Tuesday, February 28, 2012

Jim Rogers: Attack on Jim Rogers: Attack on Iran, Pure “Madness” — Likes Gold ... - ETF Daily News

Dominique de Kevelioc de Bailleul:  Jim Rogers fears an attack on Iran will happen, calling a military confrontation with the world’s fifth-largest oil producer, “madness.”  The 69-year-old chairman of Rogers Holdings also favors commodities over paper assets as investment for the remainder of the decade, especially gold (NYSEArca:GLD) during tensions in the Middle East.  

“It is pretty clear that many people in Washington DC and in America who want to do something with Iran,” Rogers told India-based Economic Times.  “There seem to be many people in Israel who want to do something with Iran,” adding, “I find it madness if they would even think about something like that because if they do, it is going to cause all sorts of havoc in the world and retaliation, but people do foolish things all the time.”  In the case of an all-out war with Iran, Rogers believes many markets will initially suffer from the geopolitical shock and turmoil in the Middle East, except, maybe, gold.

“If somebody starts bombing Iran, everything in the world is probably going to go down for a while except maybe gold,” he said.

But when asked specifically about the most obvious commodity standing to benefit from a war with Iran, oil, Rogers didn’t explicitly offer a comment on the potential price of crude (NYSEArca:USO) following an attack on Iran—possibly to play down the possibility of drawing criticism of profiteering from war.

“I am not investing as it was going to happen other than the fact that I do own oil and I own commodities, but I hope it does not happen, but it looks like it will,” stated Rogers.

War or not, Rogers likes commodities no matter where world GDP is headed. Strong growth brings strong demand for raw materials; weak growth elicits central bank intervention via currency debasement.  It’s a head-you-win-tails-you-win trade, according to him.

“If the world economy gets better, the shortages of nearly all commodities are developing and I am going to make money in the commodities,” Rogers  explains. “If the world economy does not get better, they are going to print a lot more money. The place to be is in real assets, including base metals.”

As in previous interviews with various media outlets, Rogers, again, specifically mentions the same three commodities, silver, rice and natural gas as promising vehicles for investment capital, though, through advice from his lawyers, he states that he doesn’t formally “recommend” any one or group of commodities in particular. [Related: iShares Silver Trust (NYSEArca:SLV), U.S. Natural Gas Fund (NYSEArca:UNG)]

Narrowing Rogers’ apparent penchant for silver, in July 2011, Rogers told CNBC (BER article), “Silver is going to go much, much higher—much higher, over the next decade.”

In early November, Economic Times quoted Rogers (BER article), “I would prefer silver because it is still depressed on a historic basis. Silver is 30 percent below its all-time high.” [Related: ProShares Ultra Silver (NYSEarca:AGQ)]

Two weeks later, Rogers told CNBC (BER article), “Throughout history, when things have gone wrong, they print money…when they print money, you should own silver, you should own rice, you should own real assets.” Emphasis added.

As far as timing of a meaningful purchase of gold, of recent past, Rogers wasn’t buying gold at the $1,600 and $1,700 level, preferring to wait for the possibility of a further correction before jumping back into the bullion market.

He, like Gloom Boom Doom Report publisher Marc Faber and FX Concepts’ Founder John Taylor, is looking for a intermediate capitulation in the gold market before buying in quantity.  All three men expect new highs in gold in the future.

However, Rogers appears less confident that a further correction in the gold market is in the offing given the escalating geopolitical events of the past few weeks between the US and Iran.  Since the sell-off in September, Rogers indicated that he was not buying, but today, he’s a nibbler.

“I bought some gold on Monday, a little bit,” he said.  “Not very much, but if gold goes down a lot, I would buy. I hope I am smart enough to buy a lot  more gold. Gold is going to go much higher over the course of this decade.”

And, in step with both the thinking of Faber and Taylor, Rogers believes the gold market has much more room to run before it’s time to consider selling the precious metal. “Do not sell your gold, not yet.”

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