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Jim Rogers: US Training More PRs Than Farmers

Why agricultural commodities top Jim Rogers' list of long-term fundamental trades...
JIM ROGERS may be the world's best-known commodity investor, founding his Rogers International Commodity Index and authoring best-selling books including Hot Commodities.
Here he speaks from his home in Singapore with Hard Asset Investor's managing editor Sumit Roy...
HardAssetsInvestor: After dropping 29% in 2013, gold prices have rebounded a bit this year. Is the bottom in, and if so, where do you see prices going?
Jim Rogers: I'm very bad at market timing. I'm a very bad short-term trader, so I have absolutely no idea what is going to happen. I do own gold, but I have hedged some of my gold. I expect there will be another opportunity to buy gold sometime in the next year or two.
If that means gold is under $1000, I hope I'm smart enough to buy. If it means gold is $1600 because America and Iran end up going to war, I hope I'm smart enough to buy it. In my view, it's more likely there will be another chance to buy gold lower than now, and that's why I've hedged some of my gold, but I'm not selling.
HAI: What do you think about the situation between Russia and Ukraine? Is it something that commodity investors should be paying attention to?
Jim Rogers: Absolutely, if for no other reason than the fact that both Russia and Ukraine are huge commodity producers. Ukraine especially is a large agricultural commodity producer and has been for centuries, and it's been awfully good at it for centuries. I don't know if this is going to disrupt production or not, but if it does, that is just that much less supply on the market.
HAI: I'm curious as to your thoughts on Federal Reserve monetary policy. We saw another tapering of the Fed's QE program last week. Do you think they did the right thing with all this quantitative easing, and do you think there will be repercussions now that they're ending it?
Jim Rogers: It's a disaster for all of us, for the whole world. They never should have done it in the first place. Because they are bureaucrats and academics, they didn't know what else to do. It's going to be terrible. Never in the history of the world has debasing of currency been good in the long term or the medium term. Sometimes it has helped in the short term, but it's certainly not going to be good for us in the long term.
And this is the first time in recorded history when you've had all major central banks printing money at the same time, so when this ends, it's going to be a disaster for the whole world.
HAI: Do you think the US stock market is overvalued here? There is a lot of debate about whether stock valuations are too high after this huge rally we've seen.
Jim Rogers: I'm sure some are. We might have seen bubbles develop in some sectors such as biotechnology. You see what has happened to those stocks. There may even be bubbles in some other sectors like social media and technology. In some sectors, it may be a bubble, but no, the whole market is not a bubble. It may be too expensive, it may be too high priced, but an overpriced market is different from a bubble.
I have no idea whether the market is overpriced, but I wouldn't be buying US stocks. I mean, they're at all-time highs. There are other markets around the world that are certainly much cheaper on a historic basis.
HAI: Does this move in agricultural commodities this year surprise you? We had a record corn crop, yet prices are rallying, and coffee has nearly doubled since the start of the year. Are these moves sustainable?
Jim Rogers: Inventories of agriculture products are near historic lows. The world has consumed more than it has produced for a decade now, so that means inventories are very low, and we're running out of farmers worldwide. The average age of farmers in America is 58, in Japan it's 66.
I can go on and on. More people in America study public relations than study agriculture. So we have low inventories and we have a shortage of farmers developing. We're expecting a crisis in agriculture sometime in the next few years, and prices are going to go much, much, much higher.
HAI: You were really one of the first to understand the tremendous impact that China would have on the global economy. From your vantage point, how are things looking there right now? Is China doing a good job of transitioning to slower growth levels?
Jim Rogers: Well, few countries do a good job of transitioning to slower growth. The Chinese have been trying to slow things down for a while, so anybody who is not aware that China has been trying to engineer a slowdown should be reading the papers more, or reading the internet more.
China has had an inflation problem and they have had a property problem. They know it and they're trying to do something about it. China has been slowing, but this is not the least bit unusual.
I would remind you that what is unusual is that China hasn't had more economic problems in the last decade or two. I would remind you that as America rose to power, we had 15 Depressions; we had very few human rights; we had very little rule of law; we had massacres in the streets; we had a horrible civil war.
It is normal for countries or companies or families or individuals that rise to have setbacks along the way. What is unusual to me is that China hasn't had more problems, and I suspect they will.
HAI: That's a really good point. Finally, can you tell us some of the recent trades you have either made or considered?
Jim Rogers: I will say that I own the Rogers Agriculture Index. I am looking to buy some Russia, and I may be buying it today [April 30, 2014] in fact. 
I am looking at some Chinese shares. The overall Chinese market is not attractive to me right now because they do have some debt problems and some real estate problems. But they have said something that is very exciting to me, and that is that they are going to let the market decide situations in the future. That means they're going to let the market decide if some people are going to go broke, which is very good for China and good for the world. 
I am not terribly optimistic about the Chinese market at the moment. However, when they had their economic conference back in November, they listed areas of the Chinese economy where they are going to be spending a lot of money over the next decade or two, and the Chinese government is going to spend a lot of money on some sectors of the Chinese economy. I want to spend money there too. They have got more money than I do and they have got more brains than I do. They gave you a list. Get out the list and try to find companies. That's what I'm doing. is a research-oriented website devoted to sharing ideas about investing in the natural resources sector. Published by Van Eck Associates Corporation, the site offers an educational resource for both individual and institutional investors interested in learning more about commodity equities, commodity futures, and gold – the three major components of the hard assets marketplace.

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