Jim Rogers Still Favors Commodities

The billionaire investor and new Singapore resident Jim Rogers has been a long time big player in the commodities markets. A highly successful one at that.

The outspoken Jim Rogers says he isn’t buying stocks in any country these days.

“I’d love to invest in equity markets around the world, (but) I can’t find any I want to buy shares in, including the U.S.,” Rogers told Fox News.

“The world’s got a serious problem, mainly because these guys in Washington don’t understand what’s going on and they’re making it worse.”

The only place other than currency Rogers advises putting money now is commodities. As you might guess Rogers believes that the Washington gang of legal gangsters is well on its way to destroying the value of the US dollar. As the dollar falls in value commodities would tend to increase in value as they are generally priced on world markets in US dollar terms.

The fall of the dollar will be great for commodities, Rogers notes. In addition, “We’ve got the lowest inventories in 50 years for agricultural products,” he says. Fundamentals at big firms like Citibank and General Motors are not getting better, Rogers observes, but fundamentals for commodities are improving and will continue to improve.

“Nobody can get a loan to open a mine … the world’s oil reserves are in fairly rapid decline,” Rogers points out, this causes the current supply of commodities to dwindle, which pushes up prices.

Not everyone agrees with Rogers. “This recession is going to last a lot longer than the one in the 1970s,” Commodity Information Systems President Bill Gary says. “I don’t see any major bull move in commodities in the next several years.”

My own opinion is that the next few years for commodities will be one of extreme volatility as the world wide recession/depression cuts into demand but weather, and financing problems experienced by producers cuts into supply. Low current inventories in many agriculture commodities will add to the volatility as any small increase in demand or crop problems will quickly ramp up prices.

We are therefore likely to experience extreme price movements as speculators and investors have periods of hope that depression conditions are improving and then react to signs that no indeed they are getting worse.

This is not all bad as experienced commodity traders welcome volatility. However, extreme volatility can be challenging even to the best of traders. For sure, the next few years are going to present challenging commodities markets even if we have a run away bull market in commodities as Jim Rogers forecasts. Corrections within the trend are likely to be fast and violent and test the convictions of even the most seasoned traders.