A month ago I asked commodities guru Jim Rogers if he was still convinced about commodities being inside a long term bull market.
At the beginning of October his answer was a resounding yes. The present sell-off is just a short term liquidation that presents cheap prices for commodities that are going to get a lot more expensive in the future. Crop commodities in particular he found attractive and was loading up on.
After a further month of losses in ag prices, what does Rogers think? Are ag commodities still the place to be?
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“I would rather buy agriculture than oil. Agriculture prices are so far-depressed on a historical basis. Betty (presenter’s name), Sugar is 80 percent below its all time high . . . Sugar’s going to go through the roof in the next few decades.”
But what about the threat of recession that’s terrifying the markets right now? If it’s time to buy commodities, isn’t it also the time to buy depressed equities?
“The way you make money out of this is to find the things where the fundamentals have been unimpaired. The only thing where the fundamentals have been unimpaired are commodities. This is good for commodities. It’s bad for General Motors. It’s bad for Bank of America. But everything that’s happening is great for commodities, so the best thing to own coming out of this will be commodities.”
So, the king of commodities still believes in commodities in general, and crop commodities and particular. Does that make you feel more confident about the outlook for the crops stored unpriced in your bins, and for the crops that you’ll have to borrow money to seed come spring? Â Rogers’ doesn’t pretend to be a good short-term investor, and he’ll never offer a guess on where prices are likely to go in the next few months, but he still has supreme confidence in long term commodity prices – especially ag prices – so if farmers can make it through this depressing patch, things should look up.
