Jim Rogers, founder of the Rogers International Commodity Index and bestselling author of “Hot Commodities,” has long been a proponent of precious metals and a staunch critic of the Federal Reserve System and its monetary stimulus.
He sat down with HardAssetsInvestor.com late last week – the interview was published Monday – and Rogers discussed a wide variety of business news, particularly regarding gold, the Ukraine crisis, the Fed and commodities.
One element of the interview that has been grabbing headlines and generating buzz among contrarian investors and gold bugs is his projection that the yellow metal will likely bottom out again and create another buying opportunity within the next one or two years.
“If that means gold is under $1,000, I hope I’m smart enough to buy. If it means gold is $1,600 because America and Iran end up going to war, I hope I’m smart enough to buy it,” said Rogers. “In my view, it’s more likely there will be another chance to buy gold lower than now, and that’s why I’ve hedged some of my gold, but I’m not selling.”
Rogers did not mention silver bullion at all in the interview, but he has said on previous occasions that he would rather own silver than gold and has the capacity of reaching new highs in the future.
The Federal Reserve further announced another round of tapering and will now acquire $55 billion per month of mortgage-backed securities, Treasury notes and bank debt. Financial experts say that this could be a sign the United States economy is improving, but Rogers – as well as many other libertarian critics – says it’s been a “disaster” from the very beginning.
According to Rogers, the Fed’s quantitative easing initiative should have never been launched, but he understands because the central bank is filled with academics and bureaucrats who had no idea of what else to do.
“Never in the history of the world has debasing of currency been good in the long term or the medium term. Sometimes it has helped in the short term, but it’s certainly not going to be good for us in the long term,” explained Rogers. “And this is the first time in recorded history when you’ve had all major central banks printing money at the same time, so when this ends, it’s going to be a disaster for the whole world.”
The crisis in Ukraine has further intensified and this has been detrimental to certain markets, including the commodity sector. Both Russia and Ukraine are commodity producers, especially Ukraine because it’s an agricultural commodity producer. He noted that he is unsure if it will be affected by the situation.
In regards to the entire agriculture industry, he listed a number of facts: agricultural products are at record lows, the world consumers more than it produces, inventories have diminished and the amount of farmers worldwide is very low.
“I can go on and on. More people in America study public relations than study agriculture. So we have low inventories and we have a shortage of farmers developing. We’re expecting a crisis in agriculture sometime in the next few years, and prices are going to go much, much, much higher,” added Rogers.
There have been many investors who have presented the case that the stock market is either in a bubble or it’s overvalued. To Rogers, it’s likely a bit of both in different sectors. For instance, he says that the social media and technology sectors are probably in a bubble, but the whole market might not necessarily be in one.
“It may be too expensive, it may be too high priced, but an overpriced market is different from a bubble,” stated Rogers. “I have no idea whether the market is overpriced, but I wouldn’t be buying U.S. stocks. I mean, they’re at all-time highs. There are other markets around the world that are certainly much cheaper on a historic basis.”
Rogers has been bear on the U.S. stock market since before the economic collapse and Great Recession. He had been warning people about the bubble formations, the recession and how central banks across the globe would react with inflationary responses.
