Commodities to Outperform Equities: Jim Rogers
an interview with ET Now, Jim Rogers, Chairman, Rogers Holdings,
talks about the commodities market as well as the impact of Osama
Bin Laden's death on the global markets. Excerpts:
A few days
back in an interaction you said you own silver, and probably you
were hoping for silver to come down to lower levels and as an owner
of silver, you would like to buy more. Keeping in mind firstly,
let's talk about the latest news that has been causing this kind
of a sharp cut in the commodities market and then will you seek
this as an opportunity and probably pick up more positions in commodity
I am not buying
as to when there is decline. I am certainly watching and I am glad
to see this because we will not now have a parabolic move upwards
and so we will have some normal correction somewhere along the line.
I hope I am smart enough to step in and buy more silver.
throw a little light on the kind of movement we have seen across
currencies, you had dollar in the doldrums, it was at that kind
of a 3-year low. Now currently it has seen a bit of strengthening.
What kind of levels are you foreseeing?
I am not sure.
I sold some of my dollars when it kept going down and I am worried
about dollar. I do not think that today's news is of much significance
to the financial markets at all. It may just attract people like
you who have to comment on it, but I do not think that in the end,
the financial markets would be at all affected by this.
seen a knee jerk reaction into the international markets after Osama
Bin Laden's death news came in here, but would you see it just as
a knee jerk reaction or do you think markets may see a bit of a
turnaround from here?
I do not see
that the death of Osama Bin Laden has any affect on the economy
of anybody in the world. The worry of course is there are rumours
that his followers have planted bombs around the world that if he
does get killed, those bombs are supposed to be set off. Now, I
have absolutely no idea, those are the internet rumours as you probably
know, but if something like that happens, then it is going to cause
economic chaos in many places. But other than that, I do not see
any affect of this on anybody in the world.
As we wake
up in this morning, there is a lot of uncertainty into the markets
as you also rightly pointed out but we have seen most of these high
yielder commodities actually give up a bit of gains. So if you look
at crude prices, gold, silver, copper, all of them have opened intraday
on the lower side, how much of a decline are you really witnessing
have a rest. These commodities have been going straight up for several
weeks, several months. It is good that they rest. Anything that
goes straight up, usually goes straight down. The things that have
nice long term up-moves are the things that go up, consolidate,
go up, consolidate, go up, consolidate. So, I hope that what we
are seeing here is overdue normal correction in commodities and
other things as well.
course has been a day of correction, but commodities actually have
beaten stocks, bonds, dollars for last 5 straight months. This has
been the longest rally in the last 14 years. Do you see it going
ahead further as well?
No, I hope
it does. I hope to have a consolidation. You just pointed out. Commodities
have been very strong. Not just for 5 months, commodities have outperformed
stocks for 12-13 years. It has been going on a long time. You can
take it that commodities have been stronger than stocks. In America,
commodities have been something like 'can have' more profitable
than stocks in the last decade or so. So now this has been going
on for a long time, it is going to continue. I presume that there
will be more consolidations. I hope so. I expect to buy the corrections
and if stocks go up, then there will be a chance to sell some stocks,
sell some stocks sure.
on base metals as well and we have not seen much happening with
copper. There has been consolidation onto that one, the Chinese
manufacturing numbers for the month of April have not come in so
strong as well. So do you think that sector may see some more pressure
I am not very
good at short-term trading. I am not sure of medium-term trading.
So you should ask some people on Thomson Reuters. They will know
better than I will about short-term trading. I own commodities,
I expect to own commodities for several more years. The bull market
is not over, supply and demand are out of balance, but what happens
in the short term, I do not have the clue. You should watch Thomson
Reuters to get the answer to that kind of question.
come back to the fact that US dollar probably determines the path
that most of these commodities can also take, particularly from
the metals space so to speak. Keeping in mind how the dollar has
been moving and probably even the reaction to this bit of news that
has come about, maybe not in the short term but if you ask such
bull in the commodities market, which kind of commodities would
you probably handpick at this point in a phase of consolidation
and even a phase of correction where the value seems a little more
what goes down the most. The correction only one day old. You have
to ask me after the correction is a month old or quarter old. Tell
me what is going down the most and I can tell you what I would be
most interested in buying, but I have no idea what is going to go
down the most. If you do, you should tell us all what to buy.
the rest of the article
Rogers has taught finance at Columbia University's business school
and is a media commentator worldwide. He is the author of Adventure
Gift to My Children, and A
Bull in China. See his
© 2011 The
Best of Jim Rogers