Why does global investor Jim Rogers now advise getting out of dollars and buying silver?
*Business Intelligence Middle East, November 11, 2008:
“Legendary global investor Jim Rogers believes the recent dollar
gains are temporary and are not based on fundamentals.
‘The fact that the dollar is gaining rapidly is only temporary,’ Rogers
recently told a group of private bank clients.
‘Within a year you'll have to get rid of the dollar,’ he said.
Rogers has spent a career being one step ahead of mainstream investment
thinking. Amongst his many accomplishments, Rogers was co-founder with
George Soros of Quantum Fund. During his ten years with the fund, the
portfolio gained more than 4,000%, while the S&P rose less than 50%.
All hedge funds were short on the dollar, Rogers said, but because
there has been a rapid increase in the dollar's value against other
currencies, fund managers want to buy them now.
‘This is temporary,’ Rogers says. ‘Fundamentally it is a drama.’
Rogers also said US government bonds are extremely overvalued. ‘They
are "the world's last bubble.”’
The current rescue plans, which will force governments to issue more
debt, print money and flood the markets with liquidity, will flare up
inflation after the crisis is over and will create worse problems.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben
Bernanke should resign for keeping alive ‘zombie banks’ that should be
allowed to fail, he said.
The Japanese government refused to let financial institutions fail in
the 1990s. ‘It's 18 years later and their stock market is 75% or 80%
below what it was 18 years ago,’ he added.
‘I know we are going to get aggressive rate cuts everywhere, that's why
I'm long short-term government bonds in the US, but shorting long-term
government bonds because it's not going to help, it's going to add to
inflation.’
Rogers admits that silver has been particularly battered down, 35% this
year, and perhaps that is why he thinks this precious metal will
outperform gold as investors turn to the metal as a hedge against
inflation.
‘Silver will do better than gold,’ Rogers recently said. ‘It’s been
beaten down horribly. If you put a gun to my head and said you have to
buy one, I would buy silver rather than gold.’
Gold may drop as central banks and the International Monetary Fund
(IMF) sell the metal to raise cash, said Rogers, who correctly
predicted in April 2006 that gold would reach US$1,000 an ounce. The
IMF in May ratified a plan that included proposals to sell 403.3 metric
tons of gold to reduce a budget deficit.
‘The IMF has gigantic amounts of gold. Maybe gold is going to go down
for a while. If gold does go down, I’m going to buy more,’ Rogers said.
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
Call Now
Let us help you:
Personal Advisors
available now at
1-800-444-8317