Jim Rogers: Commodities ETFs To Benefit From Monetary Easing, Supply Issues

by: Tom Lydon

Noted investor and author Jim Rogers says index-based commodity ETFs will be an easy-to-use strategy for investors to profit from supply shortages in natural resources combined with easy monetary policies from central banks around the world.

Speaking Wednesday at the 2013 ETF Virtual Summit, Rogers pointed out that world governments have gotten into the habit of printing money in the wake of the financial crisis.

There are several exchange traded products based on commodity indices designed by Rogers.

For example, Royal Bank of Scotland issues a family of exchange traded notes tied to the benchmarks, including RBS Rogers Enhanced Agriculture ETN (NYSEARCA:RGRA) and RBS Rogers Enhanced Commodity Index ETN (NYSEARCA:RGRC).

Also, Van Eck manages the Market Vectors RVE Hard Assets Producers ETF (NYSEARCA:HAP), which tracks an index developed with Rogers.

Rogers noted that the new Japanese Prime Minister, Shinzo Abe, won his election on promises to increase quantitative easing to jumpstart the stagnating economy. Consequently, the Japanese yen has been depreciating, and Japanese equities have been rallying on the optimistic outlook.

  • CurrencyShares Japanese Yen Trust (NYSEARCA:FXY)
  • iShares MSCI Japan Index Fund (NYSEARCA:EWJ)
  • WisdomTree Japan Hedged Equity Fund (NYSEARCA:DXJ)
  • db-X MSCI Currency Hedge Equity Fund (NYSEARCA:DBJP)

It all may sound good and feel good to investors, "but by the end of 2013, all this will be wearing off," Rogers warned. "We will see serious problems and ramifications down the road."

Rogers believes that investors will be able to find opportunities in natural resources, as there are "supply problems in all commodities going forward."

"We will make money in commodities because of supply shortages… and governments will print money," Rogers added.

  • RBS Rogers Enhanced Commodity Index ETN (RGRC)
  • PowerShares DB Commodity Index Tracking Fund (NYSEARCA:DBC)
  • iPath DJ-UBS Commodity Index ETN (NYSEARCA:DJP)

In the metals space, Rogers is looking at base metals over precious metals.

"I suspect base metals benefit as they are down so much that they would be in a better place than precious metals," Rogers said. "I would not be selling my base metals."

  • RBS Rogers Enhanced Industrial Metals ETN (NYSEARCA:RGRI)
  • PowerShares DB Base Metals Fund (NYSEARCA:DBB)

Additionally, Rogers is leaning toward agriculture and natural gas, which he says have been oversold. Looking at the agriculture market, the world is consuming more than is produced by farmers. Some areas of the world are witnessing a food shortage.

  • RBS Rogers Enhanced Agriculture ETN (RGRA)
  • PowerShares DB Agriculture Fund (NYSEARCA:DBA)
  • ELEMENTS Rogers International Commodity Agriculture ETN (NYSEARCA:RJA)
  • United States Natural Gas Fund (NYSEARCA:UNG)

"We are running out of farmers," Rogers said. "No one is going into farming. The old are getting out and the young aren't coming in."

He said indexed ETFs are "the best way for everyone to invest in everything." ETFs make getting exposure to commodities as simple as buying individual stocks, Rogers added.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.