Tuesday, June 12, 2012

Buy a farm, says investment guru - Stock and Land

AS Europe's debt crisis rattles global equity market confidence farming is being increasingly championed by many as a sound, long-term bet for investors needing a safe haven for their money - particularly superannuation funds.
"I'd urge anyone to buy a farm," said high profile international investor and author Jim Rogers, whose rise to success included co-founding the powerful Quantum hedge fund in the US with billionaire George Soros.
Rogers, who has a keen eye for value investments and correctly forecasted the past decade's bull commodity "super cycle", strongly recommended buying agricultural investments ahead of gold.
But back on the farm it's still hard work convincing cashed-up pension funds in Australia or overseas to modify their investment strategies to take advantage of many big and small scale rural opportunities on offer.
While some big superannuation names from AMP to US-owned Westchester Group have had lengthy farm sector ties, the rush of corporate and foreign money into agriculture is not as dramatic as it seems according to those in the investment business.
"The average superannuation fund is very focused on relying on half-yearly, quarterly, even daily dividends, with a big discrimination towards liquidity," said retiring managing director of the $145 million Sustainable Agriculture Fund (SAF), Frank Delahunty.
"Agriculture is not a liquid investment. You can't easily sell in and out of farming assets.
"That's a big reason it doesn't easily fit the short-term thinking which most investment funds are skewed towards."
Investment vehicles like SAF tended to be seen more as niche ventures - despite it owning five big aggregations covering 29,000 hectares between North West NSW and Tasmania, and backed with money sourced from funds such as Auscoal, AustralianSuper, AMP and Christian Super.
Sydney-based agribusiness capital raising principal Bruce Tweedie said the story was similar for private money investment in agribusiness.
While interest was strong converting it into real spending wasn't easy.
He said bad publicity surrounding managed investment schemes, their hefty management fees and a reliance on tax refunds for dividends had hurt agriculture's investment image, further complicating the task of promoting farming to outsiders.
However, with overseas investors now burnt by dissolving equities and derivatives markets, he said interest in "real" ag assets was serious, notably from London ("they have a history of understanding overseas agricultural investment in the UK"), Shanghai, Hamburg and Toronto.
Inquiry through Tweedie Capital - which targets the $10 million to $100m investment range - leaned towards cotton and dairy enterprises, followed by grain and sheep.
Mr Tweedie's investment targets were well-run individual properties which would ideally retain their current owners as managers for the new investors.
With many families reaching a point where they must think about farm succession issues and what to do with their land it was relatively easy to find good farms to offer.
"Quite a few farmers approach us simply looking for a capital injection, but that isn't so attractive to investors," Mr Tweedie said.
"If they're putting up serious money of $10m or more they tend to want control."
SAF's Mr Delahunty, agreed that while many farmers liked the idea of getting outside capital to help them with debt recovery and expansion plans, most investors considered such arrangements more trouble than they would be worth.
"And if you're already a top performing farm business you're probably too strong minded to want to accept another major shareholder having much say."
Mr Delahunty said SAF's own strategy was following the footsteps of specialist overseas farmland management funds which had already proven that "patient capital" invested in the top 25 per cent performers was well worth the effort.
Those with runs on the board included the $2 billion Westchester - a division of a giant US teachers pension fund - which began investing in North American farmland and has owned Australian farms for 20 years.
"It's a prime example of an overseas super fund which is very comfortable with the long term returns from 400 agricultural property assets," Mr Delahunty said.
"Unfortunately our own investment sector tends to only think about property if it's city commercial real estate with the assurance of monthly rent cheques."
Reaffirming its enthusiasm for farmland in these troubled investment times Westchester's parent, TIAA-CREF recently contributed to a new $US2 billion fund buying more land in the US, Australia and Brazil.
The new TIAA-CREF Global Agriculture's backers include Swedish pension fund AP2, British Columbia Investment Management Corporation and the Caisse de depot et placement du Quebec - one of the world's largest real estate managers.
Caisse's private equity executive vice-president Normand Provost said the timing was right to diversify into farm assets and enter an "emerging asset class exposed to global agricultural product demand".

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Jim Rogers bullish on Chinese stocks - Morning Whistle

Jim Rogers is bullish about Chinese publicly listed companies, saying at an investment forum that he won’t sell his Chinese stocks in this bear market but he would like to buy more Chinese shares and leave his holdings to his offspring.
While saying he doesn’t hold too many stocks, he insisted he wouldn’t sell the Chinese shares that he has acquired and will pass them on to his family.

“I always take the opportunity to buy Chinese shares when the stock market plunges and I‘ll leave these assets in the form of Chinese shares to my grandchildren.

He also believes the world economy now is facing the same turmoil it experienced in the 1920s and 30s.

“The global economic restructuring from England to America came with the economic and financial crisis made by politics at that time. The world now sees a similar change again, the transition from America to Asia. Moreover, this financial crisis is also led by these mistakes from policy makers.”

Roger said China, Japan, South Korea, Hong Kong and Taiwan are among the biggest creditors globally. In other words, Asia is now home to the world’s asset, while the U.S. is the biggest debtor country in history.

Last but not the least, the legendary investor pointed out his concerns about Western countries’ debt problems and the collateral damage they could pose to emerging markets.

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Monday, June 11, 2012

ost Dire Warning, “Please Get Worried” (GLD, SLV, TZA,FAZ, AGQ) - ETF Daily News

Dominique de Kevelioc de Bailleul: In his most serious demeanor of recent memory, Jim Rogers of Roger Holdings said the U.S. economy is in for a very rough sledding akin to other major crises since the beginning of the republic.  In fact, the 69-year-old veteran of the commodities markets said even he is “worried.”

When asked by Newsmax’s Kathleen Walter about the state of the U.S. economy, Rogers said he’s not particularly concerned about 2012; it’s an election year, after all.  But after the election, in 2013 and 2014, “it’s coming again” —that slowdown expected by many analysts to lead to a sovereign debt crisis in the U.S., much like what has afflicted Greece. “. . . this year is going to look good and feel good, because Mr. Obama is going to give out a lot of good information,” Rogers said.  “It may be manipulated information, but he’s going to put out a lot of good information.  He’s going to spend a lot of money; he’s going to print a lot of money to get us through the election.”
"Nationalism will emerge. Healthier countries will not see fit to spend their hard earned money to bail out their less responsible neighbors." But post-election, conditions will change, the data will change, and the financial turmoil that the markets have already enduring will accelerate appreciably, according to Rogers.
“Be very worried about 2013 and be very worried about 2014, because that’s when the next slowdown comes,” Rogers stated.  “In 2002 we had a recession and in 2008, it was worse because the debt was so much higher.”

He added, “The next time is going to be even worse because the debt is so staggeringly high now. So if you are not worried about 2013, please — get worried.”

“Staggeringly high” U.S. sovereign debt, to which Rogers alluded, is projected by most economists to top $16 trillion for fiscal 2012, and the rate of deterioration has soared dramatically since the global financial crisis began in 2008.  The U.S. budget deficit for fiscal 2012 is expected to reach $1.6 trillion, or more, up drastically from $438 billion at the end of fiscal year 2008, and up 10-fold, or $162 billion, from 2007.

Rogers’ dire warning comes off the heals of Marc Faber’s May 25th comments, of which, he said the probability of a U.S. downturn next year is “100 percent.”

Because both men have earned reputations for candid and measured language regarding forecasts, investors have weighted their assessments of the future for the economy and investments quite heavily.

During the U.S. collapse, stocks will drop and currency markets will be in turmoil, according to Rogers.  However, like a tsunami, the tide back into the U.S. dollar could be strong during the worst of the collapse, as it had been during the kickoff to the crisis with the fall of Lehman Brothers (from USDX 72 to 88), but the epicenter of a global currency crisis will come back to the shores of the U.S.

That’s the time when interest rates on U.S. sovereign debt could skyrocket, leading to a flight of the U.S. dollar and financial Armageddon predicted by some notable and respected analysts and economists.

Taking into account that 61 percent of global central bank reserves are held in U.S. dollars (28 percent held in euros), the extent of the damage to living standards in the U.S. and across the globe could be dramatic and sudden, according to Euro Pacific Capital CEO Peter Schiff and ShadowStats economist John Williams.

Greece’s less-than-two-percent weighting of the eurozone is equivalent to the weighting of the impact of America’s state of Maryland upon the U.S. dollar, so the fallout of a Greenback in free-fall, globally, has no precedent, no yardstick and no shape, giving rise to the notion that the purpose of FEMA facilities built throughout the U.S. during the past decade has been the result of preparations for a Greek-like moment of global financial history, with riotous crowds and mayhem on American soil 100 times more problematic than that of Greece’s.

“It’s just going to be turmoil. Everybody’s going to be worried, including me,” Rogers said.

Related: SPDR Gold Trust (NYSEARCA:GLD), iShares Silver Trust (NYSEARCA:SLV), Direxion Daily Small Cap Bear 3X Shares (NYSEARCA:TZA), Direxion Daily Financial Bear 3X Shares (NYSEARCA:FAZ), ProShares Ultra Silver (NYSEARCA:AGQ).


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Jim Rogers: Buy Commodities Now, Or You'll Hate Yourself Later -Seeking Alpha


“It’s coming again” warned commodity legend Jim Rogers earlier this week. When asked about the future of the U.S. economy Rogers had a pessimistic outlook, as he feels that the global financial landscape is simply too volatile to avoid another recession. And what’s more, Rogers thinks this next one will be worse than 2008. He cites the recessions in 2002 and 2008, stating that the 2008 recession was so much worse because of higher debts. Now, in 2012, debts are even higher, leading Rogers to believe that the coming recession will be even worse [see also Warning: Ignore Bill Gross’ Hard Money Prediction At Your Own Risk].

Just how high is our current debt? Economists project it will top $16 trillion by the end of the fiscal year, which would bring us to a debt-to-GDP ratio of over 100%. Rogers was quick to note, however, that the major problems likely won’t surface until 2013 and 2014, as this year is an election year, and Rogers feels that Obama will be forced to print money to get us through the election. His final plea to investors came in the form of a dismal warning: “if you are not worried about 2013, please — get worried” [see also Doomsday Special: 7 Hard Asset Investments You Can Hold in Your Hand].

Buy Commodities!

Several weeks ago, Mr. Rogers went on the record stating that he feels that stocks and bonds are not the way to go, as a capital flight could send interest rates soaring and wreak havoc on our financial system. Instead, the hard assets guru put his money where his mouth is by stating that he owns gold, silver, and agriculture, as he feels that these assets have the most potential to either provide a positive return or preserve value in the coming years. He also noted that he feels that the U.S. dollar has strong potential for short term gains (as money flows out of the indebted European nations), but will eventually lose its status as the world currency and exhibit a similar fallout of the British pound sterling.

This advice comes at a time when gold has been faced with a number of hardships, as the precious metal had been rapidly losing value for the majority of the past month. Sitting at what seems to be a low, it seems that Rogers is suggesting to buy gold at its current price as he feels that the gold bubble won’t pop until the end of the decade. In light of this dire warning from one of history’s most respected investors, we outline several options for making an actionable play on the advice of Jim Rogers:
Gold/Silver Bullion: Plain and simple, the safest way to own gold and silver is by physically holding the commodities. Note that this is also the most illiquid option, as selling large amounts of physical bullion can be a daunting task.GLD/SLV: Your next two options for making a play on these precious metals will likely come from these physically-backed ETFs. GLD represents gold bullion with over $65 billion in assets while SLV holds silver bullion and is home to $8 billion in assets. These two options will be extremely liquid and allow for easy movement of positions.Market Vectors-Agribusiness ETF (MOO): This ETF will be a perfect play for those looking to take advantage of Rogers’ advice on agriculture. This fund provides exposure to publicly traded companies worldwide that derive at least 50% of their revenue from the business of agriculture, putting an equity spin on a commodity investment.


Jim Rogers: I Won't Sell Gold Despite Losses - Moneynews

Gold prices have fallen by around 18 percent since peaking above $1,920 an ounce in late 2011, but a shrewd investor will hold onto the precious metal, says famed commodities bull Jim Rogers, CEO and chairman of Rogers Holdings.
The yellow metal has been climbing every year for over a decade, and corrections are normal.

"Gold has gone up eleven years in a row and it is consolidating right now. I have not sold any gold, I still own my gold," Rogers tells Newsmax.TV in an exclusive interview.

"If it goes down, I hope I am smart enough to buy more, and I hope I am smart enough to buy more silver, because precious metals are going to make a lot of money for a lot of people in the next decade."

Gold has done well thanks to excessive debts and loose monetary policies that have weakened paper currencies.

Since the downturn, governments have spent heavily pumping up their economies, while central banks have flooded their financial systems with liquidity to encourage investment and hiring.

Gold prices could plunge should the European debt crisis intensify, such as messy Greek or Spanish default and withdrawal from the eurozone.

Such a scenario would send gold on fresh declines as investors run to the metal's traditional hedge, the U.S. dollar, but bargain hunters will snap the metal right back up.

Translation: Gold is headed up either way, especially if weak economies prompt central bank to continue stimulating their economies.

"If Spain suddenly goes bankrupt out of the blue, everything is going to collapse ... to $1,300 or $1,200 if it goes that low, and I hope I am smart enough to buy a lot more," Rogers says.

Don't expect the U.S. or any other major government to adopt a gold standard, which sets the value of a paper currency to a specified weight in gold.

"I think it's unlikely. I know there are lots of people who would like to return to the gold standard, but the problem with the gold standard is that it always had problems, too. Politicians can always figure out ways to try and cheat us, the poor citizens," Rogers says.

The U.S. abandoned the gold standard in the 20th century, but calls for its return are back in wake of the inflationary fears that loose monetary policies have stoked.

"If the world's currencies collapsed next week or next year, I am sure the people grab for gold because they know nothing else. But I don't think that's going to happen any time soon."

Jim Rogers

Warren Buffett

Nouriel Roubini