Exclusive Interview: Jim Rogers Says If He Were China, He Would Scale Back On Buying US Bonds
By Grace Cheng on January 15, 2009 | More Posts By Grace Cheng | Author's Website
In this DailyMarkets.com exclusive, I spoke by phone with legendary investor Jim Rogers who made his fortune with the Quantum Fund, a hedge fund he co-founded with George Soros in 1970. Over the next 10 years, Quantum gained 4200% while the S&P 500 index rose about 47%.
He is also author of the best-selling books “Hot Commodities”, “Investment Biker” and “Adventure Capitalist”. Rogers, who created the Rogers International Commodities Index (RICI) in 1998, is one of the most closely watched investors. If you are fed up with the Fed, you are not alone. Recently, Rogers said that Paulson and Bernanke should resign for keeping “zombie banks” alive as they should be allowed to fail.
His uncanny accuracy in predicting the recent commodity bull run as well as the financial crisis has made the media, as well as private and institutional investors, sit up and listen to what he has to say about the markets.
Grace Cheng: Do you think the period of forced liquidation has ended or does it still have a ways to go?
Rogers: I’m sure it has not ended. It certainly has not ended for many asset classes and it probably has not ended for most. It may be over for a few things but it still has a long way to go.
As you’ve said many times, the US government is printing a lot of money right now, when do you think inflation will come around and bite us?
Rogers: Well there is inflation now in many things. There’s temporary deflation in raw material prices and in some property. But throughout history, whenever you’ve had gigantic printing of money and spending of borrowed money, it has always led to higher prices. Unless something is dramatic, it’s going to happen again. When I don’t know. It’s already happening in some things. I don’t know if you’ve bought any sugar recently or some other things, prices are up and that will continue and it will get worse.
You’ve been bullish on commodities for a long time, recently you said you’re buying the Rogers Metal Index. Do you think that the Obama stimulus plan will create more demand for commodities?
Rogers: Well of course, anything that causes a revival of economic activity causes a revival of demand for everything including commodities. I mean if you’re gonna build bridges you’ve got to build them out of something you cannot build virtual bridges you have to build real bridges, etc.
You’ve said that over the long term, the US dollar is doomed. What are your thoughts on the British Pound?
Rogers: More doomed. It will disappear sooner. If it weren’t for the North Sea, the British Pound would have already disappeared. It’s more doomed. The UK has been exporting oil for 26 years; within the decade, the UK will be a net importer of oil again, and they have nothing else to sell to the world once the oil dries up.
Do you think China will scale back on buying US bonds? And if that happens, how will it affect the US economy and the US dollar?
Rogers: Well if I were China, I would scale back. If I were everybody, I would scale back. The US bonds yield virtually nothing, the dollar is a flawed currency, inflation is coming, higher interest rates are coming. I would think everybody would be scaling back including China. We’re going to have higher interest rates down the road because somebody’s gonna scale back. If not China, Japan or Korea, or who knows, somebody.
You’ve been buying Chinese stocks for many years already, now that China’s economy is doing badly and exports are decreasing significantly, what sectors are you looking at in China?
Rogers: Agriculture, water treatment, people who build power generation, people who build infrastructure, tourism. Many areas of the Chinese economy will continue to do well no matter what happens to the world economy. Many will suffer; anybody who sells to Wal-mart (WMT) or retailers in America is going to suffer, others will do extremely well no matter what.
My last question, on a personal note, do you miss traveling around the world for fun like you’ve done several times before?
Rogers: No, because now I have two little girls and they’re more fun than anything. I hope someday that I will travel around the world with them for fun. But at the moment, watching them grow up and helping them grow up is more fun than anything I can imagine.
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Nice article it’s good to hear jims view on the pound for once as he ussually talks about the dollar.
Jim Rogers is the greatest commodity trader of all-time.
I always thought the greatest was W. D. Gann…sure you don’t want to amend your statement?
If the UK pound is likely to go belly-up because of the UK’s declining oil stocks, what will happen to the Euro-sceptics’ (like me) pet hate, the euro? Will the euro’s weaker currencies - Ireland, Greece, Spain, Portugal, & Italy - “bomb right out of it”, because of the euro’s (until recently) strict anti-deficit financing rules? And if so, what future is there for the ultra-bureaucratic, anti-democratic, & ultra-interventionist & controlling EU? My view is hopefully no future at all, but what does Jim Rogers forecast about them - ie the euro & the EU?
Jim is super smart. He’s been right many times. However, if you had bought commodities, china stocks in the past several years you would have given back, perhaps all of the gains and some, if you had held onto to them. China stocks are down nearly 70% from their recent top taking you back to november 2007. Did we hear Jim telling the world to sell? His own Commodity Index was down 55% to 12/2008 taking you back to March 2004 level. Through these recent years you only heard him say BUY China, BUY commodities. Or BUY more if markets came back. You need to have a lot of cash to be averaging down in these two areas. If you had borrowed to buy, you would be in bankruptcy courts right now. Jim will be right eventually as inflation returns. All bear markets are followed by a bull market. Did I just anything really meaningful? sin-ming
what you say is pure arithmetic…
a 5year old student can make such calculation..
good for you sinming my calculation works out the same..
if Mr. Rogers tell us how much he invest… in all these
commodities and currencies he say he does perhaps his opinion would be more credible…
anyone can make statements or speculate…
the proof is in the pudding.!!
after reading all these interviews one can only comes to the conclusion that Rogers is the only money investment
expert in the world…
from my experience those who knows dont tell…
but others do………
Jim is good at spotting trends at the beginning…however, doesn’t seem to know when the top is. He has admitted that he cannot time the markets.
However, it is likely that gold and silver will be strong with all the computer digits the Fed is creating out of thin
air.
Jim Roger has the cutting edge data and info. on commodity and ability to process into opinion like what a weather man does. To take a coat ride on will not be easy as he wouldn’t tell when he takes his position or exist when things goes wrong in the commodity market. Jimmy, you does well in your tradesman. steve-malaysia
Regarding he United Kingdom , Jim Rogers does not know British history. It was in the UK that many of the finest products were manufactured - Morris minor cars , Jaguar, Austin Martin , Rover , Triumph motor bikes + household names like Kenwood. Wadkin Machinery and many many more that led the world in production, quality, innovation & good quality export products, and long before the Chinese , Koreans , Indians who now follow there example. The British will do that again.
Its true that we in the west lead the world for a long time. But the problem now is we are still living in the past. The brands like Jaguar and Rover are now Indian, not British. Many of the US and UK brands are now made in china, creating jobs there, without any real productivity other than consumption in the UK.
The next few deaces belong to the east which are working hard to catch up and will soon lead the way….
Look to the future…
I’ve been trying to email Jim Rogers Directly. I want to learn and work for him and move my Family to Singapore too. He is right the US will crash and don’t want to be around when it gets worse. I love what he does and how he lives his life and what he believes must happen to the Federal Reserve, IMF, and World Bank. These all need to be abolished and the elite wealthy behind them are very evil and have no interest for the best of all mankind. They just want to control everything and everyone.
If there is a way to confirm with Jim that I can call him or email him or have him call me at 707-689-0404 that would be awesome.
Sincerely,
Hubert Rotteveel
hubertrotteveel@yahoo.com
I have been “investing” in gold since 2002 and don’t think that I have beat any other kind of investment. With my awful timing, I’ve probably made less than 2%/yr. I’ve been listening to Rogers for well over a decade and value and respect his opinion (I really like the guy), but do I think that China and Asia are going to “take over”? No way…I spent 8 years living and working in Asia and that place only makes whatever the west gives them (Aside from Japan, Korea, and Taiwan). Their ONLY advantages are that they have a completely unregulated cheap labor force and a virtually unlimited supply of people. Why did Rogers move to Spore? Because it is an oasis in the middle of squalor. Sorry to say, but unless you are part of the military-industrial-political elite in Asia (2% of the population max), your life pretty much sucks. I would rather live in any recession/depression/collapse N. America or Europe than anywhere as a “common man” in Asia.
I’m tired of hearing China whine about their USD holdings. No one told them to buy the stupid bonds in the first place. Let’s see…they want the benefits of keeping their currency low by buying US bonds, but then don’t want the risk of holding them! Look dudes: interest rates are at historical lows..There is no direction for bond prices to go except for down! Or go buy Argentine/Chilean/Venezuelan paper and not just watch your money “devalue”, but completely disappear as they default/change governments every 5-10 years.