Jim Rogers: Before All This Is Over, Gold Is Going Through The Roof

Legendary investor Jim Rogers said enjoy the market rally while it lasts, issuing a dire warning that “the worst correction of his lifetime,” is coming for stocks. 

“Soon something’s going to happen that will make everyone happy again and the market will go up one more time, and that will probably be the last hoorah. Next year will be not a lot of fun,” Rogers said in an interview with Kitco News on Monday. 

He added, "It’s been ten years since we have had a bear market, that is very, very unusual so the next bear market is going to be the worst in my lifetime." 

When promoted to quantify the correction, Rogers said it would easily be over 50%.

- Source, Kitco News

Jim Rogers: Sub $1000 Gold Coming

Jim Rogers sits down with the Silver Doctors and talks about a dire warning. He sees gold correcting lower, much lower. However ultimately, this will be a huge buying opportunity.

- Source

Gold and the US Dollar Are Directly Opposed to Each Other

Gold is seen as a hedge against inflation. With inflation rearing its head, gold bugs are turning bullish on the precious metal.

Gold futures, at the time of writing, were trading at US$1,331.20 per ounce, 6% higher than a year ago, when it was US$1,258.1 per ounce.

IQI Global chief economist Shan Saeed says the outlook for gold is buoyant. “I can foresee gold prices heading north in the range of US$1,300 to US$1,700 per ounce… US$1,365 per ounce is an important level and the next point to touch is US$1,425 per ounce moving forward,” he tells The Edge.

Saeed says this is the third bull run for gold in financial markets.

“The first bull run was from 1971 to 1980, when gold appreciated by 2,000% and the second was from 1998 to 2011, when it appreciated by 655%. We are now in the third bull run, which began in December 2015.”

Spot gold prices have risen 24% from US1,069.29 per ounce on Dec 1, 2015, to US$1,329.19 per ounce on Feb 20.

Gold’s inverse relationship with the US dollar is one that is hard to disregard, says OCBC Bank economist Barnabas Gan.

“The 30-day correlation between the said assets remain strong at -0.91 in early February, suggesting that gold’s climb has largely been attributed to the weaker greenback. While further dollar weakness into 2018 could still come to pass, gold’s trend with the dollar could potentially weaken as global economic conditions evolve into the year.

“In a nutshell, the rosy economic outlook, tame inflationary backdrop and potentially higher interest rates in both developed and Asian economies are persuasive factors to drag gold prices lower. As such, we keep our gold outlook unchanged at US$1,100/oz at year-end,” he says in a Feb 14 note.

- Source, The Edge Markets

A Commodity Super Cycle in the Making?

INVESTMENT guru Jim Rogers implied that commodities and equities have an inverse relationship when he said “commodities tend to zig when the equity market zags”.

The simple logic to that — from the manufacturers’ perspective at least — would be that higher commodity prices translate into higher input costs and thus lower profitability for a company, which tends to result in a loss of investor confidence and interest to invest in such firms altogether.

However, when there is impetus for growth in the economy, then commodities and equities could end up moving in the same direction. And that is exactly what happened on Jan 26, when the Dow Jones Industrial Average hit an all-time high of 26,616.71 points and the Bloomberg Commodity Index (BCOM) touched 90.79 points — its highest level since August 2015.

The BCOM tracks 22 commodities, including gold, crude oil, copper, corn, soybean, aluminium, nickel, zinc and wheat. Gold holds the highest weightage in the index at 12%, followed by natural gas (7.58%) and Brent crude oil (7.23%).

With the BCOM hitting its highest level in 29 months in January, coupled with the International Monetary Fund revising its global growth forecast to 3.9% from an earlier 3.7%, a question to ask is whether an uptick for commodities is in store.

Furthermore, rising inflation and a weaker US dollar — two factors prevalent this year — are positive for investments in commodities. These, coupled with volatility in stocks and higher interest rates ahead, have commodity bulls calling for a “commodity super cycle”.

Goldman Sachs is also reported to be at its most bullish on commodities since the end of the super cycle in 2008. In a report this month, the bank’s head of global commodity research, Jeffrey Currie, says the 3Rs — reflation, reconvergence of global growth and releveraging — will drive commodity prices higher.

According to Currie, most commodity prices reflated last year, supported by a weaker US dollar, supply controls and global growth. This allowed debt-laden producers to repay loans, clean up their balance sheets and releverage.

This led to emerging economies catching up — or reconverging — with developed ones.

Goldman is not alone. JP Morgan is also bullish on commodities amid inflationary pressure, as evidenced by recent US wage data and core consumer price inflation.

Recall that commodities last had a good run in the early 2000s — its so-called “super cycle”, with the BCOM seeing a more than two-fold increase from 89.03 points on Dec 31, 2001, to 233.03 points on June 30, 2008 — before dropping 53% to 109.78 points on March 31, 2009.

OCBC Bank economist Barnabas Gan says a bullish view on commodity prices is not unfounded going into 2018.

“Global economic strength is expected to stay on track into the year, albeit some moderation in trade and manufacturing momentum given 2017’s high base print,” he writes in a Feb 14 note, adding that this suggests that demand for commodities will stay supported this year.

However, he says, views that a commodity super cycle is just around the corner can be a little too premature at this juncture.

“Historically, the super cycle seen in the 2000s was led by two key factors. One, it occurred immediately after the Great Commodities Depression of the 1980s and 1990s, in which there was a huge pent-up commodity demand,” he says.

“Two, with increased globalisation and the emergence of trade deals across trading countries, a commodity boom emerged in the two decades following the depression. On this, there was a sudden and arguably unprecedented rise in commodity demand, especially from emerging markets.

“Should history be of reference, the ingredients to a similar commodity super cycle remain obscure to date, while the state of the global economy is starkly different from what we are facing now.”

However, some experts say there are enough signs at present, such as rising government bond yields, to support an uptick in commodities.

Shelley Goldberg, founder and principal of US-based financial advisory firm Invest-With-Purpose, says in a recent piece on Bloomberg that the 10-year US Treasury yield is one of the best metrics for predicting the direction of commodity prices.

“Treasury yields show how investors feel about the economy in the future, which influences spending habits today. Rising yields are generally a reflection of a stronger economy and heightened confidence. Manufacturers then build plants and grow inventories to respond to greater demand.

“Its [the yield’s] increase in recent months indicates that commodities have more room on the upside,” she says.

The 10-year US Treasury yield rose to its highest level this year on Feb 21 at 2.95%. It was also the highest yield achieved since Jan 9, 2014, at 2.9652%.

The BCOM at the time was understandably higher at 122.33 points given the higher crude oil prices then. Oil prices began their decline in mid-2014, bringing the BCOM down with them.

With oil prices showing some strength of late, is it finally commodities’ turn to do well, led by oil, after years of being in the doldrums? If so, where are the bright spots in commodities?

- Source, The Edge Markets

The Global Markets Aren't Prepared for this Trade War

Jim Rogers believes global markets will fall from these levels and may rally for a while if someone says something nice, but things will get much worse by end of this year and next year as interest rates will go higher and Trump administration will continue with trade war.

Rogers is of the view the US is not prepared for the trade war. "China is in better position than the US, at least financially, and China doesn't want a trade war. Only Washington wants a trade war," he said.

- Source, Zee Business

Jim Rogers: Trade War Will Hit India, Says Ace Investor

Nobody wins a trade war, said ace investor Jim Rogers, Chairman, Rogers Holdings in an exclusive chat with Zee Business when questioned about what kind of impact will US president Donald Trump's rhetoric on trade may have on India and the wider world. Rogers added that it is only Washington which wants a trade war. 

Jim Rogers also said that India may not have a direct impact of the same, but it cannot stand alone if giants like US, China, Japan, Europe and others have problems. "Washington very much wants a trade war. Donald Trump is in favour of trade war. There could be a time when they slow down, but they will fall back to trade war if things go bad," he warned. The expert also noted that India cannot stay decoupled from what is happening around the world. "India is a wonderful country, but it can't stand alone if giants around it, from Europe, America, China, to Japan will have problems," he said.

Expectedly, so, China retaliated to US action. To which Jim Rogers said: If somebody hits you on the face, either you run away or hit back. Most people hit back. This is what China did. Of course, this is not good for the world. Neither for America, China, India or any country. Unfortunately, if later in year or next year if we have more economic problems, Washington will hit back again. Nobody wins a trade war, but who cares! They will anyway do it.

Jim Rogers believes global markets will fall from these levels and may rally for a while if someone says something nice, but things will get much worse by end of this year and next year as interest rates will go higher and Trump administration will continue with trade war.

Rogers is of the view the US is not prepared for the trade war. "China is in better position than the US, at least financially, and China doesn't want a trade war. Only Washington wants a trade war," he said.

From the markets perspective, Jim Rogers is worried more about the next year. "I'm not worried as much about this year as 2019 and 2020, because by next year the ongoing problems will snowball. We will have Congress and Senate elections Fed will have hiked rates, trade war will have escalated and not to mention economic challenges," he said.

Rogers doesn't believe the new US Fed Chair Jerome Powell will introduce any fundamental changes in Fed policy. "Powell is one of them. He has been with Fed for long," he said.

Jim Rogers even feels the US Fed may again lower interest rates if it sees the markets are being affected by the ongoing situation.

- Source, Zee Business

Jim Rogers It’s Time to Prepare, Economic And Financial Collapse is Coming Soon