Why Jim Rogers Is Still Bullish on Grains and Gold

After three straight days of a market rally, a lot of investors are starting to slowly move back into the markets.  Leading the way up has been agriculture and gold stocks. In a recent interview, Jim Rogers explains why he’s still bullish on both.

The man who turned bullish on commodities at precisely the right time nearly a decade ago and has managed to stay one step ahead of the rest of the investment world is speaking publicly again. This time, Rogers (view Jim Rogers Bloomberg interview here) provided some further insight into his thoughts on where the markets are headed over the medium and long-term.

Although he didn’t say much of anything new, he continued to stick closely to many asset classes which we’ve been watching come down in price a lot.

Rogers continues to be bullish on gold and said the United States and other western economies are headed for an “inflationary nightmare.” He added, “Gold is still in a bull market and will continue to be for a long time.”

That’s no surprise. The gold bulls are starting to come back to life. He is continuing, however, to be as bullish as ever on agriculture stocks. Rogers says, “I expect to make more money in agriculture than I do in gold or stocks.”

I agree completely there. The agriculture story has been unfairly beaten down. Yes, for readers of many of my other posts, I’ve been bearish on agriculture stocks since the middle of the summer. It seemed like a very frothy high and it was no time to be chasing after many of the hot names like Mosaic (MOS) and Potash Corp (POT).

Sure, they’re great companies, well-managed, and facing incredible opportunities, but they had just gone a bit too far too fast. And then you add forced selling from hedge funds, mutual fund redemptions, rising U.S. dollar and a worsening economy, and you’ve got the makings of a massive unwarranted sell-off in commodity and mining stocks across the board. Everything was getting sold off hard, gold, fertilizer, silver, copper…everything.

It was a forced liquidation. Rogers agrees. In a recent interview with CommodityOnline.com, Rogers said, “We have had 8-9 periods of forced liquidation over the past 100-150 years wherein everything was liquidated without regard to fundamentals. This is such a period.”

The boom in agriculture stocks is slowly starting to reappear. As I say in my latest agriculture stock report, “We’re in the third inning of the global agriculture boom.”

The root cause of the agriculture boom hasn’t changed a bit. Demand is rising and supply is barely keeping up. The amount of arable (suitable for farming) land is in steep decline compared to the world’s population…and it’s only getting worse.

In 1961 there were only 3 billion people in the world. There was plenty of food to grow around. There were about 40 arable acres for every man, woman, and child in the world. That was more than enough to feed everyone.

In the five decades since, the situation has completely changed. Today, the world has about 6.6 billion people. That doubling of population has pushed the amount of arable land down to less than 25 acres of farmland per person. That’s a 37% decline in arable farmland per person…and falling.

All the fundamentals are still there and now agriculture stocks are as cheap as they’ve been in a couple of years. The world’s population is growing and the amount of available farmland is not. Nothing has changed, except an uptrend has formed.

If this is the time agriculture stocks take off, they’re going to go up for a long time to come.

Disclosure: I have no position in any of the listed shares mentioned.

Comments

[CLH:]

Rogers didnt like gold until it was almost $1000 an oz. Now he loves it as it starts down. Hes a stopped clock in most commodities screaming --"buy lead". Following Rogers is the best way to lose your money.

2008 Oct 31 05:26 AM

[Steven Hansen:]

i agree about agriculture but not the logic - nor can you predict when it will happen. the problem in discussing feeding the planet is all things are not equals. meat eaters need much more land than people who have plant based protein diets. as prices and incomes change, so does the ratios.

but a bad year with no rain or floods or natural disasters will make it happen instantaneously.

2008 Oct 31 05:36 AM

[logicalthought:]

Rogers has got to be down HUGE, between his commodity bets and his bets on the Chinese stock market. Will it all eventually come back? Sure, probably, but a great money manager doesn't keep you long at the top of a bubble.

2008 Oct 31 06:07 AM

[Reader851:]

lousy analysis; major difference between 1961 arable land and 2008 arable land is not the amount of land but the productivity of that land; productivity gains far outweigh the loss in the amount of land

pick up your analytic game

2008 Oct 31 06:46 AM

[User 284234:]

Rogers has owned his Chinese shares and commodity positions since the late 90's. Last year he was actively hoping for a decline in the Chinese market because it was approaching bubble levels and he did not want to sell. He just got done shorting the financials, and he's long the Yen and the Yuan. Ag has been quite the loser in the commodity boom so far, but everything suggests that it should take off soon.

His most concerning position is being short long term treasuries. If that pans out like he expects, there's big trouble ahead.

2008 Oct 31 06:50 AM

[Engineer:]

Rogers is a very smart man with a track record to back him up. I suggest we pay attention to what he says.

I remember during the tech boom everyone was calling Buffet a man of the past and out of touch because of his archaic habit of focusing on fundamentals. He was eventually vindicated.

2008 Oct 31 12:35 PM

[run338:]

You must be bitter and uneducated...bad combination....as Jim Rogers has been BULLISH on commodities since 1999! Even wrote a book about it and released it in Nov 2004....his commodity index is up over 200% in 9 years, and thats after the correction....go hide somewhere and shut your ignorant mouth!

2008 Oct 31 01:12 PM

[Tony Daltorio:]

Anyone who follows Jim Rogers over the long-term has and will continue to make a bundle of money. It's only the short-term trader mentality types(who think one week is long-term) who don't like Jim Rogers.

2008 Oct 31 02:45 PM

[Pipo:]

Visit a Jim Rogers`s blog at:

jimrogers-investments..../

He gave a recent interview to Time Magazine

2008 Nov 03 01:15 PM

[User 364568:]

check it out

Feb 26 01:34 AM

[User 364568:]

check it out

Feb 26 01:35 AM