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Jim Rogers
Jim Rogers is one of the most respected investors in the world. I had a chance to chat with him the other morning to get more details about some of his recent comments in the media …
Damien Hoffman: Jim, you were in the media a few times last week and I want to follow up on a few points you made. You said on Bloomberg that Nouriel Roubini did not do his homework regarding the asset bubbles about which he is now warning. Can you explain what homework he did not do?
Jim: All of it. How can you talk about a bubble when assets such as silver are 70% below their all-time high? Same for coffee, sugar, cotton, natural gas, and many more. I have a problem talking about a bubble when assets are this depressed from their all-time highs.
A bubble is when assets are screaming to new highs everyday, everyone is talking about them, and everyone owns them. Right now, virtually no one owns commodities. So for Mr. Roubini to talk about a bubble in commodities defies comprehension. It proves he does not understand markets.
I am flabbergasted at Mr. Roubini’s comment about bubbles because there is not a single market in the world making all-time highs except Gold, US Government Bonds, Cocoa, and the Sri Lankan stock market. That’s hardly reason to call for a bubble. So, I am most perplexed about this alleged bubble which is out there.
If an asset rises 100% in one year, that’s a great year, but not necessarily a bubble. Look at oil. It’s up huge off the bottom but nowhere near it’s old highs. Look at Citigroup. The stock is up 3 or so times off the bottom …
Damien: … and I doubt long term shareholders feel like they are in a bubble.
Jim: Exactly. And since Mr. Roubini thought oil would stay below $40 a barrel for all of 2009, I would love for him to tell me and the rest of the world exactly where are all the oil supplies because the International Energy Agency (IEA) — which has the best global data set on energy supplies — has no idea where is the oil. Mr. Roubini should tell us where this price suppressing oil supply is hidden. All the oil possessing countries in the world have declining reserves. All the oil companies have declining reserves. So Mr. Roubini must know something the rest of us don’t.
Damien: On another note, Gold has been reaching new all-time highs, although not inflation adjusted. You said Gold may reach $2,000 an ounce over the next decade. Can you explain what variables will push Gold to $2,000?
Jim: First, I hope you will keep Mr. Roubini’s statement where he said Gold going to $2,000 an ounce by 2019 is “utter nonsense.” I think you’re going to get a chance to call him before 2019 to ask him what he thinks of Gold at $2,000 and why he thought it was “utter nonsense.”
Regarding variables, it’s very clear there is huge suspicion about paper money around the world. This suspicion is gathering steam. Governments are printing huge amounts of money. This has always led to higher prices. Maybe I am wrong and it’s different this time. But I doubt it.
Additionally, no new large gold mines have been opened in decades. Some of those mines are over 100-years old. They are all depleting. On the other hand, central banks have huge Gold reserves above ground — and they are less interested in selling than in the past.
If you adjust Gold for inflation and go back to it’s former all-time high in 1980, Gold should be over $2,000 an ounce right now if you want to say it’s reaching new inflation adjusted all-time highs. That does not mean Gold has to get back to a true all-time high. Nothing has to. However, I suspect that given all the money printing in the world, we will see much higher prices for hard assets.
Despite Gold’s potential, I think I will make more money in other commodities such as silver, cotton, or coffee — all of which are terribly depressed.
Damien: Speaking of other assets, as an outsider living abroad, what is your opinion on US Equities?
Jim: This is one of the few times in my life I have not had shorts anywhere in the world. I have also not had a lot of longs in the stock market because I’ve chosen longs in commodities and currencies. I have kept away from shorts because there is a gigantic amount of money being printed and it has to go somewhere. I thought some of it would end up in the stock market, and it has.
How much higher can the equity markets go? I don’t know. There are a lot of problems in the economy, but I don’t know when those problems will cause a downdraft in the stock market. All we’ve done is paper over the problem, so I expect we’ll have to deal with those issues in the future. Printing and spending money we don’t have simply prolongs the problems and makes them worse in the long run.
If the world economy improves, commodities will lead the way due to demand and shortages. If the world economy does not get better, commodities are still a great place to be because governments are printing so much money. And, if the world economy doesn’t get better, they will print even more money!
Damien: Jim, thank you for taking the time to share your outlook and opinions. I greatly appreciate it.
Jim: You are very welcome. Your site is very impressive. I look forward to staying in touch.
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You should have asked Jim about all the new oil discoveries this year. Good interview though.
Nice “get” Damien. Looking forward to the 2 hour sit down with Rogers in the future – have to nail down that intern first ;)
Thanks, Mark! I think I’ll video that one ;)
Nice work Damien! He makes a good point that there are a fair number of commodities out there that are still super-cheap. They dont get the pub because most just cover Gold, Oil and Copper. Its too bad that the obscure ones are very difficult for the average joe to play.
Thanks, Jordan! I know you follow silver … seems like Rogers likes that a lot.
I bought a bunch of gold cause of Jim. Now I am rich.
Jim has been all over the world. That’s a bird’s eye view!
I think mr. Roubini, the now mr. media star, is so compromised by the powerz(wall street, govt., certainly media boss(es)– likely a paid propagandist!. Money can corrupt simple folks aplenty. So, mr. roubini is so comprised, that he is a turncoat, now.
Roubini listens to this person call Mahendra will if you say it enough eventually you will get it right even it takes months or years. But not days as these people predict.
Larry Summers submitted his “White House Financial Disclosure” 12 months ago revealing his part ownership of Roubini’s economic website http://www.Roubini.com (formerly RGEmonitor). In addition to this little detail, Summers was also drawing a salary from Roubini’s company and was on his board of advisers.
Some have suggested that Roubini is being influenced by the White House, while I find that hard to believe it is curious that he went out of his way to praise Summers appointment while never declaring their business relationship.
http://online.wsj.com/public/resources/documents/disclosure-LSummers04032009.pdf
I am going to write something about this. THANKS for your great work, Rahm!
Hey Damien
Great work. I only hope you conduct a similar piece with Nouriel. He is an economist of great repute and has been right in most of his predictions. If he thinks in a particular way it is not without reason. One would love to listen to his reasoning.
Aditya,
I will do my best to get a hold of him. Thanks for the great idea.
Best,
Damien
Love your site, Damien!
Keep up the good work.
Thanks, Michelle!
Jim rogers has been promoting gold for years and its beena very good investment. I have been investing now for 3 years and very happy with the returns so far