Jim Rogers is bearishly bullish on commodities

Jim Rogers, the investment guru and author of the best seller Investment Biker, who got started in business at the age of five selling peanuts, is cautiously betting on what he knows intrinsically from childhood—commodities.

I am bullish on agriculture. Commodities have been very strong. Copper and iron ore are making all-time highs. A lot of other commodities are also going up. I suspect they need to correct for a while, but I am not very good at trading,” Rogers told the Economic Times in an interview.

Rogers was one of those who warned about the US housing bubble—which caused the 2008 financial meltdown—as early as 2003. That insight lends credence to the sagacity of people who do not get carried away by a bull run.

“I expect a correction in most commodities. The fundamentals are probably sound, but they have all been going straight up. When things go straight up, they usually correct for a while even if the bull market continues. Silver is up a lot, but it is still down 50 per cent from its all-time high. Be careful of those commodities, including copper, that have gone straight up,” Rogers said in the interview.

On the metals rally and futures, Rogers said that the world is going to have electric vehicles in the future and pointed out that electric cars use several time more copper than regular ones. So if we are going to have electric vehicles, we will use more copper and lithium. As the production of copper is not going up much, the fundamentals are there to support metals.

 He was bullish on infrastructure and remarked that if US President Joe Biden spends huge amounts of money on infrastructure, it will certainly replace some of the Chinese demand that might slow down. “The whole world wants to spend money on infrastructure now, so I would not give up on the infrastructure spending yet.”

Roger’s website is called The Millennium Adventure and in 2002 he had a third Guinness World Record passing through 116 countries and covering more than 245,000 kilometers—it was the first Guinness for his wife Paige. The non-stop, self-contained, three-year trip in a one-of-a-kind Mercedes-Benz took them to six continents.

“Our goal was to explore as much of the world as possible at the turn of the millennium, to learn what people and countries were doing and to see how well they were doing it.” This old world and earthy charm is indicative of a lack of interest in things you can’t touch and feel. And so the coldness to cryptocurrencies shouldn’t come as a surprise.

“I have never bought nor sold Bitcoin. So I am probably not the right person to ask. Just looking at the markets, it seems that Bitcoin and many other cryptocurrencies have peaked. There were thousands of them and hundreds of them have already disappeared. If you are very good at trading, it seems to be a nice trading vehicle. I am not a trader and I am not good at it. But if you are good at trading, why not (try) until they make it illegal,” Rogers said.

“I would not be trading them now as there has been too much of a bubble. Bubbles have always popped. I have no idea when this will pop. It does not look sound at the moment from a trading point of view. But then, I am a bad trader,” he added.  

Comparing the current commodities boom with the 2008 rally, Rogers said, “I am long on nearly all commodities. I suspect that commodities will go up for several years now. Oil is down 50 per cent from its all-time high, so there is a lot of upside left in commodities. I have no idea how long it will take. When stocks will go in a bear market sometime in 1-2 years, then probably commodities will also join them for a while. However, commodities can do very well during a bear phase in stocks because it is seen as an inflation hedge,” he told the Economic Times.

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