Commodities to Outperform Equities: Jim Rogers

The Economic Times

In 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 like silver?

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.

Just to 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.

We have 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 from here?

They should 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.

Today of 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.

One word 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 going ahead?

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.

Just to 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 viable?

Depends on 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.

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May 5, 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.

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