Wednesday, April 18, 2018

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

Sunday, April 15, 2018

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

Thursday, April 12, 2018

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

Monday, April 9, 2018

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

Friday, April 6, 2018

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

Tuesday, March 27, 2018

Jim Rogers Says Trade War Is Making His Bearish View Even Darker

Veteran investor Jim Rogers is already predicting the worst bear market for stocks in his lifetime. And that’s before you figure in a trade war.

“The next bear market is going to be the worst in my lifetime -- just because of the debt -- but if we also have a trade war, it’s going to be worse than a disaster,” Rogers, the 75-year-old chairman of Rogers Holdings Inc., said in a Moscow interview. “I’m extremely concerned. I’ve read enough history and been through enough markets to know that trade wars are usually a disaster.”

Rogers spoke as the prospects for a full-blown trade spat looked to be increasing. President Donald Trump plans as much as $60 billion of tariffs on Chinese products as early as this week to swat Beijing for alleged intellectual-property theft, according to two people familiar with the matter. Meanwhile, China is preparing to hit back with levies aimed at industries and states where Trump’s supporters are found, the Wall Street Journal reported, citing unidentified people familiar with the matter.

“You think the Chinese are just sitting around?” Rogers said. “China’s a huge buyer of American agriculture, so of course that’s the obvious place to hit back because that hurts Mr. Trump the worst. It’s not Americans, it’s Trump. Trump and his guys, those are the ones they have to hit.”

With U.S. and European stock markets near historical highs, Rogers is looking for investments in Russia, China, Japan or Vietnam, he said. He bought short-term local Russian government bonds on Wednesday, he said, citing the appeal of the stable ruble and high real rates. He’s also invested in the shares of Russian companies Qiwi Plc and Rosinter Restaurants Holding.

“I’d rather invest in Russia than in Germany, I’d rather invest in Japan or China than in America,” Rogers said. “America is at an all-time high, and no other nation in the history of the world has ever been this in debt.”

- Source, Bloomberg

Thursday, March 15, 2018

The Indian Stock Market is the Most Vulnerable in the World

Chairman of Rogers Holdings, Jim Rogers says that he will not invest in India for now.

The sell-off in the US equity markets – the biggest in two years – was triggered mainly by rising bond yields and spread across major global indices on Tuesday. Jim Rogers, chairman of Rogers Holdings tells Puneet Wadhwa that the US bond market that hit bottom in 1981 and has been in a bull-run since then, is coming to an end. There will be rallies along the way, he says, but we will enter a very long bear market. Edited excerpts:
What is your interpretation of the rout we saw in global equity markets today?

The Dow Jones Industrial Average (DJIA) index has gone up quite a lot in the past few years and has had not reactions to any major event. The correction seen in global markets was well overdue. However, I cannot say right now if this correction turns into something more than just a one-day fall and goes deeper. It is too early to predict. That said, we were very, very overdue for the markets to go down.
How do you see the bond markets play out over the next three – six months?

The US Federal Reserve (US Fed) is likely to raise interest rates in March 2018. I think they will. This will trigger a rally in bonds. The bond yields will go higher over the next few years, although the central banks will try to cause rallies every time things get really bad. The US bond market hit bottom in 1981. That long bull market is coming to an end. There will be rallies along the way, but we will enter a very long bear market.
What does all this mean for the Indian markets?

The good news for the Indian market is that there is a general election coming up in 2019. Narendra Modi will do everything he can to win it. This means giving out sops and adopting populist measures as well. On the other hand, the Indian stock market has been on a strong footing since quite some time, but you now have a capital gains tax on equities to deal with as well.

Historically, we have seen if you tax something, whether it is gold, cars or any other asset, the demand gets supressed for that item. So, the Indian stock market is more vulnerable than any other global stock market now due to the introduction of LTCG.
Are you looking to invest in the Indian markets on any correction?

No, I do not. The Indian markets, as I said, are more vulnerable than any other global market. Given the run up seen over the past few months and the introduction of LTCG has made it more vulnerable. I will not invest here for now.
Which regions and asset classes appear investment worthy to you right now?

I like Asian tourism stocks, agriculture stocks. That apart, I also like companies engaged in pollution clean-up. India and China are both filthy and need to be cleaned up. Some areas of the world economy will do well going ahead no matter what happens. But basically, this is not a good time to be buying shares.
What is your outlook for crude oil prices and gold?

Crude oil prices are in the process of making a bottom. Over the past few years, since 2015 to 2018, people will say the oil prices tried to make a bottom, but it has been a complicated bottom. I think oil prices will be a good buy over the next couple of years. I am not buying oil at the moment. Now that the equity markets are going down, oil prices will correct too.

I am not buying gold at all. I am waiting for the gold prices to go down a lot from here. If the overall markets go down, gold prices will also be impacted. Over the next one – two years, I hope to buy a lot of gold, especially if it goes down a lot. I do not hold any cryptocurrencies, like bitcoin etc.

- Source, The Print

Monday, March 12, 2018

This Will be One of the Worst Market Crashes Ever

Rogers has seen severe bear markets before. Even this century, the Dow plunged more than 50 per cent during the financial crisis, from a peak in October 2007 through a low in March 2009. It sank 38 per cent from its high during the IT bubble in 2000 through a low in 2002.

“Jim has been talking about severe corrections since I started in business over 30 years ago,” said Alibaba Group Holding Ltd. President Mike Evans, a former Goldman Sachs Group Inc. banker. “So I’m sure he’ll be right at some point.”

Rogers predicts the stock market will experience jitters until the Federal Reserve increases borrowing costs. That, he says, will be the point when stocks go up again. He said he’ll buy an agriculture index today, reiterating his view that prices of such commodities have been depressed for some time.

“I’m very bad in market timing,” Rogers said. “But maybe there will be continued sloppiness until March when they raise interest rates, and it looks like the market will rally.”

Friday, March 9, 2018

Veteran investor Jim Rogers says next bear market will be 'the worst in our lifetime'

Jim Rogers, 75, says the next bear market in stocks will be more catastrophic than any other market downturn that he's lived through.

The veteran investor says that's because even more debt has accumulated in the global economy since the financial crisis, especially in the US.

While Rogers isn't saying that stocks are poised to enter bear territory now - or making any claim to know when they will - he says he's not surprised that US equities resumed their sell-off on Thursdayand he expects the rout to continue.

"When we have a bear market again, and we are going to have a bear market again, it will be the worst in our lifetime," Rogers, the chairman of Rogers Holdings, said in a phone interview.

Tuesday, March 6, 2018

Fiat Money is Out of Control, This Will End Us

Jim Rogers and Michael Pento discuss how reckless and out of control central bankers have become. The endless money printing is going to bring the entire system down.

- Video Source