Commodities are the cheapest asset class in the world now: Jim Rogers – The Economic Times

lipped from: https://economictimes.indiatimes.com/markets/expert-view/commodities-are-the-cheapest-asset-class-in-the-world-now-jim-rogers/articleshow/82627407.cmsSECTIONSCommodities are the cheapest asset class in the world now: Jim RogersET NowLast Updated: May 14, 2021, 02:19 PM ISTSynopsis

“If you can find the right shares that are cheap and that have not moved, you will probably make a lot of money. But commodities are the cheapest asset class in the world right now,” says Jim Rogers.

Investment guru Jim Rogers says he would rather own commodities than stocks because the former is the cheapest asset class in the world now on a historic basis. Edited excerpts:

Besides the sharp run-up, what can spoil the party for commodities? Or would you say that since the fundamentals are strong, commodities have a stronger case than equities?
There is a near-term risk in commodities. Copper went straight up and is at an all-time high. Whenever something goes straight up like that, it should correct in order to keep the bull market going. So I certainly see the possibility of a correction in commodities.

If the American stocks market goes down for a while, the central bank is going to panic and they are going to print more money and do everything they can do to get the market up. The politicians and central bankers in America are not very smart. All they know is to print money and make things go higher. It is not good for America, but they do not care. They (only) care about the next election.

Commodities have a stronger case than equities now because many of them are still down. The American stock market and many other stock markets are making all-time highs. Commodity is the only asset class around the world that is cheap on a historic basis. Look at agro-commodities. Agriculture has been a disaster for years. Many commodities have been a disaster, so I would rather own commodities than stocks.

If you can find the right shares that are cheap and that have not moved, you will probably make a lot of money. But commodities are the cheapest asset class in the world right now.

What is your advise to those who have missed out on the commodities rally?
Look at things that have not moved much yet – silver, sugar, etc. I would not rush to buy copper now. If it corrects, may be you can.

The last time we spoke, you were long on the dollar. Where do you see the greenback headed now?
I want to repeat that the US dollar is a terribly flawed currency. America is the largest debtor nation in the history of the world. The debts go up every hour. But when people want a safe haven, they look at the US dollar. The next time we have a big market turmoil, the dollar will go up a lot, will become overpriced and then I will have to sell it and find something else. I would be short US dollar but it has the status of being a safe haven; it is not so but people think it is.

Crude oil prices continue to trade below the pre-pandemic levels. Some experts suggest that the pandemic could change the demand patterns for crude completely. What is your take?
The pandemic affects demand for everything. We had a big bubble in fracking and a lot of new production came but now the fracking bubble has popped. In the meantime, the known reserves of crude oil all over the world continue to decline. So I would suspect that crude oil is making a complicated bottom here. We are going to realise after a few years that crude oil has been a good place to be in. Its demand may slow down because of electric vehicles, etc, but I won’t give up. I am long on energy.

How do you think inflation is going to play out? Do you see the Fed acting sometime this year?
In the last few years, the only country that has had a sound central banker was India. He is gone and is now a professor somewhere but I wish he was running the American central bank. He is a smart guy. Most central banks continue to print huge amounts of money and that will eventually lead to higher prices and inflation, whether we like it or not. I own all the commodities through indexes and I suspect that we will have a higher inflation.

To what extent do you think this commodity boom can trigger an inflation in the world? Which economies would be the most vulnerable?
It is already causing inflation. America has reported the highest inflation in years. It is the same story in other countries also. If the price of corn goes up, it affects everybody. Inflation is here and it is going to affect everyone. It is going to certainly affect some countries more than others. America is the largest market and interest rates are so low, so it is going to have a big affect in many American cities and companies. There are going to be some bankruptcies in America when interest rates go higher. Japan has got a horrible problem as far as debt is concerned. Inflation is going to be disastrous for Japan.

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