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Commodity Fundamentals Are ‘Unimpaired,’ Rogers Says

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December 05, 2008 – Comments (5)

By Nigel Stevenson and Brett Foley

Dec. 5 (Bloomberg) -- The fundamentals of commodities are “unimpaired” and prices will rebound when a lack of new supply leads to shortages, said Jim Rogers, chairman of Rogers Holdings.

“Commodities will be the place to be if and when we come out of” the downturn, Rogers said yesterday in an interview from Miami. “The only thing where fundamentals are unimpaired are commodities. Farmers cannot get loans for fertilizer now. Nobody can get a loan to open a zinc mine. So we are going to have some serious, serious supply problems before too much longer.”

The Reuters/Jefferies CRB Index of 19 commodities has plunged 53 percent from a record in July on concern that a global recession will sap demand for raw materials. The index almost doubled between its low in 2001 and the end of last year.

Rogers said crude oil and agricultural commodities were the most likely to have shortages and the outlook for zinc and cotton had “improved.” “I haven’t sold any commodities since the bull market began,” he said.

“I own some gold and if gold goes down I’ll buy some more and if gold goes up I’ll buy some more,” Rogers said. “Gold during the course of the bull market, which has several more years to go, will go much higher.”

Gold for immediate delivery has tripled since its low in 2001. It’s still 25 percent below the record $1,032.70 an ounce reached in March.

‘Unfathomable’

Rogers also said that while he owned platinum through index investments, “I’m not buying platinum at the moment.”

Platinum, used mostly in jewelry and catalytic converters for cars, has plunged 64 percent since reaching an all-time high of $2,301.50 an ounce in March.

Central banks and President-elect Barack Obama should be careful in responding to the global economic slump, Rogers said.

“It is astonishing how bad they’re reacting this time. It is unfathomable to me what they’re doing and you think some of them would have read some history,” he said.

5 Comments – Post Your Own

#1) On December 05, 2008 at 4:18 PM, DemonDoug (73.55) wrote:

the blind leading the blind leading the blind leading the deaf, dumb, and blind.

only question is where is the bottom for oil.  my caps port is getting killed as is my one long-term oil holding (SU).

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#2) On December 05, 2008 at 5:54 PM, ThoughtfulFool (< 20) wrote:

DemonDoug:

I'm still holding onto my oil sector ETFs (DIG and USO with real money; several other additional in CAPS), and realize now that I called the bottom at the wrong time when I entered around $46-50/barrel.  I now really don't know what to do; do I sell and wait for a lower bottom?  Someone on CAPS recently was using TA to call a bottom at an unbelievable $20/barrel which I just didn't believe - I thought maybe $40 at the lowest if I was wrong about $50, but gee, maybe he was right after all! 

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#3) On December 05, 2008 at 6:15 PM, kdakota630 (29.56) wrote:

I'm with you guys.  I didn't think oil would hit $75, or $60, or $50, and now it's closing in on $40.

Merrill Lynch today was predicting that it cold hit $25/barrel, and someone else (I forget who) going as low as $20.

Personally, if I owned any oil stocks (and I do), I'd hold and wait for a rebound.

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#4) On December 05, 2008 at 8:50 PM, kaskoosek (53.16) wrote:

They also predicted oil at 200$. (Lehman).

They pull numbers out of their ass.

 

Still bullish on oil, I think that 30$ (short period) is the lowest it can reach. No way in hell it gets lower. So at 45$ is not a bad investment.

 

We have also reached peak oil production. This will not be a 1980s style slump.

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#5) On December 06, 2008 at 10:53 AM, columbia1 wrote:

OPEC meets on Dec.17, I am expecting to hear about major cuts in production. Though I am suprised that they have let oil slide this low with out major cut-backs! wait and see, but if oil hits $40 I'll go back in, I have been sitting on cash for a while since the last run-up in early Nov. I am trading PBR though, it has been getting a larger bounce then SU.

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