Wikinvest Wire

Rogers likes agriculture over oil over gold

Monday, April 13, 2009

Famed investor Jim Rogers was on Bloomberg TV earlier today and had a few thoughts on oil, gold, and his new book - A Gift to My Children: A Father's Lessons for Life and Investing.

That's not a very flattering freeze-frame above - parts 2 and 3 are also available at YouTube.

For at least the last year or so, he's been pretty consistent about his favorite investment over the short-term and there were no changes today - agricultural commodities.

On market bottoms:
I don't know if this is going to be as bad as the 1930s - it may well be. But a rally is not unusual at a time like this. We've certainly seen a bottom. Is this the bottom? I don't think so. I think we're going to see more bottoms in the next few years.
I would expect to see more problems. Probably this fall or next year we're going to see currency problems. We're going to see more bankruptcies, so there are going to be more problems in the financial markets which does not mean that we can't have big rallies.

We're having one.

I don't know how much longer it's going to last. I am not participating - at least in the stock part of the rally. I'm participating by buying commodities because, if the world economy is going to be better, commodities are going to be the best place to be. If the world economy is not going to be better, commodities are still going to be the best place to be, or at least the least bad place to be.
On whether to hold oil or gold through the rest of the year:
Of those two I would rather own oil. The IMF is trying to sell its gold. The IMF is one of the largest holders of gold, so you’ve got this huge supply overhang. Whether they sell it or not, the world is expecting them to sell it, so I'd rather own oil than gold.

I'd rather own agriculture than either.
Apparently he hasn't heard about the willing buyers in Asia for all the IMF gold - that seems to be the consensus opinion of nearly all who have commented on this subject. Interestingly, for as far back as I remember, Rogers has never been real bullish on gold simply because, in his view, central banks have too much of it and are more than happy to continue to sell it.

It's a half-hour long interview - here's the summary:
00:00 Inflation; Asia; agricultural commodities
06:21 Investors should expect more "bottoms"
08:40 Commodities; U.S. stocks, bonds "last bubble"
13:24 Japan love hotels, stocks; Thai politics
18:09 Currency crisis; agriculture, China strategy
26:27 Prefer oil to gold; China, Brazil real estate
28:44 Angola. Ethiopia; U.S. bailouts, economy


Ted S. said...

What is it with his fixation on ag??? If prices go up, farmers plant more, if prices go down they plant less. Last year probably won't ever be repeated.

Chuck Ponzi said...


I won't speak for Rogers, but I would suggest that he probably feels that delivery shocks can place extraordinary effects on prices.

In other words, one good dustbowl or other "global warming" induced event, some large hurricane, tsunami, or otherwise can play havoc on prices; not to mention political instability which is becoming increasingly common.

Very few people have sufficient food stockpiled to feed themselves fore more than a few days or weeks; many laugh at the Mormons or end-of-worlders who are supposed to have 1 year or more of food storage. Lots of things could make food very expensive; look what happened with food riots in Asia when oil went up! Imagine if martial law were declared in Vietnam and foodstuffs were illegal to transport over the border. In short order, food and agriculture could be more valuable than gold.

I'm no doomsayer, but I remember an anecdote about Warren Buffet being asked a question by a college student who only had $1000 to invest and wanted to know what to buy. Buffet said he should buy canned goods. There is some computation that you could earn 600% or more per year on your money by buying at opportune sales and stockpiling foodstuffs for when they were needed.

For the time being, food is historically very cheap. That could quickly change and become a much larger part of a household's expenditures. If you have a place to store it, it becomes a great savings plan in case of job loss, supply shocks, or others external events.

However, in times of extremes, be sure to find a way to protect your storages. It could be as valuable as gold; you can't eat gold, but it's a whole lot easier to hide.

Just trying to figure out myself why he would say that, and that's my best guess. Do not take it as investment advice.

Chuck Ponzi

Evan said...

Speaking of people liking ag, I sure hope Bob Pisani doesn't start in on "Buy Potash" again. That was irritating. But I guess everything about Bob Pisani is irritating.

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