Jim Rogers is bullish on agriculture, gold, and silver
- Rogers on COVID-19: this too shall pass
- QE and stimulus are a dangerous experimental legacy from 2008
- Silver, gold and agricultural commodities are top picks
Jim Rogers, the legendary investor famous for co-founding the Quantum Fund with George Soros, dwelt on COVID-19, QE, and commodities on a call co-promoted by ETF Strategy.
The event coincided with the relisting of the Market Access Rogers International Commodity Index UCITS ETF (LON: RICI) on the London Stock Exchange.
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The ETF returns to London after a hiatus of four years. China Post Global had canceled the ETF’s LSE listing in 2016 due to low trading volume.
“Interest in gold and commodities has increased sharply since the COVID-19 pandemic began,” explained Danny Dolan, Managing Director of China Post Global. “Investors are seeking a safe haven in gold, and an inflation hedge in broad commodity indices after huge quantitative easing measures.”
Jim Rogers designed the Rogers International Commodity Index (RICI) in 1996/97.
Here are his views on the virus, helicopter stimulus and commodities.
Rogers noted the extremely adverse impact of COVID-19 on global economies, saying it was unparalleled since the days of the Depression.
Encouragingly, he thinks this is likely only to be temporary, and that the world will bounce back.
He also made the important qualification that though production will rebound, it may not recover to pre-virus levels for quite a while.
Quantitative easing and stimulus
However, it appears that Rogers is more worried about the debasement of the global financial system that started after the 2008 crisis through fiscal and monetary stimulus measures by countries around the world.
Rogers is alarmed that what was then admittedly an “experiment” is continuing due to short-sighted political motivations, with no thought for long-term implications.
He claimed that artificially induced, low interest rates had fuelled hugely leveraged bets by sovereigns and corporates. These positions could unwind with dire consequences including insolvencies and people’s loss of confidence in the financial system.
The situation is ripe for investing in gold, and Rogers has been doing exactly that in recent months. The current pandemic and economic crises have propelled gold to new highs, but the bulls will come into form on the evidence of a structural financial crisis.
Rogers notes that historically people have hoarded gold in uncertain times.
However, Rogers is even more bullish on the other precious metal – silver. “I buy more silver than gold these days,” he revealed.
He finds silver an attractive investment due to its “historically favorable valuation” that could bounce once industrial activity normalizes.
[In separate comments at a webinar hosted by NTree, Rogers had this to say about silver: “Last year I started to buy gold and silver. I continue to buy gold and silver, and of the two I’m buying more silver now than gold because on a historic basis it’s much cheaper. Silver is down 80% or 70% from its all-time high if you go back, but gold is near its all-time high. One reason for that is that silver has more commercial and industrial uses than gold does. But when push comes to shove, if you ask me, I am buying more silver than gold.”]
However, agriculture could prove to be the dark horse according to Rogers. He observes that the sector has been on a long-term downtrend and fallen 45% since 1998 as measured by the RICI Agriculture sub-index.
But agriculture may be ripe for a turnaround. As anecdotal evidence, Rogers observes that farmers are now much older, on average, around the world. And that fewer and fewer people are training in agriculture.
He concludes that the situation in agricultural commodities is shaping up for “structural undersupply” accompanied by a shortage of skilled and migrant workers.
These are the hallmarks of a nascent bull market.