Jim Rogers says at 70% below its peak, silver is better investment than gold
Source: BI-ME , Author: BI-ME staff
Posted: Fri July 9, 2010 1:27 am

INTERNATIONAL. Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers said bond markets are a bubble waiting to burst because the problems are worse now than at the beginning of the crisis.

So where should investors put their money?

Speaking to CNBC last Thursday, Rogers said "Markets are looking ahead to more difficulties."

"I'm watching the bond market, I have no longs and no shorts," Rogers said. "It is a bubble which is developing; it's one of the few bubbles in the world which is developing."

"I think it's going to be a disaster and I plan to be selling them short sometime in the foreseeable future," he added.

"My investment outlook is I am long commodities and short stocks," Rogers said.

"I do own some stocks that I have had for years, but I have been shorting and am short stocks," he confirmed.

Geographically, he said he prefers assets in the countries that have the cash, rather than in the ones that have the debt.

"The creditor nations are all in Asia now … I'd rather be invested with the creditors than the debtors," Rogers said.

Speaking at a conference in Kuala Lumpur yesterday, Rogers reiterated his position: Investors should sell bonds and buy commodities as the world economy may continue having problems.

“You should own commodities because that’s your only refuge” whether it’s silver or rice, reported Bloomberg, quoting Rogers.

The best place to be is in commodities and other natural resources, including precious metals like silver, platinum and palladium, the legendary investor said.

“I do own gold,” he said. “Gold has been extremely strong of late, but I'm not rushing out to buy gold. I don't like to buy things that have been going straight up.”

While gold has been trading at all-time highs, silver remains 60%-70% below its peak and is a better investment, he said. Silver reached an all-time high of US$50.35 in New York in 1980.

Silver for immediate delivery touched a 1-week high at US$18.24 an ounce today as the price of physical gold bounced from a new 6-week low early in London on Thursday, but struggled to hold above US$1,200 as investor risk appetite rose.

Agricultural commodities are better than metals as prices are “very depressed,” he said, pointing to sugar which is 75% below its all-time high in 1974. Raw sugar for October delivery slid 1.2% to 16.49 cents a pound on ICE Futures U.S. in New York. It reached a record of 66 cents in November 1974.

“Not many things are 75% cheaper that 36 years ago, but that’s true of sugar,” Rogers said. “Agriculture commodities are desperately cheap compared to 20, 30, 40 years ago.”

Rice futures on June 30 touched US$9.55, the lowest price since October 2006, on rising production and declining demand. The contract for September delivery gained 0.7% to US$9.935 per 100 pounds on the Chicago Board of Trade yesterday.

Rogers views most Western currencies with caution as they are “very suspect.” He sees weakness all around because of the ‘liquidity seeking return’ mentality in which stock markets are buoyed by easy money.

The legendary investor believes “the Euro will probably break up in the next 15 to 20 years” because currency unions do not survive and they haven’t in the past.

Nonetheless he has been buying Euros. Why?

When no one wants something that should be a signal to buy it. Everyone has been selling the Euro so I bought some, if only for the rally.

This doesn't mean that I think European governments have got their act together. Far from it. But the euro could go up from a rebound rally so that's why I'm interested.

Rogers belives there is going to be another recession, probably in 2012., “Yes we're going to have another recession, I guarantee you. Certainly by 2012, it's time for another recession," he told CNBC in March.

While he doesn’t call this a double dip, he does say that “the next time it’s going to be worse because we’ve shot all of our bullets.” With zero interest rates and huge government deficits all around, policy options are definitely more limited.

Rogers has spent a career being one step ahead of mainstream investment thinking.  He rose to fame after co-founding the now-closed Quantum Fund with George Soros nearly four decades ago. During his ten years with the fund, the portfolio gained more than 4,000%, while the S&P rose less than 50%.

The Quantum Fund shot to fame after making more than US$1 billion betting against the British Pound in early 1990s.

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