Investing guru Jim Rogers was in Chicago this week talking about, what else, commodities. But also expressing anger over Fed policy and the money printing policy of the Western world. He is still bullish on commodities but little else as Rogers told a crowd of invited guests of Price Asset Management.
Price and its various subsidiaries offer exposure to various products based on the Rogers International Commodity Index (RICI), which has performed well on an absolute basis, thanks to the ongoing bull market in commodities, and as compared to other commodity benchmarks.
But Rogers rarely touts his products as much as tries to convert listeners to his mantra of investing in things with real value as opposed to paper assets.
Surprisingly, Rogers said that he was long U.S. dollars though he pointed out that is was a short-term position and he views the dollar as a flawed currency. In fact, Rogers added that he never saw a time when so many currencies appeared in distress and wasn’t prepared to offer an alternative currency; instead advising the attendees to invest in real assets.
Rogers of course designed the RICI, which he pointed out has outperformed competing commodity indexes.
His biggest concern, however, is America’s move in a quarter of a century from a large creditor nation to the world’s largest debtor nation. He doesn’t believe it will end well. More to the point he does not believe quantitative easing is the right approach.
Though not naming him, Rogers sharply criticized Federal Reserve Chairman Ben Bernanke saying, “he does not understand economics, he understands printing money. It is not the right thing to do,” Rogers said before joking, that one of the reasons he is long cotton is because it is used to make money and he expects a lot more money printing.
Rogers is pretty pessimistic on the global economy but is bullish commodities regardless of how it turns out. Rogers says a recovery would mean greater demand while a further economic decline would mean governments would continue to print money increasing the value of commodities.
When asked whether all this quantitative easing and money printing would cause inflation, Rogers responded by pointing out there already has been quite a bit of inflation in the United States and criticized the way the Bureau of Labor Statistics calculates its numbers. “It should be criminal. Prices are going up except in the Bureau of Labor Statistics, [inflation] is here and it is going to get worse.”
And he expects the cost of money to rise as well, stating that the 30-year bull market in bonds is ending and an era of sharply rising interest rates is on the way.
Not a rosy scenario but I place more trust in Rogers' analysis than our economic leaders who have been consistently wrong on just about everything the last few years.