Jim Rogers Gives Kudos to Agricultural Commodities

By Lindsay Williams
12 Jun 2006 at 10:47 AM EDT

JOHANNESBURG (Business Day) -- Former George Soros partner in the Quantum Fund, Jim Rogers talks to Classic Business Day about his bearish outlook for the U.S. markets and the dollar, and his bullish commodities views especially with regards to agriculture.

LINDSAY WILLIAMS: When Classic Business Day spoke to Jim Rogers in December 2005 he had some fairly strong things to say about the U.S. stock market, the U.S. economy, the dollar, and incoming U.S. Federal Reserve head Ben Bernanke: “I’m not too optimistic about the U.S. stock market in 2006 - the economy will slow down, the market will slow down. The market’s been flat for a couple of years now, basically. Ben Bernanke will be a disaster for the U.S. Federal Reserve - his solution to everything is to print money. I’m not optimistic about the dollar, the stock market or the economy in the U.S. next year.” Jim, good evening.

JIM ROGERS: I’m delighted to hear that I got it right!

LINDSAY WILLIAMS: You got it right in spectacular fashion - do you really think Ben Bernanke is the cause of all the recent problems?

JIM ROGERS: No, of course he’s not the only cause - there’s lots of reasons. Just as I said last year inflation is coming back, prices are higher, interest rates are up, you’ve got an incompetent running the U.S. Federal Reserve, and America is overextended in the world including Iraq. There are lots of reasons for the market to be down - he’s just one of them. He’s going to make it worse - not better.

LINDSAY WILLIAMS: He gave CNBC presenter Maria Bartiromo that comment.

JIM ROGERS: If the press were his only incompetence we would be lucky! I’m afraid he’s incompetent in more ways than that - he doesn’t understand the economy, he doesn’t understand the markets, and he doesn’t understand the press - but with all due respect who cares about the press? We care more about the market and the economy than we do the press.

LINDSAY WILLIAMS: I’m not the press - I’m a broadcaster! The inflation problem - that seems to be the root of all stock market evil at the moment. Is that right at the top of your bearish list?

JIM ROGERS: It’s certainly one of the major reasons. We do have inflation - prices are going up, and they’re going to continue to go up. That has never been good for anybody except people who benefit from inflation - but for the mass of us it’s not good.

LINDSAY WILLIAMS: After inflation - any more problems?

JIM ROGERS: Sure, there’s the U.S. international debt - the U.S. is the largest debtor nation the world has ever seen. We owe the rest of the world $8 trillion or $9 trillion. That’s bad, but the worst is that our foreign debt is increasing at the rate of $1 trillion every 15 months! Do the arithmetic - it’s simple arithmetic, but it’s terrifying arithmetic.

LINDSAY WILLIAMS: Yes, it is terrifying - it’s also fairly terrifying after a few years of sideways movement on the Dow Jones, the Nasdaq, the S&P etcetera - but suddenly we’ve started to break downwards. I’m no chartist, but when I look at the graphs it really does look as though this thing could go so much lower.

JIM ROGERS: It will. I’m not a chartist either - but I do know it will probably go down a great deal more before it’s over. It’s not the end of the world - we hope it’s just a bear market. If it’s the end of the world then of course we’re all in trouble. I suspect that this time it’s just going to be another bear market - it might be a serious bear market, but we’ve had bear markets since the beginning of time.

LINDSAY WILLIAMS: We can always take advantage of bear markets of course because of the wonderful world of derivatives. Commodity prices have come down a bit since we last spoke - is it just a correction in a bull market?

JIM ROGERS: Yes in my view. Some commodities are not down - cotton is up, and agricultural commodities have actually been doing very well. Everybody looks at gold and copper - and perhaps oil - but underneath there are several commodities that are still doing well. It would be wonderful from my point of view if we had a nice correction in commodities - because we need one. Things that just never go down - that’s a dangerous kind of market - so I’m hoping for some more corrections.

LINDSAY WILLIAMS: That agricultural side of things is quite exciting.... Are those still your top picks of the commodity sector now?

JIM ROGERS: Yes, if I were looking for new opportunities in commodities I would be looking at agriculture - that’s where some great things are happening, and that’s where you’re going to find some opportunities, at least in my view.