Jim Rogers Wants You To Buy Dollars

Billionaire investor Jim Rogers said today that he is expecting a US dollar rally in the currency markets.

The Singapore-based Rogers, who predicted correctly the current commodities boom, said at the launch of the Barclays Global Agriculture Delta Fund in Singapore today he expects a “nice rally” in the US dollar because many people including himself have been bearish on the dollar. He is also bullish on the Australian dollar, saying he does not have plans to sell the Aussie as “they have a great future”. He did say that ” the New Zealand and Australian dollar may get hurt if carry trades reverse”.

Many people who called for a dollar rally at the start of this year were hurt when the dollar fell to a record low versus the Euro in late April. There is a good enough chance the dollar could now be bottoming in the short to medium-term against the Euro and Swiss franc, judging from the breaching of certain significant technical price levels and change of sentiment towards the dollar. Last month, Rogers said he was hoping the dollar rally would last a year, which would allow him to sell all of his dollars.

Now that Jim Rogers has spoken his thoughts, and if enough people follow his prediction, the dollar could indeed see the light, and he could get rid of dollars. So Rogers is bullish on the following: Commodities (since 1999), commodity currencies like the Aussie, Kiwi and Loonie, and the US dollar.

If you recall, Warren Buffett said over the weekend that not even aliens would like to keep US dollars. Both Buffett and Rogers are on the same page in some way: They don’t really want to hold onto dollars in the long-term. In any case, many people including Rogers, Buffett and George Soros (who co-founded Quantum fund with Rogers in the 1970s) are saying the dollar is losing its status as the world’s reserve currency and a prime candidate replacement is the Euro. Rogers even said today the Chinese yuan could become one in 20 years’ time. Yet, it’s quite unnerving to think that China could hold so much power, considering China’s questionable political and human rights record at this point in time.

Keeping Interest Rates Unchanged

Both the Bank of England and the European Central Bank kept their rates unchanged today. ECB’s Trichet said that “inflation rates have risen significantly since autumn”. He added, “As we have said, inflation rates are expected to remain high for a rather protracted period of time before gradually declining again.” He said there is still a high level of uncertainty resulting from the turmoil, but “the economic fundamentals of the euro area are sound”.

Forex Trading

EUR/USD finally broke below 1.5340, falling 60 pips sharply to expected initial target around 1.5280, a 2-month low. As long as it stays above this level, we can expect some dollar weakness, but if this gives way, it may next target 1.5230, then 1.5200. EUR/USD’s strong bounce from support of 1.5280 meant that USD/CHF couldn’t break higher than 1.0630, causing Swissy to fall back toward 1.0500.

Friday:

Reserve Bank of Australia Quarterly Monetary Policy statement 0130 GMT

Canada unemployment 1100 GMT

US trade balance 1230 GMT

Comments

[buyitcheap:]

Is this a foreshadowing of a migration by the elite, uber-wealthy to dump the dollar in favor of the euro or other currency? What about a petrodollar with the global fed based in Dubai? This may well be the beginning of a massive shift.

2008 May 08 11:30 AM

[CK:]

"Yet, it’s quite unnerving to think that China could hold so much power, considering China’s questionable political and human rights record at this point in time."

And the United State's political and human rights record is squeaky clean??? We currently occupy a country and have killed over 100,000 Iraqis!!! Not to mention something called torture...

2008 May 08 11:47 AM

[Just Say Whoa!:]

People with "skillz" always like to do a "head fake" when their opponents stand in their way...

....on the way in to "score".

This $ rally is a "head fake". If everyone "knew" what their plans were, they wouldn't be able to "score" so easily.

2008 May 08 12:06 PM

[Eagle-Chief:]

Gracie - you are a smart cookie. And I like what you say about Communist China - It is scary to think that they hold so much power & that their currency could be a (or "the") world reserve currency. Hopefully China will become more free & will start to respect human rights. On the dollar isssue, I started thinking your title is exactly right - Jim Rogers wants YOU (and ME) to buy dollars (worthless garbage) so that the dollar can have a short-lived rally, giving him a chance to dump his dollars & buy something better. Jim Rogers does not want Jim Rogers to buy dollars. He would not be so foolish. These billionaires profit from the losses of other fools. Yeah, Jim Rogers wants YOU to buy dollars. These men love one thing & one thing only - MONEY.

2008 May 08 03:58 PM

[hollowman:]

Eagle-Chief, exactly! This guy is talking his book, just as Soros has. I can't think of two bozos I would love to see lose everything. Only, IIRC, Rogers was short the USD. I think he covered when he saw the rally, and moved long. Now he wants you to buy the dollar so he can turn around and short the sucker's-rally.

2008 May 08 07:29 PM

[traveler:]

since when is jim rogers a billionaire. smart guy ? absolutely. entertaining ? definitely. billionaire ? since when ?

2008 May 08 10:18 PM

[Coelacanth:]

Well, all I can say is Jim Rogers is wrong about the dollar.

Sure, markets always overshoot themselves and some dollar appreciation was/is inevitable. Economic cracks starting to show in the euro-zone have helped support the dollar too lately.

Be that as it may, as the maelstrom of bad economic news picks up pace in the coming weeks and months, dollar longs will find themselves on the wrong side of the trade.

Jim Rogers is right on the mark about the Aussie though. In April they had a solid increase in retail sales, a shrinking trade deficit, a whopper of job number (25k vs. consensus 10k).......all meaning you'd have to be pretty cynical to not see value in their currency. Not to mention being perfectly positioned to benefit from a global commodities boom. I would expect the Aussie to firm up a lot when risk appetites improve again.

2008 May 09 12:50 AM

[fxtrader07:]

there will be no single currency replaciong the dollar as the world's reserve currency. The Euro will very soon be entrenched in a boatload of problems due to Europe's structural fiscal and demographic problems and due to the unique (and frankly, silly) way the Euro has been created in the first place. It is an experiment that has only seen a couple of years - yet it gets extended to shaky eastern european economies while already huge cracks are showing up among the "established" Euro-members countries.
So the most likely scenario is that some basket of currencies will take then place of the dollar. Over the longer run, the whole system based on fiat money will experience a severe crisis, though. Solutions are not yet to bee seen as the powers that bee, notably the bankers, have every incentive to create boom-bust cycles perpetually rather than establish a stable monetary order.

2008 May 09 04:34 AM

[Martin Lowe...:]

You are late to the game Jim, I was suggesting from 1.48 all the way down to achieve a good average price. See commentary at www.lompie.blogspot.co...

2008 May 09 10:00 AM

[Jimbo:]

Regarding CK's comments about the United States' aggression toward others. It is an evil world and evil is relative from country to country. Since C K thinks the U.S. is beyond redemption, I suggest he or she move to the People's Republic of China or the Democratic People's Republic of North Korea. The possibilities are endless... Venezuela, Cuba, Bolivia, Zimbabwe, etc. etc. I really detest pious,unctuous,smug self righteousness. It's time to put your money where your mouth is.

2008 May 09 12:15 PM

[300mph:]

I second your thoughts, Jimbo.

2008 May 09 12:27 PM

[bearfund:]

All dollar rallies are temporary. It doesn't even matter what you pair it against - euros, gold, yuan, wheat, oil. The trend since 1971 is painfully clear - a wide but steady downward channel against everything, with periodic weak reversals. If you're an investor with a 50-year view (as Jim Rogers seems to be and as we know Warren Buffet is), there is absolutely no reason to want dollars. That shouldn't be news to anyone. The real question is not whether to hold dollars, it's what to hold instead of dollars. And on that question this article offers us nothing.

2008 May 10 05:38 PM

[Lou Thomas:]

This article is uncommonly edgy for you, Grace. I'm saying that like its a good thing, because it is. More of this kind of analysis, please, and less of "and it's the dollar on the inside track by a head because Bernanke scratched his nose with his left hand, wait, no, now it's the Euro approaching fast from behind due to the dryness of Trichet's dollar commentary, and yes, it's the Euro, but wait..."

2008 May 17 01:11 AM