Chris Mayer (Penny Sleuth):
“If you can tell me something else where the fundamentals are so attractive…I’d be happy to put my money there,” said Jim Rogers, the famed investor and self-made billionaire in a recent interview. “But I don’t know of any other place.”
After earning hefty profits on its commodities trading for nearly 18 years, heavyweight trader Goldman Sachs Group Inc. (NYSE: GS) now finds itself on the hot seat, defending this crucial source of revenue. And while that may not be good for Goldman, it’s also bad for investors. Let me explain…
Billionaire investor George Soros thinks the worst of the global financial crisis is behind us. In a June 20 interview with Polish television, the Hungarian-born Soros acknowledged that this has been the most serious crisis he’s seen in his lifetime, but said, “Definitely, the worst is behind us.”
We have no shame here at Notes. When legendary underground investor Jim Rogers makes a call we listen. And we listen good. Rogers correctly predicted the commodities rally in 1999. And between 1970 and 1980, when he partnered with George Soros at the Quantum Fund, his portfolio made gains of 4,200% when the S&P 500 rose by 47%. To say he’s a legend is an understatement.
The big daddy of underground investors, Jim Rogers, says the best way to play this downturn is to focus on commodities and agriculture ETFs (hat tip The Daily Crux). The primary logic behind this play is simple to understand.
Gold had about as lackluster a day as possible on Friday, trapped between $880 and $890 from the far East clear through the Globex, with every attempt to break out in either direction quickly thwarted, and it finished where it started, at $885.80/oz., down 40 cents. For the week, gold dropped 3%.
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The Reuters/Jefferies CRB Index shows commodities jumped 29% in the first six months of this year – the best first half for more than 30 years.
But there is much talk now of a “commodities bear market” and the popping of the so-called “commodities bubble” as prices pull back from their highs.
Jim Rogers, however, remains a commodities bull. “This bull market is not magic,” says Jim, writing in Whiskey and Gunpowder. “It’s not some crazy ‘cycle theory’ I have. It does not fall out of the sky. It’s supply and demand. It’s simple stuff.”
Despite its many problems, China remains such a strong long-term profit play, says global investment guru Jim Rogers.
In the second part of an exclusive interview with Money Morning, Rogers says giving up on that country now would be like selling all your U.S. stocks at the start of the 1900s – before America created massive wealth by evolving into a world superpower.
“I have never sold any of my Chinese companies,” Rogers said. “You know, selling China in 2008 is like selling America in 1908. Sure, let’s say the market goes down another 40% – so what!
Editor’s Note: There’s a lot of confusion about the direction of the dollar and commodity prices, says Chuck Butler in The Daily Reckoning. Hank Paulson is talking up a strong dollar. Analysts are calling commodity prices a bubble. But the trend is clear. The dollar is in a slump. Commodities such as oil and gold are off the dial. And there is nothing to suggest a turnaround in the near future…