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Jim Rogers - Govts' Moves Can't Halt Commodity Rally



September 13, 2008 – Comments (1)

Newswire18 / Mumbai September 13, 2008, 3:31 IST

Trying to cut out speculators from the commodity futures trade will only decrease liquidity and will not halt a price rise as supply problems persist, investor James B Rogers, popularly known as Jim Rogers, said on Friday.

He was speaking on the sidelines of the launch of a commodity-equity fund by Birla Sun Life Mutual Fund.

Commenting on the ban on eight commodity futures in India and rising scrutiny of speculators in the US commodity markets, Rogers said, “Governments and politicians do not understand markets and they are making the situation worse by trying to impose controls on the markets.”

“Commodity prices will go up whether governments impose controls or not as there is a serious supply-side problem.”

He said the bull run in crude oil prices is not over yet and expects prices of sugar, cotton and coffee to rise sharply.

“Zinc and silver prices may also witness some upside,” Rogers said. He said despite the fall in gold, he is not selling the yellow metal and will buy more if it falls further.

“If you have gold, I will buy it from you. Gold is not something I plan to sell. Ever,” he added. Rogers remained extremely pessimistic on the dollar and said it is a “terribly flawed currency”. It is because of the pessimism of many investors like me that the dollar has suddenly appreciated, he said.

“However, it is likely to weaken again and I intend to sell all my holdings in the dollar in the current rally,” he added. Rogers said as the dollar situation is likely to get worse, it will also have a positive effect on commodity prices, which are mostly dollar-denominated.

“The commodity’s price will go up no matter where the dollar is. A weak dollar only adds to the rise in prices and is not the major factor,” he added.

He expects the dollar to lose its position as the reserve currency of the world soon. “Iran and Venezuela are already not accepting the dollar when they sell oil and even Opec (the Organization of Petroleum Exporting Countries) is trying to figure out how to deal with a weak dollar,” he said.

He said the dollar’s weakness was because of the weak move made by the Federal Reserve and the US government.

“It was a horrendous mistake to bail out Freddie Mac and Fannie Mae banks,” Rogers said. “The next thing we know they will be bailing out Lehman Brothers.”

According to him, what the government should do is let two-three people collapse, which will help clear out excesses in the system.

He said the current recession will help clean up the global economy and then the economies can start growing again.


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Why Jim Rogers is Bullish on Commodities (Aug 21, 2008)

1 Comments – Post Your Own

#1) On September 13, 2008 at 10:46 PM, milpo (45.47) wrote:

Dear Dakota:

I think that a commodity equity fund is a great idea. I agree with Mr. Rogers. In fact, if I had a warehouse big enough, I  would fill it with actual, tangible commodities.  I would spend every spare dollar available to me to achieve this end. Unfortunately, gold and silver are so heavy and who could afford a full time security system. Therefore, a paper equivalent might be the next best move. 

Unfortunately, the above assumes an inflationary spiral in which the value of paper is diminished.  I worry that these new commodity equity funds are actually a fraudulent attempt to create a "shelter" in a perfect storm.  I think that the originators of these funds know that they will capture investors and thereby escalate the value of their paper.  However, remember that it is only paper and not the tangible commodity itself.  What is the value of any paper if it can only be converted to worthless currency?

The central banks have initiated Phase 2 of a process by  tightening the money supply. This was preceded by Phase 1  in which there was a decade of almost perverse dumping of cheap credit into the marketplace. Phase 3 will occur when all debtors lose anything of value through seizures of real wealth (i.e.) businesses, property, even commodities for pennies on  the dollar. The United States and everyting it stands for is in receivorship by the central banking system.  Of course, our "economic zcar,"  the honorable Paulson, is the henchman and probably the best candidate for the job.  Let me think.  The only thing that has value is gold.  I have gold but no food or a  place  to live.  Am I in any bargaining position with respect to the value of my gold?  The answer is no.  That's assuming I still have title to  my gold and it was not seized in my bankruptcy.  I agree with Alstry.  In fact, I think he is being conservative.

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