about the real estate bubble in China that is going to burst and the inflation.
Rogers also worries about the demonstrations in China, and uprising from their citizens and workers. We have seen thousands of demonstrations in China every year. However, he is more worried about the social unrest in America and Europe, as it will be even way worse than it is in China, although we don’t see as many demonstrations there than in China.
Dominique de Kevelioc de Bailleul: Commodities guru Jim Rogers and Euro Pacific Capital CEO Peter Schiff have recently gone on the record that the next harrowing event in the ongoing global financial crisis will most likely take place after the presidential election, with the crisis in Europe spreading to Japan and the U.S. Treasury market sometime in 2013.
In recent weeks, the 69-year-old Rogers has said politics and the natural downside of the ‘business cycle’ will determine the timing of the next big drop in most financial assets. “This is an election year in the United States, as you well know, and there are something like 40 to 45 elections over the next 12 months, including France, U.S., Germany,” Rogers told Opalesque Radio. “So we have a lot of elections, a lot of politicians who want to be re-elected. So there’s going to be a lot of good news.
“Nationalism will emerge. Healthier countries will not see fit to spend their hard earned money to bail out their less responsible neighbors.” Rogers added, however, historical data show that the ebb and flow of business activity suggest to him that the rebound from the crushing lows of corporate profits, stock prices and GDP during the 2008-9 economic and financial collapse has run their course.
As negligible as the rebound of the economy has been, with GDP still not back to the peak of $13.1 trillion for 2008, the time has come for the next leg down, according to him.
“The overall situation is getting much worse because the debt is going through the roof for all of us,” he continued. “You should be worried about 2013, 2014, but overall, 2012 won’t look so bad.
“In America, we’ve had an economic slowdown, or recession, every 4 to 6 years since the beginning of the Republic. So you can do the addition, by 2013 or 2014 we’re going to have another . . . we’re overdue for another recession. And if it comes, the markets are anticipating that . . .”
Within the context of the so-called two-year ‘recovery’ that still has yielded less U.S. GDP for 2011 than was achieved for 2008, along with higher overall debt at the federal level, the downside to the U.S. dollar, and by implication a U.S. Treasuries sell off, could be severe, Rogers has said in previous interviews. He still holds to that thesis. “There’s going to be more currency turmoil in the next year or two. . . as these imbalances are sorted out,” he concluded. Though Rogers didn’t mention his short position of U.S. Treasuries during the Opalesque interview, he did announce earlier in the year that he has taken a short position on U.S. Treasuries debt, citing limitations to the upside in prices (lower rates) while the Fed maintains its dominate position as the ‘buyer of last resort’, and due to waning demand, to outright decreased holdings, from foreign buyers.
Echoing Rogers’ outlook of the U.S. Treasury market is Peter Schiff. In a telephone interview with financial publication Forbes, he said ultra-loose monetary policy at the Federal Reserve only serves to exacerbate the snap back to the imbalances Rogers spoken about in the Opalesque Radio interview.
“The more you delay it, the bigger it will be,” Schiff told Forbes, Tuesday, “so we need to raise interest rates during the recession to confront the inefficiencies.”
“We consume more than we produce and we borrow abroad, but we are never going to be able to pay them back,” Schiff continued, a conclusion that appears to have been drawn as well by the nations responsible for driving global growth for more than a decade, the BRICS.
Heads of state from the nations of Brazil, Russia, India, China and South Africa signed an agreement in New Delhi, Thursday, making way for a credit facility as a means of extending credit between the five-nation block in their own currencies, thereby bypassing the U.S. dollar for international trade.
The fourth BRICS summit is the latest in a rapid trend by developing nations to disengage from the dollar/euro reserve currency protocol. In addition to the agreement, the five-nation block also called for reforms to the World Bank and International Monetary fund (IMF).
Since as early as 2000, Schiff has warned that the world’s producers of goods and raw materials will one day stop extending credit to the debtor nations as the debt levels become unserviceable. That means it’s inevitable that the U.S. dollar falls further and interest rates rise to reflect the added risk of holding U.S. Treasuries.
At that time, few in mainstream media (MSM) took Schiff seriously, while some scorned him, when he warned of a dollar collapse. But today, he has been partially vindicated. Gold has risen sharply against the two reserve currencies, the U.S. dollar and euros, since 2000.
However, contrary to what Schiff’s pundits now say, the worst has not passed; there’s much more currency debasing to come, including a U.S. Treasury market collapse.
“All of the people who were 100% wrong [back in ‘08] are saying that everything’s okay [now],” Schiff said. “I am telling them they didn’t solve the problem and are making it so much worse.”
According to Schiff, the U.S. Treasury market is set for a big fall in 2013, and he expects to be right once again.
Investor Jim Rogers, chairman of Rogers Holdings, said he’s “not so optimistic” about gold and silver prices.
“I expect the price to decline and when that happens I will buy more,” Rogers said at a conference in Bucharest today.
Rogers is very bullish on the long term economic prospects of China and Asia. He says he believes that the housing bubble in China has come to a close. “There has been a bubble in the Chinese property market which is now over,” said Rogers. “The Chinese government has been trying to burst the bubble. I think the government is doing the right thing to bring down the price of property. If you do not pop bubbles, lots of people get badly hurt. The bigger the bubble gets, the worse it is for everyone.”
Stating that bureacracy in India is the worst in the world, Jim Rogers, Chairman, Rogers Holdings told ET Now that he was disappointed with the General Anti-Avoidance Rules (GAAR) proposal announced by Indian Finance Minister Pranab Mukherjee in the Union Budget 2012-13. Rogers believes that India would develop faster if the markets are less regulated.
The GoldCore trading desk was unusually busy yesterday with a large percentage of clients selling their bullion holdings including some quite large sell orders. It could be indicative of a bottom as there has been capitulation by weak hands concerned about the recent price fall.
Despite a recent decrease in physical demand both from Asia and in western markets, the fundamentals driving the market have not changed and will be supportive. Demand has abated after the record levels of demand seen at the height of the Greek debt crisis in November and December.
However, this demand will likely return in the coming months when Spain, Italy and potentially the U.K., Japan and U.S. all experience similar debt crises.
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Gold, Silver, S&P, DJIA, US 10 Year – 1 Year
Risk adverse investors and the prudent should maintain a “buy and hold” strategy and should continue to accumulate on the dip.
Jim Rogers “I Will Buy More” Gold – Still Long Term Bullish
The smart money continues to accumulate gold and silver on the dip.
Investor Jim Rogers, chairman of Rogers Holdings, said he remains bullish on gold and silver in the long term and he “will buy more” on price weakness.
Rogers predicted a global commodities rally and the gold and silver bull markets in 1999. He also predicted much of what has transpired in financial markets in recent months and years and has consistently warned about the risks posed to the U.S. dollar and other fiat currencies.
In the short term he is not so optimistic about gold and silver prices. “I expect the price to decline and when that happens I will buy more,” Rogers said at a conference in Bucharest yesterday.
He recently said that he would buy gold at $1,600/oz and would increase position by even more at $1,500/oz – reiterating that gold is going much higher in the coming decade.
Rogers did not elaborate, nor was he asked, how much higher, but he said in November 2011 that gold “will easily go to $2,000 but it will reach $2,400 over the course of the bull run, which has years to run.”
The following commentary comes from an independent investor or market observer as part of TheStreet’s guest contributor program, which is separate from the company’s news coverage.
NEW YORK (ETF Expert) — U.S. dollar strength has kept a number of commodities range-bound, including gold, silver, copper and agricultural grains. Yet industrial metals tied to economic expansion appear to be gaining strength on signs that China may loosen monetary and fiscal policy, while oil/gasoline continue to surge on Middle East uncertainty.
In aggregate, commodity investing has been mildly beneficial in 2012. The iPath DJ UBS Total Commodity ETN (DJP) is up 3% year-to-date, but that pales in comparison to the 10%-plus on shares of corporate stock.
One might be quick to assume that Jim Rogers has it all wrong. He has passionately argued against the U.S. dollar’s viability in a world where the Federal Reserve electronically creates currency out of thin air. Yet, the U.S. dollar has been hanging tough in the face of 0% rates and quantitative easing.
Moreover, Rogers’ preference for commodities over corporate shares didn’t work out so well in 2011, nor has it appeared beneficial here in 2012.
Of course, sometimes it pays to look a little bit closer. For example, over the last three months (12/14-3/13), Gold (GLD) has garnered about 6.5%. The Gold Miners ETF (GDX)? Close to 0%. You can see the weakening of the miners relative to the metal in the price ratio (GDX:GLD).
Is it merely a precious metal problem? Hardly. PowerShares DB Oil (DBO) has lifted investor spirits by 20% over a 6-month period. SPDR Oil Exploration & Production (XOP) logged about 14% in the same time frame. Once again, the price ratio (XOP:DBO) demonstrates the imperfect direction of oil explorers relative to the underlying commodity.
These examples do not conclusively support the notion that it is better to own the commodity than the corporations that mine/explore. And while Mr. Rogers has been quoted as preferring actual “stuff” over owning the shares of hard asset producers, he might be the first to say that different time frames may favor one asset type over the other.
That said, are we in a near-term period where underlying commodities may beat out resource-related exploration firms? Or is it just a matter of time before commodity price inflation sends the shares of Gold Miners (GDX) and Oil Exploration/Production (XOP) skyrocketing?
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Jim Rogers continues to act as the curmudgeon in chief, a bearish counterpoint to Berkshire Hathaway’s (BRK.A) Warren Buffett’s optimism about the recovery of the American economy. The legendary investor, who has been officially retired since the age of 37, has been very vocal about his pessimism about the future of the United States, going so far as to move to Singapore so as to raise his children in Asia where he sees the future of the global economy.
“A lot of the problems we’re facing today is that people have forgotten how to work hard. It’s a generational thing. If you go to a fast food restaurant or a department store in the United States, you’ll see senior citizens working behind the counter or greeting customers. They’re doing it because they have a work ethic.” – Jim Rogers
Rogers seems to be like the negative Energizer Bunny, he just keeps going and going. In each and every new interview, Rogers seems to espouse his belief that the sun is setting on the glory of the American economic empire. An interview on Friday with Business Insider provided Rogers with another opportunity to rain on everyone’s efforts at having a parade over economic data. Rogers speculated that the crushing national debt, rising oil prices, and inflation will all contribute to a new “lost decade” for the United States, with the snail-paced recovery this year giving way to serious issues for the future.
“This year’s fine,” he told CNBC in an interview on The Kudlow Report. “Worry about 2013. Be panicked about 2014.”
Whether or not Rogers’ serious concerns about the future should be heeded is much more difficult to say. For every economist inclined to agree with Rogers, there’s another who will insist that he’s totally off base. What’s more, Warren Buffett, an investor of some reputation, placed multi-billion dollar bets on US equities when the market was crashing last year based on his bullish view towards the American economy. While it’s impossible to say for sure whether or not Rogers is correct, he certainly isn’t pulling any punches. One thing’s for sure, the people of Asia are probably pulling for him to be right.