I've read a few of Jim Rogers' books and we certainly can't say he hasn't made the right calls in the past. I was curious what the team thought about his pronouncements? I'm just getting started in investing and my income is completely dollar-denominated. Should I be considering gold? How aggressive should I be in moving out of the U.S. dollar? I really don't know what to believe when I hear Jim Rogers make doomsday predictions like this below:http://business.timesonline.co.uk/tol/business/economics/article3451136.eceJim Rogers - who co-founded the now closed Quantum Fund with George Soros - told 750 global fund managers in Tokyo today that, America is “completely out of control”, there will be a 20-year bull market in commodities and that prices will be in turmoil.And he also warned that it “made sense” if global competition for resources ended in armed conflict.Mr Rogers told delegates to the CLSA investment forum that the prices of all agricultural products would “explode” in coming years and that the price of gold, which hit an all-time high of $964 an ounce yesterday, will continue its surge to as much as $3,500 an ounce.Gold would continue to rise, the analyst Christopher Wood told fund managers, “because it is the exact opposite of a structured finance product”.In a blistering attack on US monetary policy and the “helicopter cash drop” responses of the Federal Reserve, Mr Rogers described the American dollar as a “terribly flawed currency”.He said that the plan by Ben Bernanke, the Fed Chairman, to “crank up the money-printing machines and run them until we run out of trees” had exposed America’s weakest point to her rivals and enemies.The dollar may have declined recently, he added, “but you ain’t seen nothing yet”.Talking to a room almost exclusively populated with Japan-focused equity investors, Mr Rogers recommended an immediate language course in Mandarin and a switch into commodities — the second-biggest market in the world behind foreign exchange.Mr Rogers said that historic drains on wheat, corn and other soft commodity inventories have created market dynamics that could lead to severe food shortages.The outlook over the next two decades would see prices of everything from cotton and sugar to lead and nickel “going through the roof”.Heavily playing down the prospects of a big recovery in Japan, Mr Rogers said that the country’s demographics — as the fastest-ageing country in the world — would cause it greater problems and an ever-diminishing quality of life for ordinary Japanese.But he also said that other countries — including Britain, Italy, China and the US — should take note of what their own demographics would look like without the effect of immigration.“Japan will be the perfect laboratory for the world to watch how a demographic crisis plays out,” he said.
If there is one huge problem the US faces it is Nation Debt soon to be coupling up with the flow of Baby Boomers who will be hitting the Social Security offices going "show me the money". That will mean massive new debt being added that will make Iraq look like the Granada invasion.Of course nobody knows what to do with it, how we will fix it, how we can change our ways and what will happen once it all merges together.But you know what?US manufacturing and service industries will continue. The screaming about the dollars devaluation ...?.... It was the exchange rate that allowed Japan to become a super economic power in the 1970's ... now the rolls are reversed. I don't believe we have even conceived of the impact the present exchange rates will have on US business ... look at HURC ... smok'n hot due to the exchange rates.As for the articles statements And he also warned that it “made sense” if global competition for resources ended in armed conflict.Mr Rogers told delegates to the CLSA investment forum that the prices of all agricultural products would “explode” in coming years and that the price of gold, which hit an all-time high of $964 an ounce yesterday, will continue its surge to as much as $3,500 an ounceThe concept of global competition for resources ending in armed conflict is very real. Where would it happen? All those Ex-Soviet countries that Russia is pulling the energy strings on who also have Gazprom’s pipelines running through their countries. Then of course the developing African nations will still have unstable governments to try and protect assets.As for $3500 gold ... I would be head'n for the mountains with my gold pan :) I read somewhere that it is estimated 95% of the worlds gold is still undiscovered. Gold is a psych play .... Iron is a real mineral. Heck, at $3500 an oz I bet you could pull gold out of sea water at a profit and get the desalinated water as a side benefit.And all agricultural products would “explode” and so will companies like Monsanto and Cat, Harvester, fertilizer companies, irrigation companies ...... The US exports more, more jobs, better wages and the equalization cycle begins again.I grew up with $35.00 an oz gold .... Now at $964. That is an increase of what? 27 X's. The author is claiming we will all die if it increases X4.Economies are resilient and self adjusting over time. No need to get a cabin in the woods stocked with spam and sleep with an M16 :)Bears
I believe that as the populations of China and India (combined 2.5 Billion) and other populations in South America mature they will put demands on our natural resources as the world has never seen. They will demand better food (Cresy), better housing (CHLN.ob, improved transportation (TATA, SORL), vacation spots (Macau-MPEL), banking services (HDB), etc. This story will take 20 years or more to unfold and it will not occur in a straight line. As this happens the dollar will drop as other currency's rise. I also think commodoties will rise as well. But this will also bring about new technologies that will improve crop yields, more efficient energy production and consumption.Anyway I guess I feel pretty strongly that part of ones portfolio should be diversified among a basket of foreign businesses. I wouldn't count out the US but I think anywhere from 20-50% in foreign stocks is a reasonable allocation depending on your risk/volatility tolerance.FWIW...Chris
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