Jim Rogers Sees Fed Failing - Calls Bernanke Its "Death Knell"

Monday, June 12, 2006

The dollar will collapse, the Fed will fail as did its two US central bank predecessors and Bernanke is the person in place to be the death knell of the Fed. Oh, don't forget to pencil in a recession for 2007 but still prosper by investing in commodities as China will happily substitute declining US demand.
Commodities investment guru and author Jim Rogers describes financial doomsday in very frank words in an interview published on InvestmentU.com.
From the interview:
Mark Skousen: The Fed, as we know, is determined to raise rates. Do you look at Fed policy? Is it important?
Jim Rogers: A little bit. The Fed is overrated as far as I'm concerned. We've had two central banks in America that have failed. This one will fail, too, and Bernanke will probably be its death knell. Between Greenspan and Bernanke, I'm sure the Fed is coming to an end. It's going to fail.
Mark Skousen: Wow. That's quite a prediction.

I agree with the interviewer.
Rogers reiterated his view that the bull market in commodities is still in an early stage, basing his perception on inflation-adjusted prices.
Mark Skousen: Given that commodities have gone through a major correction of late, are they going to make a comeback? Is this the top of a commodities market, or just a correction?
Jim Rogers: First, we're in a secular bull market in commodities, which started early in 1999 ... I went back and looked, and the shortest bull market in commodities I could find lasted 15 years, and the longest lasted 23 years. So, if history is any guide, this bull market will last sometime until 2014 and 2022. That's not a prediction; I'm just telling you what history would indicate. Yes, some commodities are up, but if you look at the commodities market, there are only five or six commodities that have made all-time highs. And they're not even - most of them - above the old all-time highs. Zinc is, copper is, and oil is, but the rest of them, even aluminum, which got near its all-time high, or lead, or tin ... they're not far above their old all-time highs, for the most part.
Mark Skousen: Gold and silver ... they haven't hit their all-time highs.
Jim Rogers: Silver is 75% below its all-time high ... gold is 30% below its all-time high. Sugar is 80% below its all-time high. Corn is 50% below its all-time high. Cotton is 60% below its all-time high. I could go on and on ... and those aren't adjusted for inflation. So, most commodities now are somewhere between 80% and 90% below their all-time high, especially adjusted for inflation.
So is this over? No. Copper and zinc may slow down for a while. We haven't even really gotten started. Commodities have ... my index has tripled ... more than tripled.
Mark Skousen: So easy money has been made, in your opinion?
Jim Rogers: In zinc and copper. But not in coffee. Coffee is 75% below its all-time high. I don't want to use the term "easy money," but there's still plenty of money to be made. Because in bull markets - in every asset class - eventually everything makes a new all-time high.
This makes sense to me.
Grandich Calls The Next Up-Leg
Add that to Peter Grandich's new long call, who was on the spot with his call for a correction in gold-related investments on May 11, only a few hours before gold collapsed more than $100 to current levels.
On June 7 Grandich headlined "It's time to jump back in precious metals and mining shares with both feet."
Seeing these markets stabilize since could put him on course for this year's #1 market timer. Inflation data could become the ignitor for his bold forecast that gold will resume its up-trend fairly soon.


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