Jim Rogers speaks candidly with Bloomberg (December 23, 2008) about his outlook for 2009.
- The American economy will likely be the worst since World War II.
- Policy mistakes could precipitate a depression, as in 1929, when policy makers made horrendous mistakes. Politicians are getting in on the action today as they did then, so its possible to have a depression in this period.
- "I'm negatively impressed by what I see this time. Its unfathomable what they're (central bankers and politicians) doing. You would think that some of them had read history, or interpreted history properly."
- Pres. Obama has made his platform to (1) tax capital and (2) protect America.
- "This is a world that is short of capital...what a genius."
- "Protectionism led to the Great Depression."
- "If that happens (taxing capital and protectionism) its all over."
- In 1918, The UK was the richest country in the world; by 1939, it was a shambles; Exchange controls, the economy was a wreck; it was a horrible period.
- "The same thing is in the process of happening in America and if America continues to make mistakes, you're going to see that quick a transition."
- I moved to Asia because I see enormous opportunities there, and I've got my two little girls who I want to grow up speaking Chinese and grow up knowing Asia as well as they know America.
- I'm convinced that China is going to be the great country of the 21st century.
- I want to prepare my little girls for that; I don't see how America is going to become the great country of the 21st century again.
- The (biggest issue) right now is that "the American government is printing gigantic amounts of money right now and that in the end is going to be the worst problem.
- They're propping everyone up everybody in sight; throughout history, when you've printed that much money its led to inflation, and in some cases runaway inflation.
- I think in the end, the credit problem is not going to be the serious problem.
- Its too bad the American government would not let people fail.
- The big problem is (a) that they have not let people fail, and (b) they're printing money to try to solve the problem.
Regarding Commodities:
- The facts are, during this period in time the only thing to have its fundamentals unimpaired is commodities.
- Farmers can't even get loans for fertilizer now.
- The supply of things is going to be in even worse shape coming out of this.
- The IEA recently came out with a study showing that the worlds reserves of oil are declining at the rate of 7% per year.
- you can do the arithmetic, the supply of everything is going down; oil and everything else;
- we're going to have serious supply problems before too much longer.
- The fundamentals for General Motors are impaired, the fundamentals for Bank of America are impaired.
- The fundamentals for Zinc are improving, the fundamentals for cotton are improved
- Commodities will be the place to be if and when we come out of this crisis, but even if we don't come out of it
- In the 1970's the economies were bad, but commodities went through the roof.
- In the 1930's commodities were a much better place to be than stocks, because there was no supply.
- I own some Gold, if gold goes down I'll buy some more, if gold goes up, I'll buy some more.
- Gold will probably go much higher
- I think I'll make more money in Agriculture for a while, but I own some gold.
- Platinum is more industrial, and certainly tied closely to the Auto industry; I own some, but not a lot, but when its time to buy Automobiles again, Platinum will be a spectacular play.
- There are shortages, and then demand will suddenly come racing back, and there won't be any inventories left; this is how economies have always evolved.
His ideas:
- I'm the worlds worst market timer so don't ask me for the timing of all of this - but we do know that people are closing mines; we do know that the cost of producing Zinc is below the cost of production now,
- Things can stay below the cost of production for a while, because often it costs more to close a mine than to keep it running at a loss, but eventually, you will have less supply of everything, and you're certainly not going to have any new mines opened in the next several years because the economics of opening a mine are out the window now, and it takes ten years to bring a mine on stream,
- The supply and reserves are going down so you're not going to have nay new mines coming on stream
- I have not sold any of my metals since the commodities bull market began.
- I was short Fannie Mae, short Citibank, still am short the investment banks.
- My way of investing is: I try to be long the good things where the fundamentals are improving, and short the things where the fundamentals are deteriorating. That's the way I invest and always have.
- Rogers is not buying any specific metals
- Buys his own indices to avoid conflicts
- The best way for investors to invest in commodities is through ETFs or ETNs or indexes. These are the best ways to invest in anything else.
- I amass things for as long as like them and would own them forever if possible, so long as the fundamentals are there.
- Covered many of his short positions in the US stock market in October.
- Has recently been buying more commodities (which he started buying ten years ago), China, Taiwan, and the Yen. For metals, he's been buying the Rogers Metals Index, and gold coins.
- Oil is crushed, its below the cost of production in many places, its below the cost of alternate sources of energy, so oil is going to make a huge comeback when it does. The IEA conducted a massive study of the world's oil fields and concluded that oil reserves are declining by 7% per year.
- You can do the arithmetic. In 15 years there isn't going to be any oil left unless somebody discovers a lot of oil quickly in accessible areas, and the price of energy has to go through the roof again.
To Watch the entire interview, click on the image:
