INTERNATIONAL. Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers expects the US to lose its AAA credit rating after Standard & Poor's revised its outlook on US sovereign debt to "negative" from "stable".
S&P said last week the United States had until 2013 to come up with a credible plan for addressing its financial problems.
Speaking to Investment Week, Rogers said: “Eventually it will happen. Not this month, or this quarter, but it is certainly going to happen”.
“The US is the largest indebted nation in the history of the world and the debt is going higher and higher," Rogers added.
A new report from Deutsche Bank ranks the US government as the world's fourth riskiest sovereign borrower, behind Greece, Ireland and Portugal, and just ahead of Italy.
"Because the US has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable," S&P said in a statement.
"More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," said S&P credit analyst Nikola G. Swann.
“The government is printing money to solve this problem and I cannot imagine lending money to the US government for 30 years in US dollars at 3%, 4%, 5% or 6% interest, as the government will never be able to pay off those debts, ” Rogers told Investment Week.
Speaking to India's Economic Times (ET), the renowned investor reiterated he was poised to sell short US treasury bonds.
"I have no position in US treasury bonds. I am waiting to sell them short," Rogers said.
"I plan to sell short US government bonds sometime in the next few weeks, months. Interest rates all over the world are going to go higher. We have inflation, staggering debt problems and currency problems facing us. So interest rates are going to go higher," he added.
Asked about the US dollar, the renowned investor said: "It is a conscious policy of the US, as far as I can see, to debase the currency".
"In fact, what they might say, they want the book value of the US dollar to go down. They think that makes the US more competitive. It has never worked in many countries. In fact, this policy of debasing the currency has never worked throughout history and it would not work this time, not in the long term or the medium term, maybe in the short term," he said.
Asked by ET Now if he thought the Fed would stop buying bonds after June 30, Rogers said "they will stop buying bonds at least for a while because they have said so many times that they are going to".
"I would suspect that after a while, they will be back. Who knows what they will call it? They will make up a new name, but they will be back, they will be printing money again next time things go bad," Rogers predicted.
Rogers, who predicted the start of the global commodities rally in 1999, again reiterated his belief in agriculture commodities. "They are all going to go higher. I mainly buy the Rogers Agricultural Index which has 21 agricultural products. So I own them all," he told ET Now.
Which commodities does he prefer?
"I prefer to look at the things that are still depressed. Natural gas is depressed compared to oil, silver is depressed compared to gold. I would rather look at the things within those sectors to see what are the things that are still depressed and see if maybe that is where we should be putting money".
Clarifying his stance on silver and crude oil, he said: "Silver has certainly gone up a lot in the last 9-10 months. There is no question about that, but remember, silver is still 10% below where it was 31 years ago. I bet you do not know many things that are 10% below where they were 31 years ago".
"Silver has been going up but on a historic basis, it is still very depressed. Oil is up a lot in the last year or two, but remember the known reserves of oil are on a decline. People can moan all they want about," Rogers told ET Now.
"The fact is that the price of oil is up, but where is the oil"