Jim Rogers: Short US Bonds, Likes Russia
December 03, 2012
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Rogers: Again, I don’t know if it’s a gap in my knowledge, and I need to do something about it to find out. If mankind can solve the problem, then sure, that’s going to be a great boon for the world. There's a lot of shale gas and shale oil in the world. A lot of countries have it, it turns out. In all, bull markets and commodities will end some day. And this may be the thing that ends this bull market. But “some day” is still a long way away, as far as I can see.
I'm not rushing out to buy natural gas just because I don’t really know the answer yet. If I find it is a serious geological problem that we cannot solve any time soon, then I’ll probably buy more natural gas. But at the moment, I'm just watching.
Ludwig: Looking at China and its agricultural imports from the United States, do you see any particular products that are going to benefit more than others, say, corn or soybeans or something else?
Rogers: As you know, they already import soybeans. And consumption of wheat continues to rise in China, with Chinese prosperity, and so does sugar consumption. So anything that China consumes and is in short supply there will benefit from Chinese prosperity. But again, someday the bull market will end, at least they always have.
Ludwig: When might this commodity boom that you first wrote about in your book, “Hot Commodities,” run its course? How far is this along? Is there some kind of an end in sight?
Rogers: Well, I don’t see the end in sight—yet. Conceivably, the world economy is going to collapse sometime in the next decade. And if that happens, needless to say, then central banks are going to print even more money. It’s the wrong thing to do, but commodities will benefit and be a better place to invest than stocks, or certainly better than bonds if that happens.
On a historic basis, we’re maybe two-thirds of the way through the commodity bull market. Normally, eight, nine, 10 years into any bull market in anything, you start to see more supply come in. But what happened in 2008 and 2009 means there is a lot of potential capacity or supply that’s been deferred or delayed. So we don’t have as much supply coming as we normally would in this stage of the bull market.
So this bull market might last longer than most. But again, there's no reason for me to determine that yet. The bull market is still intact. I hope I’ll be smart enough to recognize that a lot of capacity and a lot of supply is coming in, because that will be the end of the bull market. But that’s still years away.
Ludwig: You’ve spoken very pointedly about the U.S. and where it finds itself in the arc of its history, with all of the debt and the money printing. I'm wondering if you might comment specifically on what you're witnessing now with the budget talks that are going on, this whole “fiscal cliff”—the possibility of greater taxation coming into focus. Is there anything in all of this that seems to be relatively good news? Or do you continue to see the whole U.S. picture with a great deal of skepticism?
Rogers: None of these talks are going to lead to reduction of the debt. Whether it’s the president or the Congress, none of their plans show any debt reduction for a year, if not a decade. So they may just be slowing down the march over the cliff. But they're not solving the problem.