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In an interview with ET Now, Jim Rogers, Chairman, Rogers Holdings, talks about the things and segments he is bullish on as well as his top trade for the coming year. Excerpts:
ET Now: Last time when we interacted with you, your parting comment was to eat rice with silver chopsticks. Are you still bullish on rice and silver?
Jim Rogers: I still have all of my rice. I use silver chopsticks as well and I have not given up yet.
ET Now: What do you make of the latest warning which has come from the International Monetary Fund, where they have flagged off that ETFs at global level are causing rampant speculation in commodity prices?
Jim Rogers: The International Monetary Fund (IMF) has little concept of what it is talking about. I do not know why everybody pays attention to those guys. They have gone wrong about everything in the past 60 years. We would be better off without them. If they see speculation, I would like to know where it is. Some commodity prices are up, but nothing is terribly overpriced.
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ET Now: Do you think FED would stop buying bonds after 30th of June once QE2 ends?
Jim Rogers: I presume that they will stop buying bonds at least for a while because they have said so many times that they are going to. I do not know how long that would last because as you pointed out who is going to buy US bonds at that point and who is going to supply the liquidity to the market.
I would suspect that after a while, they will be back. Who knows what they will call it? They will make up a new name, but they will be back, they will be printing money again next time things go bad.
ET Now: Would you go short on US bonds given the fact that how cost of capital in the region is now moving up?
Jim Rogers: Yes. I plan to sell short US government bonds sometime in the next few weeks, months. Interest rates all over the world are going to go higher. We have inflation, staggering debt problems and currency problems facing us. So interest rates are going to go higher.
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ET Now: Do you think politicians in emerging markets would try price controls for tackling inflation?
Jim Rogers: They are causing the inflation. These bureaucrats always try to blame somebody else. They have been printing staggering amounts of money. It causes inflation and they blame the inflation on somebody else.
I am sure they are going to try price control. Politicians always try price control and they never work. They always make the situation worse when you have price controls. If you say to a farmer you can only sell your rice for Rs 3, he is not going to produce any rice.
If you say to consumers, rice only costs Rs 3, they are going to eat a lot of rice and so you have huge shortages. Prices get worse, the crisis gets worse and eventually prices skyrocket. Then the politicians realise they have done it wrong again.
ET Now: Would agri commodities continue to attract strong capital despite government pressure on price controls?
Jim Rogers: I am still optimistic about agriculture. Prices are up, but they are not up near enough to bring new investment capital into agriculture. We have a shortage of farmers developing around the world. We have shortages of everything in agriculture.
The average age of farmers in some agricultural states in the US is 58-year old. In 10 years if they are still alive, they will be 68-year old. In parts of Japan, there are huge vast empty fields because there is nobody to farm. We have serious problems facing us. Prices have to go much higher in order to attract people into agriculture and to attract capital.
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Jim Rogers: I own all the agriculture products. They are all going to go higher. I mainly buy the Rogers Agricultural Index which has 21 agricultural products. So I own them all.
ET Now: On a relative basis, which are the commodities which you are bullish on?
Jim Rogers: I prefer to look at the things that are still depressed. Natural gas is depressed compared to oil, silver is depressed compared to gold. I would rather look at the things within those sectors to see what are the things that are still depressed and see if maybe that is where we should be putting money.
ET Now: Meantime silver crude have already risen a lot. Do you think there is much more muscle left there?
Jim Rogers: Silver has certainly gone up a lot in the last 9-10 months. There is no question about that, but remember, silver is still 10% below where it was 31 years ago. I bet you do not know many things that are 10% below where they were 31 years ago.
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Silver has been going up but on a historic basis, it is still very depressed. Oil is up a lot in the last year or two, but remember the known reserves of oil are on a decline. People can moan all they want about. The fact is that the price of oil is up, but where is the oil? If somebody finds a lot of oil, prices are going to go much-much higher.
ET Now: What is your top trade for the coming one year -- US bonds, equities or commodities?
Jim Rogers: I own very few equities. My portfolio consists mainly of commodities and currencies. If the world economy gets better, you will make money in commodities because big shortages are developing. If the world economy does not get better, you are not going to make any money in stocks in a scenario like that.
You might make money in commodities because they will print even more money. Toyota and IBM are not going to go up if the world economy does not get better. Silver might, rice might, some of the things that are still depressed might because they are going to print even more money.
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Source: Economic Times