INTERNATIONAL. Legendary global investor and chairman of Singapore- based Rogers Holdings Jim Rogers said commodities is still the place to be, adding that he can see no bubbles forming in a sector which is still very depressed compared to its all time high, except for gold.
In an exclusive interview with India's CNBC-TV18 published today, Rogers discussed his investment strategy for 2010. Answering a question on whether he thought bubbles were forming in the commodities sector, he said many commodities are still down from record highs.
"What kind of bubble are you talking about," he asked?
"Name one commodity that is in a bubble and all time high except gold," he added.
"If the world economy gets better, commodities are going to lead the way because there are shortages developing in most commodities," Roger said. On the flip side, if the world economy does not get better then commodities are good place to be because they are printing so much money all over the world.
"So I would rather be in commodities, in just about anything."
What is this bubble we are talking about? Cotton is 60% below its all time high and silver is 70% below.
In reply to a question about crude oil, Rogers said: "I do know that crude will be back in tripe-digits some time in the next five-ten years. The surprise is how high the price of crude is going to stay. The world is running out of normal reserves of crude. Hence, we are going to see much higher prices of crude down the line."
Addressing inflationary pressures in the economy, Rogers said that prices were already going up. "We already have inflation and some governments lie about it but everybody who is sharp knows we already have inflation. Look all over the world. we have shortages developing of nearly everything."
"We have governments all over the world printing huge amounts of money that has always led to price increases. It is leading to price increases now and we are going to continue to have more inflation," he added.
Commenting on the latest moves in China to cool the economy, Rogers said: " I am delighted to see what China did because some of the real estate in China was getting into a serious bubble. It’s good for China and therefore good for most of us. They need to cool off their economy."
So what would Rogers buy or sell now?
"I will buy gold if it drops to US$1,000 per ounce," he said, adding "I would buy commodities that are still depressed mainly in agriculture, silver or something like that."
"I certainly would not sell base metals because nobody can get finance to open a mine these days even if you could get finance to open a mine it takes 10 years to bring your mine on stream," he added.
Speaking in an interview with CNBC today, Rogers said that the financial crisis is likely to lead to food shortages in a few years because the agricultural sector is in dire need of funds.
The fundamentals [for agriculture] have gotten better,” Rogers said. “The inventories are now at the lowest they’ve been in decades, not in years.”
"Very serious food shortages everywhere in the world will lead to prices spiking. He recommends buying cotton and coffee because they are very distressed.
Rogers has been reiterating in various interviews over the last few months, his prediction that the price of gold will double to at least US$2,000 an ounce in the next decade.
“I suspect it’s going to go over US$2,000 some time in the bull market, but depending on what happens in the world it could go much, much higher,” Rogers said in November.
“The old high, back in 1980 adjusted for inflation, would be over US$2,000 now, just to get back to the old high. So we’ll certainly get there some time in the next decade.
When asked if gains made in commodities last year pointed to a bubble, he said: “It’s not a bubble if something is up 100% this year, but down 70% from its high".
"That’s not a bubble, that’s a good year. That’s a great year. Maybe it’s too high for this year, but that’s not a bubble,” he added.