us-treasury

Jim Rogers: US Government Paper Will Suffer

Issue 23, November 2012

‘King of Wall Street’ Jim Rogers, who earned his fortune as investment partner to George Soros in the 1970s, believes US government bondholders face substantial losses as the country “destroys its credit.”

“Whoever owns that paper will suffer,” he tells Global Mining Observer. Rogers, who retired aged 37 and boasts that he has never owned an aeroplane, is an outspoken critic of the ‘debasing’ policies of the US Federal Reserve. “Obama’s re-election doesn’t change anything,” he says. “It’s the same president, the same Congress, the same central bank. The guys who caused the problems are still there and they don’t have decent solutions.”

The so-called ‘Greenspan Put’, whereby central banks backstop markets with implicit backing, he says has clearly failed: “The Greenspan Put didn’t work. The markets are bigger than the central banks, as the world found out in 2008 and as the world will find out in 2013.”

Rogers believes another downleg in financial markets is approaching. “I only temper that by saying in real terms, because if they print enough money the Dow Jones Industrial Average could go to 30,000.”

He also describes himself as a “terrible” market timer, admitting that governments “can continue to print for a long time,” citing the UK throughout the 1950s and 60s, leading to its bail-out by the IMF in 1976. “Eventually the market says: no more.”

Rogers thinks the eurozone will breakup, but that the euro will survive. “The euro will change and be weakened for a while, but some sort of euro will survive this turmoil and that currency would be a strong one; the world needs something to compete with the dollar.”

“I own gold; I’m not selling gold; if gold goes down I will buy more,” he says, whilst being alert to the fact that gold has risen for twelve consecutive years. “The number of people buying gold calls has skyrocketed compared to the number buying puts,” he adds. “If gold goes down, I hope I’m smart enough to buy more.”

Rogers firmly believes commodities outpace commodity stocks. “However, if you find the right stocks you’ll make much, much more money. You’ve got to find the ones that have the assets and the wherewithal to develop the assets.”

“Markets are bigger than the central banks.”
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