Jim Rogers Bullish on Commodities, Sell Bonds

Sell Bonds, Buy Precious Metals, Rice on Supply Shortages, Jim Rogers Says

July 7 (Bloomberg)--Investors should sell bonds and buy commodities like silver and rice as a “refuge” as the world economy may continue having problems, Jim Rogers, chairman of Rogers Holdings said. “Bonds are not a good place to invest in,” Rogers said at a conference in Kuala Lumpur today. “You should own commodities because that’s your only refuge” whether it’s silver or rice, said Rogers, who predicted the start of the global commodities rally in 1999.

Gold has gained 8.3 percent this year, leading advances in precious metals, as investors seek haven assets to protect their wealth amid concern the global economic recovery will falter. Still, commodities overall capped their worst quarter in more than a year on investors’ concern that slower growth from China to the U.S. will sap demand. The best place to be is in commodities and other natural resources, including precious metals like silver, platinum and palladium, said Rogers, who co-founded the Quantum Hedge Fund in 1970. Commodities are good to buy as supply shortages are already developing, the Singapore-based investor said. Gold prices will rise to more than $2,000 per ounce, said Rogers, without giving a timeframe. Bullion for immediate delivery declined 0.4 percent at $1,187.85 an ounce at 6:34 p.m. in Singapore. It reached a record $1,265.30 on June 21.

‘Straight Up’

“I do own gold,” he said. “Gold has been extremely strong of late, but I’m not rushing out to buy gold. I don’t like to buy things that have been going straight up.” While gold has been trading at all-time highs, silver remains 60 to 70 percent below its peak and is a better investment, he said. Silver reached an all-time high of $50.35 in New York in 1980. Silver for immediate delivery fell 1 percent to $17.6413 an ounce at 6:22 p.m. Platinum dropped 0.6 percent to $1,507.68 and palladium declined 1.2 percent to $433.35. Still, agricultural commodities are better than metals as prices are “very depressed,” he said, pointing to sugar which is 75 percent below its all-time high in 1974. Raw sugar for October delivery slid 1.2 percent to 16.49 cents a pound on ICE Futures U.S. in New York. It reached a record of 66 cents in November 1974.

“Not many things are 75 percent cheaper that 36 years ago, but that’s true of sugar,” Rogers said. “Agriculture commodities are desperately cheap compared to 20, 30, 40 years ago.” Rice futures on June 30 touched $9.55, the lowest price since October, 2006, on rising production and declining demand. The contract for September delivery gained 0.7 percent to $9.935 per 100 pounds on the Chicago Board of Trade at 6:15 p.m. in Shanghai.

Thoughts from Jim Rogers today while on CNBC:

I think some of it is expectation management as you put it out, but remember what the comparisons were, we are talking about the second quarter of 2009, when the world essentially was coming to an end. Remember, at the end of 2008, beginning of 2009 we all thought the world had ended. The markets hit bottom in March 2009, well those were the comparisons we were up against. So things are actually better then people were expecting, but they should have looked back to see what the comparisons were and remember, the governments were spending huge amounts of money and that money has been flowing into the system in the last couple of quarters. Worry about next year, don`t worry about the second quarter now, that`s history.

My chocolate will be more expensive in the future ?! It already is....

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From Jim rogers in CNBC this morning on Agricultural Commodities:


We're going to have much, much higher prices over the next few years. Investors finally began to realize that prices for agricultural commodities have been too low for too long because of subsidies and other factors, which made agriculture an unattractive area for workers. Be prepared, if you have a sugar bowl home go fill it up because it's going to be more expensive. Anybody who's got potentially good agriculture land and good weather is likely to emerge a winner out of this situation because prices of nearly all agricultural commodities are set for steep rises.

Prices aren't high enough and most people don't believe it. Unless prices are high you're not going to attract people in the business. Eventually people will go into farming again but it's going to take a while. Shortages in agriculture are likely to add to problems created by governments who printed money to spend their way out of the financial crisis. It's all happening at a time when governments are printing more money...it's a very dangerous situation. When you print money, it's got to go in a place where it can protect itself, and that's real assets.

He recommends DBA, PowerShares DB Agriculture Fund (DBA:US)

Batman wrote:

My chocolate will be more expensive in the future ?! It already is....

============

From Jim rogers in CNBC this morning on Agricultural Commodities:


We're going to have much, much higher prices over the next few years. Investors finally began to realize that prices for agricultural commodities have been too low for too long because of subsidies and other factors, which made agriculture an unattractive area for workers. Be prepared, if you have a sugar bowl home go fill it up because it's going to be more expensive. Anybody who's got potentially good agriculture land and good weather is likely to emerge a winner out of this situation because prices of nearly all agricultural commodities are set for steep rises.

Prices aren't high enough and most people don't believe it. Unless prices are high you're not going to attract people in the business. Eventually people will go into farming again but it's going to take a while. Shortages in agriculture are likely to add to problems created by governments who printed money to spend their way out of the financial crisis. It's all happening at a time when governments are printing more money...it's a very dangerous situation. When you print money, it's got to go in a place where it can protect itself, and that's real assets.

He recommends DBA, PowerShares DB Agriculture Fund (DBA:US)

That's what I call the "breakfast hedge" strategy : long sugar, long orange, long cocoa, long coffee and long cereals
Some may consider in addition a long frozen pork belly

Seriously it could make sense...