Jim Rogers Extremely Bullish on Commodities

Jim Rogers Extremely Bullish on Commodities

www.insidermonkey.com...
______beforeitsnews/story/379/352/Jim_Rogers_Extremely_Bullish_on_Commodities.html
By Insider Monkey

Legendary investor Jim Rogers was Larry Kudlow’s guest on tonight’s The Kudlow Report. Jim Rogers started with predicting a $150 per barrel oil.

“It’s not going to $150 this week or this month, but the surprise is going to be how high the price of oil stays,” said Rogers. “We are running out of known reserves of oil. These are simple facts. We have not had a major elephant oil field discovery over 40 years,” he added. He doesn’t agree with T. Boone Pickens that natural gas will replace oil anytime soon.

Jim Rogers also talked about inflation. He said everywhere in the world, including Europe and Australia, there’s inflation.

“The Americans lie about it and the British lie about it,” said Rogers. He added that inflation is supply driven and he gave the decline in oil reserves as an example.

Rogers thinks that the recent decline in gold and copper is nothing more than corrections in a major bull market, and it still has years to go. Rogers argued that massive money printing will make investors put some of their money in the stock market, but that more money will go into commodities. Whenever paper money is debased, people will want to own real assets. Nevertheless, Rogers isn’t terribly bullish about stock markets anywhere in the world.

“If the world economy gets better, commodities are gonna make a fortune. If the world economy does not get better, commodities are the place to be because they’re gonna print more money, and that’s how you protect yourself. This is time when you should own real assets, not stock and bonds,” Rogers said.

Rogers doesn’t think stocks provide protection against inflation because stocks weren’t a good place to be when America had inflation during the 70′s. Rogers doesn’t trust the Obama administration and other politicians. He thinks the deficit and debt problems will be solved only when we have a crisis or a semi-crisis, because in that circumstance they would be forced to be solved. Rogers’ bearish view about the stock market is in stark contrast to Glenview’s Larry Robbins’. Larry Robbins expects the Dow Jones Index to approach 20,000 in three years.

reply to post by wisdomnotemotion


I don't necessarily disagree with his premise. Except he is off base with the 70's market. There was a massive bull market move in 1974 I believe.

The downward move in the early 70's was caused by the energy crisis if I remember correctly.

Regardless, equity markets are going to be moving much higher. Same can most likely be said for a large portion of commodities.

Jim Rogers is a business marksman. However, he needs to know there are some massive financial rigging going on; fabricated economic data and manipulated market. The whole system is broke and they're playing printed monopoly money game.

The current trends suggest that DOW will surpass 15000 this year. Commodities like metals and oil will fall further, while food will rise significantly.

Originally posted by wisdomnotemotion
Jim Rogers is a business marksman. However, he needs to know there are some massive financial rigging going on; fabricated economic data and manipulated market. The whole system is broke and they're playing printed monopoly money game.

The current trends suggest that DOW will surpass 15000 this year. Commodities like metals and oil will fall further, while food will rise significantly.

Looks like it. Weekly jobless claims climbed 51,000 to 454,000. Gold went down again. Rigged for sure.

Rogers doesn’t think stocks provide protection against inflation because stocks weren’t a good place to be when America had inflation during the 70′s. - insidermonkey

[atsimg]http://files.abovetopsecret.com/images/member/ffc02f50a454.jpg[/atsimg]

After suffering a 43% loss across 1973/74, the bear market of rally of 1975/76 brought the DJIA back to major resistance near 1000. A person might look at that chart and determine that the index finished the decade essentially flat. That's only true in nominal terms. In "real" inflation adjusted terms, the DJIA was puking-up purchasing power. I think that was Rogers' point.

One way to illustrate this loss of PP is with the Dow:Gold Ratio.

[atsimg]http://files.abovetopsecret.com/images/member/0066b389c8ba.gif[/atsimg]

Throughout the 70's this ratio registered a precipitous decline, eventually bottoming in the Q1 1980 near the historical low of 1, only to fully recover 15 years later near 29. Currently the ratio stands around 9 (nine ounces of Gold will buy share of the Dow 30).

Whether you consider DJIA performance in nominal terms, or "real" inflation adjusted terms, 70/79 was a dismal decade for buy and hold investors. You have to go back to the great depression to find a worse performing market.

From Davos, Soros supports rising near-term commodity prices.

Soros Says Higher Commodity Prices Likely for ‘Couple of Years’
Jan 27, 2011

A decade-long boom in commodities may last “a couple of years” longer before supply catches up with demand, billionaire investor George Soros said.

The S&P GSCI Spot Index of 24 commodities has more than tripled since the end of 1999 as mining companies, energy producers and farmers failed to keep pace with consumption. While the gauge slumped 43 percent in 2008 amid a global recession, it has jumped 81 percent since the end of that year. - More

Not sure I'd stand in front of these guys.

If we factor-in climate related crop failures and growing middle class consumerism in BRIC nations, I think the duration of a commodities super-cycle might even surprise Soros.

Yes, I agree with the basic consensus view in this thread...commodities are going up. The only possible criticism of Rogers in this connection is that he is always bullish commodities. Then again, they have been a better bet than most equities over the past decade, just as Rogers cheerfully predicted to anyone who was listening as long ago as the dotcom days. As a billionaire, he also has the benefit of an investment track record that speaks for itself. I am leery of his constant China bullishness and I am wary of anyone with such an un-nuanced and perpetually unchanging message. Even so, I think commodities in general can only go up this year, at least through the summer, I would guess.

reply to post by silent thunder

Hi st. Rogers does come across as the perennial broken record, but he's been pretty darn accurate and I also think he's done a thorough job of articulating the fundamental basis for his investment decisions. I think the heart of his current thesis is also sound. In a nut shell...if the global economy recovers [with emphasis on the East] commodities stay strong...if the Global economy falters, real assets (commodities) will continue to attract capital as a hedge against sovereign currency debasement - printing.

His latest conjecture that RMB may ultimately replace USD as the global reserve currency has raised a few skeptical eyebrows, but in light of recent developments including....

Made in China: Yuan being pushed to replace US Dollar

Last week the central bank allowed Chinese businesses to execute its investments abroad using the Yuan for the first time. This is surely an indication of the Yuan’s and China’s continued growth, strength and influence across the world.

Another example of this trend has already occurred in New York and Los Angeles. Marking another first, the Bank of China now offers Yuan-denominated accounts at its branch offices there. This represents the first time that a non-US owned bank has established this type of service within the United States. This offers a glimpse of things to come. - Full Text

I'm not convinced the concept is really that farfetched.

I apologize for the modest detour, but here's an interesting missive which explores the expansion of Chinese influence in North America from the viewpoint of an officially sanctioned, as opposed to publicly sanctioned East/West quid pro quo. - Link

rogers has been like this some commodities for awhile already

reply to post by OBE1


Thanks for the link...food for thought indeed.

he does seem to cover all the bases...for instance:

Jim Rogers also talked about inflation. He said everywhere in the world, including Europe and Australia, there’s inflation.

He added that inflation is supply driven and he gave the decline in oil reserves as an example....

[size=-3] here Jim seems to be talking akwardly... sure the 'scarcity' of oil will increase it's cost,
(one instance of Inflation)
...Jim goes on to explain:

Whenever paper money is debased, people will want to own real assets.

[size=-3]So, here's where Jim distances himself from the illogic of 'inflation' being supply driven
in the strict sense....He is rephrasing the result of excessive printing of USDs as not being 'Inflation'
but rather a currency 'debasement'
how that leopard changes spots.... too much UDSs being printed is not inflation--
instead it is currency debasement,
but less crude oil production is price inflationary because the world
is competing for the same limited resource.

Rogers thinks that the recent decline in gold and copper is nothing more than corrections in a major bull market, and it still has years to go.

Rogers argued that massive money printing will make investors put some of their money in the stock market, but that more money will go into commodities.

Whenever paper money is debased, people will want to own real assets.

the decline of metals since 2011 began, might be called a pullback or correction...
but i'm thinking its because there is an over abundance of Shorts in gold & silver out there,
and the speculators are having to wiggle out of their own trap by creating a larger snare...

have the public think that the metals returns will be less generous than the returns on
financial, technology, oil, or food sectors....thus getting the low brows to amble back
into equities while these elites manipulate the metals 'Every Which Way But Loose'
(thanks Clint Eastwood)


Jim sorta says the 'commodities' are PMs, or at least implies as such...
but what he does not say is that Coffee, Sugar, Wheat, Corn...are all commodities which
(wheat being 1st among equals) have all appreciated way more than CPI, inflation or even
debasement, which has not yet shown up as deflation as yet to any large degree.


keep on your toes fellow members, words mean something...
its all in the spin,
[like the SS system going into deficit by 2035, because of the temporary 1 year tax relief
because of the -2% reduction in SS taxes this year, that Obama Knived to get passed...
for totally nefarious and diabolical reasons...]

Jim Rogers also talked about inflation. He said everywhere in the world, including Europe and Australia, there’s inflation.

He added that inflation is supply driven and he gave the decline in oil reserves as an example....

Rogers is referring to cost-push inflation aka: supply shock inflation. Demand for oil, like demand for Silver is relatively inelastic, meaning there exists few commercial substitutes for producing essential goods like fertilizers, tires, plastics, and in the case of Silver, vital electronic components. In this context, even a small shift in supply can result in large shift in the price of the underlying commodity, raising producer input costs which ultimately pass through to the consumer.

Rogers argued that massive money printing will make investors put some of their money in the stock market, but that more money will go into commodities.Whenever paper money is debased, people will want to own real assets.

With short-term interest rates lagging the rate of inflation (even the phony CPI), capital is forced to gravitate towards riskier asset classes in search of returns. The result is spiraling commodity indices and higher prices at the register. Add profligate monetary policy to the mix, QE, and Rogers ultimately sees more investment dollars piling into the commodities complex, than into stocks.

We all become a tad jaded after listening to media default guru' babble on for years, but I wouldn't try to read too much into Rogers' comments. He's just a savy market entrepreneur with more hits than misses...ten years from now it will be someone else....

....I still wouldn't bet against him