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July 23, 2017

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Jim Rogers says he'll buy gold at US$750

SINGAPORE -- Investor Jim Rogers said he will buy more gold and base metals if the recent sell-off persists.

"Gold is in a correction right now," Rogers, who co-founded the Quantum fund with George Soros in the 1970s, said at a press conference Thursday in Singapore. "I suspect it could go down to US$800, who knows, or US$750. I'm terrible at market timing, but if gold goes down some more, I plan to buy some more."

Commodities are in their seventh year of gains, with oil rising to a record US$123.93 a barrel Wednesday as demand exceeds curtailed supply from Nigeria to Iraq. Output shortages have pushed wheat, rice, corn and soybeans to all-time highs. Still, gold fell more than 15 percent from a record US$1,032.70 an ounce March 17, while nickel and zinc are down 45 percent and 50 percent from highs in 2007 and 2006.

"I've started to think about buying base metals," Rogers said. "I'm not buying base metals yet but I've noticed some of them are down a lot and if they continue to consolidate, I will probably be buying base metals."

Commodities have outpaced stocks and bonds this year, spurring pension funds and other investors to increase holdings.

The UBS Bloomberg Constant Maturity Commodity Index of 26 commodities has returned almost 20 percent this year, while the Standard & Poor's 500 Index of stocks has fallen 5.2 percent. U.S. Treasuries have returned 9.2 percent, according to Merrill Lynch & Co. indexes. The Rogers International Commodity Index has more than quadrupled since 1998.

"Oil in my view will certainly have to go above US$150 or even US$200 during a bull market," Rogers said. "This is not a short-term view. We've not had a major oil field discovery anywhere in the world over 40 years."

"Agriculture is going to be one of the most exciting growth industries in the world for the next 10-15 years," he added. "Conservative" agricultural banks such as Rabobank NV "will have their sun now," he said.

Rice prices have to go much higher before supply rises, he said. Rice at times "in the dark recesses of history," adjusted for inflation, was much higher than now, he said.

Inventories are "very low" and "nobody's becoming a rice farmer these days," Rogers said. "Young Chinese haven't gone into rice farming in the last 30 years. They've headed to Shanghai and gone down to the new stock exchange or commodities exchange and that's true in most parts of the world."

Dollar rally

Rogers also said too many investors are bearish on the U.S. dollar and the currency will have a "nice" rally.

The dollar has declined 4.9 percent against the euro this year as widening credit market losses and slowing economic growth prompted the Federal Reserve to cut interest rates to head off a recession. Since Rogers said in an interview on April 27 that he expected a dollar rally "about now," the currency has climbed 2 percent.

"I expect a nice rally in the American dollar because so many have been bearish on the American dollar including me," Rogers said at the launch of the Barclays Global Agriculture Delta Fund in Singapore earlier Thursday. "America is also a huge producer of agriculture and if I'm right about agriculture prices, which I think will go up a lot, that's going to help America compared to those countries which don't have agriculture."

The currency rose for a second day to trade at US$1.5345 per euro as of 10:20 a.m. in London Thursday from US$1.5392 in New York Wednesday. The yen, which Rogers said he has been buying, climbed to 103.97 per dollar from 104.73.

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