Jim Rogers: Commodities Bull Run Ahead
Tuesday, October 21, 2008 11:53 AM
By: Greg Brown
Global crisis aside, commodities will roar again, and soon, says Jim Rogers, CEO of Rogers Holdings.
"We have had eight or nine periods of forced liquidation over the past 100 to 150 years wherein everything was liquidated without regard to fundamentals. This is such a period," Rogers told the Web site Commodity Online.
A slowdown in China and economic malaise in the United States and Europe have hit commodity prices short term, Roger says, but nothing about the basics of supply and demand have changed.
"Historically, the things which have come out best on the other side are things where the fundamental have been unimpaired. Commodities are the only thing I know with unimpaired fundamentals," Rogers said.
Speaking on CNBC, Rogers built on the forced liquidation theme, saying he was heavy in cash and buying currencies, including yen and Swiss francs, as well as more agricultural commodities.
"There's a liquidation phase going on, where everything is being liquidated. They're selling everything in sight," Rogers said.
"In a period like this, the way you make money coming out of it is to own the things where the fundamentals have not been impaired."
One theory among economists is that commodity prices are still at the beginning of a steep fall as the credit squeeze takes the world economy into a deep recession.
As usual, it’s all about time horizon.
"When you have a seven-year bull run, you are going to have more than a four-month correction, and we are just beginning our fourth month," Richard Feltes, senior vice president and director of commodity research at MF Global Research, told the International Herald Tribune.
"We have got more deflation coming in the housing sector, in capital assets, and it's going to continue in commodities as well."
True enough, but only if demand stalls in the emerging capitalist economies of Asia. China’s growth has slowed, but only to 9 percent, still an amazing rate of expansion.
"The underlying fundamentals of strong demand for energy, food, and industrial commodities will come back," Michael Lewis, global head of commodities research for Deutsche Bank, told the IHT.
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