Commodity Fundamentals Are ‘Unimpaired,’ Rogers Says
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.
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.