Commodities guru Jim Rogers turns Oracle of Doom as he predicts more turmoil in global financial markets. In an exclusive interview with ET NOW’s Andy Mukherjee, Mr Rogers predicts currency crises, more national bankruptcies — and he’s shorting emerging markets.
You have been warning us for quite sometime about the currency crisis. Is that what is finally upon us?
The currency crisis has been going on for a while. It did not start this week. It started maybe with Iceland or many other countries that have been having problems. The currency crisis is going to get worse. Over the next year or two, we are going to see more, so prepare yourself. ( Watch )
Do you think the Eurozone is going to shrink because of what we are witnessing in Portugal, Greece and Spain?
Eventually the euro, unfortunately, is going to break up because it keeps weakening itself from within. If they would let Greece go bankrupt, for instance, it would strengthen the euro, it would strengthen the Eurozone because then people would know you have to maintain a sound economy. You have to maintain a sound currency and everybody would jump in and buy the euro, I would also buy more if that would be the case. Weakening from within and continuing to lend money and paper over problems is not a solution for a sound currency. I do own the euro, but I do not think this is the proper approach.
We are also seeing the impact of the crisis on most commodity markets. Do you think that this is just temporary and commodity is still the place for investors to be?
Yes, gold is making all-time highs in some currencies. So some currencies are doing well. But if the world economy gets better, then obviously commodities are going to do better because the world will use more and there are shortages developing. But let’s assume the worst. Let’s assume world economies do not get better, then I would rather be in commodities in most things because governments are going to print even more money, and whenever you have printed money throughout history, it has led to higher prices for real goods whether it is silver or natural gas. So, I would rather own commodities than most things in the world in the next two or three years.
Looking at the Rogers International Commodities Index, I find that rubber has done exceptionally well this year and so has lumber. What kind of commodities do you like at the moment for the long term?
I prefer agriculture just because it has not moved up as much. Metals have boomed in the past 15-18 months, energy is up a lot in the last 15 or 18 months. Agriculture for the most part is still very depressed. Yes, you are right, rubber has done well, some things have done well but for the most part, agricultural products are still very depressed including sugar. Sugar went up a lot in the past couple of years but it is still very depressed compared to its all-time high.
It is a known fact that global markets are really swayed by movements across the globe. Do you expect to see any cataclysmic events in 2010 or do you think it is going to be a largely benign kind of year ?
I have no idea. There will be more currency crises, more currency turmoil over the next year or two or three. We have huge imbalances. All the credit to nations in the world or in Asia and all the debt — you know who the debtors are and you know where they are. Those imbalances have not been sorted out yet. Throughout history, most imbalances like this have been sorted out in the currency markets or once upon a time when we were on the gold exchange through the gold markets and so we have more problems coming.
You may well see some more countries going bankrupt in this period of time because these imbalances still exist. I would be careful if I were you. I have started selling short in the last month or so. I have had virtually no shorts. In fact, I have had no shorts since the fall of 2008 but in the last month or so, I started adding to my short positions for the first time in 18 months.
No comments:
Post a Comment