Jim Rogers: U.S. About to Have a Currency Crisis 18 comments
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If you have the majority of your savings in US dollars, this may be the most important insight you ever hear from Jim Rogers.
In an interview with Bloomberg Tuesday morning, Rogers said:
“We’re going to have a currency crisis, probably this fall or the fall of 2010. It’s been building up for a long time. We’ve had a huge rally in the dollar, an artificial rally in the dollar, so it’s time for a currency crisis.”
Jim reiterated that the place to be invested is in commodities, particularly agriculture:
"You're going to have serious food shortages in the next 3-5 years - prices are going to go through the roof."
You can view a video of this entire interview using this link (click on the "Video" tab on top).
Want some ideas about agricultural commodities with particularly appealing fundamentals right now? Check out This Week in Commodities, which is heavily focused on agricultural commodities - right now we're invested in sugar and orange juice, both profitable trades to date and still climbing.
Disclosure: Author is long 2 July sugar contracs, 1 July orange juice contract, and 1 Australian dollar contract.
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As economies are basically inefficient, government intervention is more so. The government, if anyone is listening the the Fed, Treasury and Council of Economic Advisers, will print money to panic proportions. Like everything, currency is subjected to the Laws of Supply and Demand.
Who will buy a currency when the policy of that currency's government is to print more? As history has proven, people fear unemployment more than inflation. This said, governments have a tendency to inflate and the more they inflate the worse the problem will get.
We cannot borrow and print money in order to correct for excess capacity and our failure to compete in the world economy. Our policy makers have stated they believe this will work. I hope for the best but prepare for the worse.
Commodities are being pushed by sentiment and not by demand. That means when sentiment changes, and it has changed already, your positions will rush south.
Cheers. Take care.
Unfortunately, after Lehman collapse, there are two macro asset classes: risk and "risk free."
Stocks, corp bonds, commodities, currencies (except Yen), ... are part of risk group and highly correlated.
Risk free is treasuries, TIP, FDIC-backed bonds, Yen, and perhaps Muni (was in first category until last two months) and Agency paper.
Undecided: gold.
The only risk-managed way is to time your purchases and be aggressive in sector rotation looking at undervalued countries (e.g., EWT), sectors (e.g., XLV), and asset class arbitrage (e.g., long convertibles/preferred, short common stock as hedge).
Also, we don't know what the Fed will do when inflation starts heating up.
Will they tighten the screws, even though that would cause interest rates to skyrocket and deal a deathblow to the housing market?
Or will the only politically palatable approach be to sit on the sidelines as inflation rages?
And also I strongly believe the inflation will be very uneven in where it shows up.
I can't see it causing real estate prices going up, although it might help them to stabilize in dollar value. (not adjusted for inflation)
Certainly, gold will go up. Predictions of $7000 per ounce are considered the rants of deranged crackpots. However, there have been so many outlandish things we have already witnessed in this economic downturn- who's to say a 10x rise in the exchange rate between the US dollar and gold might not also occur?
This made sense a month ago, now its old news and so I am going long the dollar. This guy has a terrible track record if you actually look at his picks and not his hype.
What huge dollar rally. Yen is still below 100, Franc is in top 10 percentile for last 15 yrs. Aussie dollar is now in the top 25 percentile for the last 15 years. Loonie is in top 20 percentile. The Euro is close to its all time high if you remove the bubble of 07-08. In 1985, the dollar index was at 160, now its 84. Come talk to me about a huge rally when we at least break 100.
This guy will never change. He was on Bloomberg in July 08 saying commodities were the place to be and a dollar crises was coming. We know how that worked out.
He is famous because of George Soros and it turns out he is no George Soros.
Cheers
On May 13 10:26 AM RiskReturnOptimizer wrote:
> Agree with Henrique.
>
> Unfortunately, after Lehman collapse, there are two macro asset classes:
> risk and "risk free."
>
> Stocks, corp bonds, commodities, currencies (except Yen), ... are
> part of risk group and highly correlated.
>
> Risk free is treasuries, TIP, FDIC-backed bonds, Yen, and perhaps
> Muni (was in first category until last two months) and Agency paper.
>
>
> Undecided: gold.
>
> The only risk-managed way is to time your purchases and be aggressive
> in sector rotation looking at undervalued countries (e.g., EWT),
> sectors (e.g., XLV), and asset class arbitrage (e.g., long convertibles/preferred,
> short common stock as hedge).
There is no food shortage at all. Prices will only go up due to inflationary measures our gov't has taken and as inflation kicks in, they have so many levers they can pull like hiking up the interest rate....inflation is not a issue, concern of deflation greatly outweighs concerns for inflation
gold is not undecided; if u think the world is coming to an end, invest in gold
So the dollar will drop in relationship to what the Norwegian Kroner- OK I believe that. But in relationship to 90% of the world currencies- no.
So what about Gold. Well IF you believe the country is going down the drain then yes Gold.
If you believe the country will pull out of this then the dollar will remain the currency of first choice for all nations. Unless your liek that idiot Gietner and believe we should go to a gloabl synthetic currency (those guys in Washington are like a bunch G-Damn of kids).
Jim Rogers has the answer for you, Hardwood: commodities. The dollar is in bad shape relative to real things of real value like food and metal.
Yes, practically all currencies will suck due to central bank easy money policy. But people still need to eat.
DBA should be a buy it and forget it part of every portfolio.
Long-term the best places to invest money will be out of the Dollar and into real assets such as ag. If one must invest in stocks, invest in the emerging markets such as China.
The absolute worst places to put your money are US Treasuries (expcept TIPS) and US financial stocks which have been driven higher purely by bullish sentiment and has no fundamental drivers behind it, unlike commodities.
Agcapita (Canada)
and
Agrifirma (Brazil)
The two have slightly different approaches. Both of course provide exposure to the global ag story but have different micro premises. Agcapita buys land in western Canada, primarily Saskatchewan, to take advantage of the large price differential which has developed between Sask and its neighboring provinces (up to 300% difference) and western Canada and the rest of the world, due to ownership restrictions that have largely been repealed. Agrifirma buys low cost arable land but non-producing land and then does the work to bring it in to production.