Oil 'Could Hit $200 a Barrel' Says Investor Jim RogersBBC News
When it comes to state visits the devil is in the detail. It's the nuances of the arrangements that allow you to calibrate just how important a relationship is. That's why the world has been watching the visit of the Chinese President Hu Jintao with such attention. The state dinner at the White House – described as an "intimate" event – apparently signifies that Washington rates China as pretty much the most important nation, economically, on earth. But the visit has also prompted much speculation in the press about how long the Chinese economic miracle can last and whether it is about to come to a juddering halt. Jim Rogers, the legendary investor who co-founded the Quantum Fund with George Soros, has moved his family to Singapore and is making sure his two young daughters can speak Mandarin. He spoke to the Business Daily's Justin Rowlatt.
Transcript is below Jim Rogers: The largest creditor nations in the world are in Asia now: China, Korea, Japan, Hong Kong. This is where the assets are. You know who the debtors are and where they are. Justin Rowlatt: But listen, I mean the Chinese economy is still way behind the American economy is and it is about the third the size of the American economy. Jim Rogers: Yes, of course. They had a disaster for 300 years, but about 30 years ago, they woke up, they changed their minds and they said we got to try something new. They unleashed entrepreneurship and capitalism again, and they have been astonishing for 30 years. It takes a while to go from a disaster to rival the Americans, but they are on their way. Justin Rowlatt: Do you really believe the Chinese boom can continue, because lots of people are saying there are all sorts of asset price bubbles that are going to trip the Chinese up in the coming years? Jim Rogers: Well, the only asset bubble I see potentially in China is in urban coastal real estate, but real estate is not nearly the entire Chinese economy as it was in America and the U.K. Sure, they will have setbacks. Justin, in the 19th Century, America had a horrible civil war. We had 15 depressions with a 'D.' We had very few human rights. We had massacres in the streets regularly. We had very little rule of law. You could buy and sell – you can still buy and sell congressmen in America, but in those days they were cheap. America had horrible problems, but they came out of that and had a pretty good 20th Century. Justin Rowlatt: So what does that imply about where people should put their money; where are the sensible investments in Asia?
Jim Rogers: Well, the best way to invest in Asia in my view is to buy commodities, because the Chinese have to buy cotton, they have to buy zinc, they have to buy oil, they have to buy natural resources because they don't have enough. If you want to invest in China and you own cotton, they are going to be very nice to you Justin. They are going to pay the bills, they are going to take you to dinner, they are going to pay you on time. If you want to invest in stocks, you have to do a lot of homework and know what you are doing. Another way is to invest in the currency. I own the renminbi. I expect the renminbi to go up a great deal over the next decade. Justin Rowlatt: But commodities are already at relatively high prices, aren't they? I mean hasn't that horse bolted already? Jim Rogers: No, no, the only commodity I know which is making an all time high is gold. Some commodities are up, yes. Sugar is up a lot, but Justin, sugar is still 50% below its all time high. How can you say that's bolted? Silver is going up, but silver is 40% below its all time high. Yes, commodities have been going up recently, but they are still extremely depressed on a historic basis. Justin Rowlatt: So what about oil? I mean oil prices are pretty high, aren't they? Almost $100 a barrel. Are they really going to go higher do you think? Jim Rogers: Well, the surprise is going to be how high the price of oil stays and how high it goes, because Justin we have had no major elephant oil discoveries in over 40 years. The International Energy Agency is going around the world pleading with people to listen. Known reserves of oil are declining. It is not good news. Unless somebody discovers a lot of oil very quickly, prices are going to go much higher over the next decade. January 22, 2011 Jim Rogers has taught finance at Columbia University's business school and is a media commentator worldwide. He is the author of Adventure Capitalist, Investment Biker, Hot Commodities, A Gift to My Children, and A Bull in China. See his website. Copyright © 2011 BBC News
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