Rogers Likes Agriculture Over Oil and Gold

Famed investor Jim Rogers was on Bloomberg yesterday and had a few thoughts on oil, gold, and his new book - A Gift to My Children: A Father's Lessons for Life and Investing.

That's not a very flattering freeze-frame above - parts 2 and 3 are also available at YouTube.

For at least the last year or so, he's been pretty consistent about his favorite investment over the short-term and there were no changes today - agricultural commodities.

On market bottoms:

I don't know if this is going to be as bad as the 1930s - it may well be. But a rally is not unusual at a time like this. We've certainly seen a bottom. Is this the bottom? I don't think so. I think we're going to see more bottoms in the next few years.
...
I would expect to see more problems. Probably this fall or next year we're going to see currency problems. We're going to see more bankruptcies, so there are going to be more problems in the financial markets which does not mean that we can't have big rallies.

We're having one.

I don't know how much longer it's going to last. I am not participating - at least in the stock part of the rally. I'm participating by buying commodities because, if the world economy is going to be better, commodities are going to be the best place to be. If the world economy is not going to be better, commodities are still going to be the best place to be, or at least the least bad place to be.

On whether to hold oil or gold through the rest of the year:

Of those two I would rather own oil. The IMF is trying to sell its gold. The IMF is one of the largest holders of gold, so you’ve got this huge supply overhang. Whether they sell it or not, the world is expecting them to sell it, so I'd rather own oil than gold.

I'd rather own agriculture than either.

Apparently he hasn't heard about the willing buyers in Asia for all the IMF gold - that seems to be the consensus opinion of nearly all who have commented on this subject. Interestingly, for as far back as I remember, Rogers has never been real bullish on gold simply because, in his view, central banks have too much of it and are more than happy to continue to sell it.

It's a half-hour long interview - here's the summary:

00:00 Inflation; Asia; agricultural commodities
06:21 Investors should expect more "bottoms"
08:40 Commodities; U.S. stocks, bonds "last bubble"
13:24 Japan love hotels, stocks; Thai politics
18:09 Currency crisis; agriculture, China strategy
26:27 Prefer oil to gold; China, Brazil real estate
28:44 Angola. Ethiopia; U.S. bailouts, economy

Comments

[capitalisth...:]

Rogers is 100% correct. Start divesting yourself of dollars and get into commodities. Inflation is going to be a big big problem.

Apr 14 06:06 AM

[blog.kerdos...:]

We have often said that if we could only own 1 thing it would be MOO

Apr 14 06:07 AM

[abetterplace:]

Commodities, a very deeeep subject. Which one or ones would you buy? Agricultural commodities will always be in demand at some level, but finding that level and price point is harder than pegging any company stock. There are many more factors that apply, not the least being weather. If you can predict what ag commodities will be produced in what amounts and can also pick their demand usage amounts, then you must be God, or one of his chosen few.
The common sense analysis of commodities will always point to the only sure thing hit in the world. Oil! We can't grow or more of it. Despite what you hear, there is no viable substitute for it in the foreseeable future, at least not to power production equipment, and every commodity we produce or extract first has to be powered with oil burning heavy equipment. If you are bent on owning commodities, better take oil, its by far your best bet.
A pretty simplistic analysis, but the best I can do for now.

Apr 14 07:57 AM

[ArkansasAngie:]

I read several months ago that demand for food wood increase by 50% by 2025 -- 16 years. So ... long term, food will become more dear.

On a more immediate basis, agri commodities (corn, beans, rice)should hold up well this year. Stay away from cotton.

On the other hand ... oil isn't going to skyrocket in the near term. World GDP, US GDP is falling.

Now about the farm land I have in SE Arkansas ...

Apr 14 08:28 AM

[Roger Knights:]

"Rogers has never been real bullish on gold simply because, in his view, central banks have too much of it and are more than happy to continue to sell it."

But, if there were ever a real "rush for the exits" from stocks and bonds, the amount of money on the move would sop up central banks' supply in a day. Or an hour.

Probably gold won't make a big move soon, but only when the crowd is about to move. That'll require sharp declines first in stocks and bonds. Maybe by year-end.

Apr 14 09:20 AM

[kelm:]

Look to the combined commodity/China plays that are out there That is, non-US companies that are in the supply chain for ore, oil, ags, or transport for China and Asia. That way you get the depreciating US dollar at your back, the commodity fundamentals, and the China growth story. I've been walking through this on my site for some time with specific names. Australian, Chinese, and Brazilian stocks should do well under this scenario.

As for gold, the gold the IMF sells will not have a problem finding a home but the gold market as a whole is going to go down before it goes up. The ETFs risk killing gold actually because they are converting it into a paper product that can be bought and sold like a stock with all of a stock's volatility. We may see gold at $2000 or $3000 one day but you'll need to be quick because it will be drop like rock after the mania subsides unless there is a re-valuation by central banks.

Apr 14 09:48 AM

[Allan Frain:]

Without speculating on the market's current direction it it easily seen that its recent level of fascination with the abstract is over. As fundamental values are reembraced by the market there is nothing whose value is so fundamental as food and water.

Apr 14 09:49 AM

[Larry House:]

It doesn't have to be one or the other. I am bullish on ag too--I just tilled up another spot of the backyard to enlarge my garden. Gold and silver make sense too.

Apr 14 09:58 AM

[auto44:]

If you added up alll the gold ever mined, and split it equally amongst the world's population, we would be lucky to be able to see with the naked eye, our individual share. Starving people don't care about gold,but people who are trying to protect the purchasing power of their savings do. I think it is prudent to keep about 10% of investment capitol in gold under present conditions. As with all assets it will fluctuate in price, but with the current assult and increased volume of currencies it seems as if the price will have to increase substantially at some point. If gold supplies were to suddenly increase at the rate that curriencies are it's price would plummet. There is not enough gold in the world to copy the increased amounts of currency that have come on the scene recently. It's also quite possible that creditor nations would rather have some gold than more of our rapidly printed bonds.

Apr 14 11:45 AM

[Stone Fox C...:]

Some commodities like copper and oil have had decent runs already. Like all commodities, they'll likely be great plays over the next 10+ years as Rogers says, but be careful short term. Never that excited about buying stuff that has had a 50%+ move.

Apr 14 12:18 PM

[Jason Rines...:]

I like Tungsten

Apr 14 02:44 PM

[Eric in IL:]

I really like MOO in the $26-$28 range.

Apr 14 03:57 PM

[Eric in IL:]

I also like PLAT vs GOLD... look at platinum after a near-term pullback. Don't own gold.

Apr 14 03:58 PM

[Applegator:]

Mr Frain so clearly describes the stock markets' recent achilles heel:

"recent level of facination with the abstract" and "as fundamental values are reembraced".

President Obama should repeat these gems over and over until he and his administrative brain trust start to understand basic economics, in contrast to financial alchemy.


On Apr 14 09:49 AM Allan Frain wrote:

> Without speculating on the market's current direction it it easily
> seen that its recent level of fascination with the abstract is over.
> As fundamental values are reembraced by the market there is nothing
> whose value is so fundamental as food and water.

Apr 14 05:16 PM

[donzelion:]

I'm becoming less enamored with soft commodities - Egypt tender this, India tender that. If one is looking for a trade, perhaps the right entry and exit points will show themselves: I'm looking to invest. I like CAT and a handful of others, but long-term, the needs are in water and fertilizer. The former grows increasingly more expensive where it's most needed, and the latter diminishes faster than petrol.

Apr 14 05:48 PM

[T. Marc Sch...:]

It looks like a few countries are buying agriculture, especially farmland. A Saudi investor company just leased over a million acres to help their food security issues. This blog talks about farmland and sometimes it will talk about farmland as an investment. farmlandforecast.colvi.../

Apr 15 03:29 PM