Sunday, July 17, 2016

Indian market will pay for West's greed, warns commodity ace Jim Rogers

All markets are up because the central banks are printing more and more money, so it is astonishing for me to see this keep on happening. The Europeans, the Japanese keep on pumping more money. Even the us money supply is going up. Interest rates have been going up or down, but all the central banks continue to pump money into the system.

The markets went down, not by very much and all the central banks printed money again. I said to you before too, what happens is that markets go down a good deal, and then the central banks panic and print more money. I mean this is absurd what is happening to the world . We are going to pay a horrible price someday including India.

- Source, ET India

Thursday, July 14, 2016

Financial Crisis: Jim Rogers Makes Grim Announcement to Investors

Billionaire investor Jim Rogers suggests that oil prices are not going to drop below $30.00 for some time; he predicts a correction. Meanwhile, as the rally lasts, there will be downward pressure on the U.S. dollar.

Rogers, who has painted a bearish scenario for the world economy over the next year, says that commodities have been “banged a great deal,” such that the only thing that can happen next is a major rally. This rally is already underway, according to him. (Source: “The dollar needs a correction…it was so strong for so long: Jim Rogers,” The Hindu Business Line, May 4, 2016.)

But Rogers speaks of a “complicated bottom.” By that, Jim Rogers implies a continued murkiness in which prices could jump or crash at any time.

In this case, he sees the Federal Reserve’s plans as crucial. Rogers says the dollar is already correcting and that it needs to do so because it’s been strong for too long. Rogers suggests that the recent commodities rally will end and metals will drop again. He suggests that there will be more profitable opportunities to buy metals later this year and possibly next year also.

Meanwhile, Jim Rogers has warned investors that the U.S. economy will—not could—enter a recession within the next year. (Source: “Jim Rogers: There’s a 100% Probability of a U.S. Recession within a Year,” Bloomberg, March 4, 2016.)

You won’t find too many Wall Street executives sharing that view. Bankers at JPMorgan Chase & Co. (NYSE:JPM) see only a 33% chance of a recession in 2017. (Source: “Rogers: Why I Am Out of the Yen, Long the U.S. Dollar,” Bloomberg, March 4, 2016.)

Rogers sees China as one of the weak links in the global economy. He is skeptical about China’s efforts to change, noting that economies are always changing; that is their nature. The problem, as Rogers sees it, is that China’s economy has a lot of debt buildup, which is going to cause many investors to blow up. A Chinese recession will have global repercussions.

If the Chinese economy tanks, the commodities market will suffer from loss of demand. When commodities drop, the U.S. dollar strengthens against major currencies such as the euro or the British pound, and vice versa. So, Rogers suggests, the U.S. dollar should see a correction in the short term, while commodities remain in the so-called complicated bottom; however, its value should rise as the economy heads toward a recession, which will force demand for commodities to drop.

Sunday, July 10, 2016

Two Lessons on China and Commodities, From Legendary Investor Jim Rogers

Maybe not tomorrow, but eventually, China will devalue its currency. And prices for uranium and coal and other undervalued commodities will recover. That's because, in the end, markets always win.

That's the application of some of the sage advice from the books of legendary investor Jim Rogers. Rogers co-founded the Quantum Fund, one of the world's most successful hedge funds, in the early 1970's. He quit full-time investing in 1980 after generating returns of 4,200% over 10 years.

Afterwards, he traveled the world several times, and he wrote about his experiences. Those books include Investment Biker and Adventure Capitalist, investment tourism books that are must-reads for anyone interested in global markets.

I found a few important lessons that are relevant to today's investment markets while re-reading parts of Rogers' books (including his more autobiographical book, Street Smarts). Here are some of those lessons:

1. Central Banks Will Always Fail to Control Prices (from Investment Biker, 1994)

China's renminbi is a prime example of this today. The Peoples Bank of China, China's central bank controls its currency's exchange rate. It's only a matter of time before the central bank is forced to allow the renminbi to decrease in value. We've written about this before, and Jim Rogers has told us the same thing. Nearly every central bank that attempts to control its currency must eventually give in to market forces. This has especially proved true in recent decades.

Many investors worried that the renminbi was going to drop very suddenly last January. As it turns out, it didn't. So, talk of the renminbi's depreciation is no longer making headlines. But just because business journalists have stopped talking about the renminbi doesn't mean the issue has gone away. Global markets will continue to react to uncertainty over the Chinese renminbi until the currency is allowed to trade freely...

- Read the full story on The Street