Legendary investor Jim Rogers talked to “First Financial Daily” in Shanghai recently. He shared his outlook for 2012 and was extremely bullish about gold and agricultural products. Here is what Rogers said in the interview, followed by our comments about how we can invest in accordance with his views:
The price of gold is indeed correcting, but I think that correction will continue. I am not surprised that gold prices remain at $1,400-1,500/oz. Gold will fall to $1,300/oz. in this wave of adjustment and I will buy then. And if gold fell further to $1,200/oz., I will buy more if I have money.
There are many ways to invest in gold when the price falls. We can invest in Gold ETF (GLD) just like John Paulson does, or we can choose Gold Miners ETF (GDX). Alternatively, we can invest directly in Gold Miners such as Newmont Mining Corp (NEM), Barrick Gold Corp (ABX), Goldcorp Inc. (GG), and Agnico-Eagle Mines Ltd (AEM). Investors can even imitate John Paulson’s picks when it comes to gold miners because his analysts have been researching these stocks more than anybody else.
Agricultural development is lagging. We lack the farmers and arable land because of the agricultural depression. If this trend continues, we will face food shortages. Therefore, agricultural commodity prices must rise to attract capital and qualified people. The trend of investing in agriculture has already started. I can foresee that more and more farmers will become rich. I also know that agricultural commodity prices will rise in the long-term. If the world economy improves in 2012, commodity prices will rise and I will make money. If there is an economic downturn, currencies will depreciate a lot, and commodity prices will also rise because people will hedge against the depreciation.
We can invest in agricultural commodities through ETFs such as DBC, which tracks the whole gamut: cotton, sugar, coffee, cattle, wheat, corn, etc. In addition, we can choose ETNs, such as Cotton ETN (BAL), Corn ETF (CORN), Livestock Total Return ETN (COW), Grains Total Return ETN (JJG), Coffee ETN (JO), Cocoa ETN (NIB), and Sugar ETN (SGG). Since Agricultural companies have large exposures with soaring food prices, hedge fund managers were buying Potash (POT) and CF Industries (CF) like crazy. Daniel Bubis, Richard Chilton, Ken Griffin and Steven Cohen bet on Potash in the third quarter. Steven Cohen, Jim Simons and other 34 hedge fund managers bet on CF Industries (see billionaire Jim Simons’ top stock picks).
Jim Rogers is somewhat bullish about the stock market because 2012 is an election year. We should note that Rogers has been shorting the emerging markets, including Brazil, India, and Vietnam; U.S. technology stocks; and some European stocks. However, he is still extremely long-term bullish about China:
China is the world’s largest creditor. The mainland of China, Singapore, Hong Kong, and other Asian regions gather a lot of capital and assets, so I suggest people to move to Asia in the future, and teach their children to speak Chinese.