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Better than Gold? … Jim Rogers Thinks So.
The following is an excerpt from our FREE
Inflationary Holocaust Survival Guide.
Do you know
Jim Rogers?
The
legendary investor first went to work on Wall Street with $600 in his pocket in
the late ‘60s. In 1970, he and George Soros founded the Quantum fund: one of
the greatest investment funds in history.
Between 1970
and 1980, the Quantum fund returned 3,365%, outperforming the S&P 500’s
performance of 47% by an enormous margin. On an annual basis, Rogers and Soros
produced average returns of 38%. Rogers then “retired” with millions in his
bank account at the ripe age of 37.
Since then,
he’s taken two trips around the world, the first on a motorcycle, the second in
a custom-made Mercedes. Still managing his own money, Rogers has used his “on
the ground” knowledge of foreign markets to make numerous major calls. He went
long stocks in 1982 when everyone was still bearish. Stocks more than tripled
in the five years following this. He also went short before the market crash in
1987.
However, his
most famous call was the commodities bull market that began in 1999. At that
time, everyone thought he’d lost his mind. Commodities had done nothing in 15
years. The Dow Jones Commodities Index hadn’t been revised since the 1960s. and
Reuters’ hadn’t revised its commodity index since the 1930s.
With no
decent options available, Rogers decided to launch his own commodities index.
He did so August 1, 1998. He then took off on his second world trip as
chronicled in Adventure Capitalist.
Since that time, the Rogers International Commodities Index has more than
doubled. In contrast, the S&P 500 has fallen.
And Jim
believes we’re just getting started.
Historically
commodities have always done well during periods of high inflation. And Jim,
like myself, believes the Feds’ moves are highly inflationary. In fact, I
borrowed the term “Inflationary
Holocaust” from one of Jim’s interviews with CNBC. Jim said, "We're setting the stage for when we
come out of this of a massive inflation holocaust,"
Jim has
publicly stated that he is looking to get all of his money out of the dollar in
the coming months. He’s also continually buying more commodities. And one
segment in particular interests him.
Agricultural
commodities.
It’s not
difficult to see why. You only make big money by buying investments that have
been ignored for years. And few investment classes are as unpopular as
agricultural commodities (when was the last time someone you knew opened a
sugar plantation or soy bean farm?)
It’s not mere anecdotal evidence either. Inventories for corn, wheat,
and soybean are all near 40-year lows. Other soft commodities like cotton,
sugar and coffee are at historically low inventories too. So there’s very
limited supply.
And it’s
only going to go lower.
The credit
crisis has made it a lot more difficult for farmers to get access to credit for
fertilizer. And low commodity prices have made it no longer economical to grow
certain crops (I personally know of a large farm that will not be planting any
corn this year for the first time in 60 years).
Yet, while
supplies are dwindling, demand is growing rapidly. From 1974-2005, the world’s
population grew by more than 1.1 billion people. Initially, most of them¾ and
the rest of the world for that matter¾ weren’t eating anything resembling a western diet. For
example, in 1980 the average Chinese consumer lived off $1 a day.
However, as
emerging markets’ economies began to expand, so did the diets of their
citizens. In 1985 the average Chinese consumer ate 44 pounds of meat per year.
Today, it’s more than doubled to 110 pounds.
Now, it
takes 17 pounds of grain to generate one pound of beef. So grains demand is
soaring... But land is limited. In 1989,worldwide arable land was 1.6 billion
acres. It’s 1.6 billion acres today.
It’s the
perfect set up for any investment: dwindling supplies and growing demand. The
inflationary holocaust will only be adding gasoline to the fire, pushing
agricultural commodities to record highs. As Jim Rogers puts it, “God knows how high the price of agriculture
is going to go, so that's where I'm putting more of my money now than in other
things… I think I'm going to make more
money in agriculture than I make in precious metals.''
To continue
with the rest of our Inflationary
Holocaust Survival Guide, go to http://www.gainspainscapital.com
and click on FREE REPORTS. All in all its 14 pages explain not only why
inflation is here now, why the Fed is powerless to stop it, and three
investments that absolutely EXPLODE as a result of this (including Jim Rogers
personal favorite on playing agricultural commodities).
Good
Investing!
Graham
Summers
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Farming for a living is a hit or miss business. My neighbors were one of the largest bell pepper farmers in the country. They had a farm that went back to the 1930s. The problems they ran into were competition from overseas. The cheaper prices from Mexico really ate into their profits. When they got a couple of bad seasons in a row they went out of business. A bad season could mean low crop yield or just low prices for the commodity (to much supply). They went out of business last year. This year Mexico has a bad season (weather) and bell pepper prices now go for a premium. Unfortunately, my neighbors are no longer in business to take advantage of the commodity increase. They had hundreds of acres that just sit there unproductive. It takes a lot of money and credit to farm on a large scale and the seasonal risk is enormous. When a farmer goes out of business the production goes away for years or even decades. It can't be brought back online to meet demand easily. These cycles that take farmers out of production helps to explain why supply has become so inelastic.
Farming for a living is a hit or miss business. My neighbors were one of the largest bell pepper farmers in the country. They had a farm that went back to the 1930s. The problems they ran into were competition from overseas. The cheaper prices from Mexico really ate into their profits. When they got a couple of bad seasons in a row they went out of business. Bad seasons could mean bad crop yield or just low prices for the commodity. Okay...but then Mexico gets a bad season (weather) and bell peppers prices go for a premium. Unfortunately, my neighbors are no longer in business to take advantage of the commodity increase. They had hundreds of acres that just sit there unproductive. It takes a lot of money and credit to farm on a large scale and the seasonal risk is enormous. When a farmer goes out of business the production goes away for years or even decades. It can't be brought back online to meet demand easily.
much of this thanks to the anti immigration congress. saw a news feature on this, the farmer couldn't find people to pick the peppers, so they were trying to develop machinery that would do it. in the long run i suppose thats better, but in the meantime what do you do. i also notice my local chain store which caters to hispanics always has a lot of produce at low prices. i suspect that get supplied direct and are putting out their produce with little or no markup, and doing an end run around the traditional distribution network, but have no proof, just a produce section which is a lot like a farmers market.
Someone well versed here,pls list the ETF's for investing in.
Or individual Funds that are the best picks.
I have my PM's down where I want them, but I need to get out of the dollar and into Ariculture.
Any help welcomed, point the way.
Thanks
http://etf.stock-encyclopedia.com/category/agriculture-crop-price-etfs.html
If you are not so sure about what you're doing, the prudent thing to do is to stick with ETFs with the HIGHEST LIQUIDITY in the category and stay away from illiquid ETFs. (With the obvious exception of GLD and SLV due to its fraudulent nature)
Which in this case, should be DBA for agriculture in general, COW for livestock and JJG for grains if I am not missing something.
Go read this before investing in any ETF. It should help you help yourself.
http://www.investopedia.com/articles/exchangetradedfunds/08/ETF-liquidit...
If things hold together, then Rogers is right, in my opinion. You should have inflationary bets that depend on continuation of the system. Gold is one that doesn't if you hold it physically. I like Rogers, he is smart and he hedges his bets.
It's comments like this that keep me coming back to ZH.
I salute you.
how do i go 'long' Jim Rogers, is he an ETF yet?
Would someone just post how Jim Rogers thinks commodities should be played?
No, you will probably have to give him a credit card number to download the "FREE" report and then cancel w/i 30 days.
Went there yesterday.
Mexico has lots of arable land, water, coastline, a friendly indigenous people, a weak and corrupt government and police force, currently run by drug cartels. with all this talk about Iran are we looking too far? Manifest Destiny (perraz)
i'm long soylent green
this graham summers guy is one step away from being a spammer. can the rest of you stand it? I barely can. I think all this BLAH BLAH BLAH buy my newsletter BLAH BLAH BLAH is bringing down the quality of ZH big time... I hope tyler is not selling out for the almighty buck (what is left of it).
Several things are simply wrong with the article. There is no large farmer that is not able to make a nice income from raising corn or any other grain crop. The margins are as good now as they ever have been for US ag producers.
There are quite large areas of the globe that are not properly farmed. Much of Africa is capable of generating good output. The problem is that the political systems are not capable of providing the stability necessary to get the investment made to get the profitable production. Anyone following the ag expansion in Brazil can see the potential in several other very large areas. It does take infrastructure to deliver the crops to market / consumer though and that requires some political stability.
The current situation will offer profitable opportunities that may simply be temporary. And that temporary time frame could be a decade or so. However, the outcome is not ordained to be widespread starvation.
Much of Africa is capable of generating good output
Yep, and thats why China has been buying African framland like a mother for the last 3yrs.
Jim is the shit. He calls Ben and Tim liars and says outright that QE is failure.
Guys i really do think you are safe with power shares agri etf's. Many countries have gone through hyper inflations and shares of companies that are commodity related do ok. A natural gas pipeline is not going to disappear in a hyperinflation either, but hyperinflation is doubtful. Pressure on foodstuffs from moderate inflation and unrelenting third world population growth is probably a good play. If you really seriously believe in hyperinflation plant a few easy care fruit trees and bushes that dont require spray. Liberty apple, blight resistant pear, surefire or montmorency cherry for east of the rockie rspecially humid southeast. Blackberry and raspberry. Ferfal said a dingle fruit tree put a family way ahead of the pack in the initial stages of the argentinian collapse. But power ag shares are just fine.
buy the futures don't buy the companies, companies go broke, while the price of the commodity will rise. sell the MOO buy the COW
Probably a good time to listen to old Jim.
Driving over the road for a living I see an amazing amount of fallow land that has neither been plowed nor grazed in decades. Much of it covered in non commercial brush. East of I35 where you can dry farm. We will get by...
Food shortages have a way of redefining what constitutes arable land. I was in Cuba (legally, as a journalist) during the worst of the "Special Period" in the 90's. It was common to see median dividers in Havana streets planted with a few stalks of corn.
Instead of trying to get rich by speculating in agricultural equities, think about making yourself food secure, less dependent on the just-in-time delivery system currently in place. Think stocks of food, not food stocks.
The MAJOR problem with this advice is the average retail investor cannot get safe exposure to agriculture. Buying ETFs or futures doesnt count - paper is paper. With PMs at least one can hold them ,hide them, barter with them, for when the inflationary holocaust arrives.
True,
I am long CRESY, AGRO, CZZ (South American Ag) BG, ANDE and a few ETF's.
Trouble is, these valuations are HIGH and ETF's are volatile.
Worse - much of this paper is non-opitionable.
Wonder if Jim (or others) have any better 'paper' picks??
paper is one commodity there is plenty of. buy direct
http://secmal.blogspot.com/2011/02/union-going-under.html
I would stay the hell out of agricutlural speculation it's going to come with karmic backlash.
Yes, speculators are going to be skewered at some point, probably literally, and resources will be nationalized. Not only would you need real titles, but real political power
Do you still believe in karma after the banksters continue to get record bonuses?
Midas, it´s Early Days Yet, Whoever would have thought in 1941 that Hitler would die by his own hand 4 years later?
See what I mean?
(Reuters) - The 20-year-old son of former Enron President Jeffrey Skilling has been found dead of unknown causes at his apartment in Southern California, police said on Thursday.
To me, ag isn't a slam dunk. At a certain point, unless incomes rise, higher commodity cost make buying food, iPhones, etc cost prohibitive. Unlike the '70's when workers wages were tied to CPI, there is no mechanism for inflation to feed through to wages quickly enough. As soon as inflation gets above a certain point, profit margins compress, consumer spending drops off a cliff, and companies have to respond to lower demand, i.e. slash payroll. Result, moderate inflation with no growth, i.e. stagflation.
Depends on the country you live in. Sure the prices will be effectively the same however the world's most powerful governments (with respect to how many people they govern) regularly implement price levels to ensure their people can eat.
Don't hold you breath for the US or Europe doing that - free market, Keynes and all that BS.
We in the west have the most to lose here, period! There's a lot more mouths in the other countries and with them sitting on massive surplus reserves it means they can afford to actually buy the stuff when the shit hits the fan,
Step 1 - try to convert as many useless greenbacks for commodities as you can (already happened/happening)
Step 2 - start your own trading exchanges denominated in CNY and pay a premium over the USD denominated exchanges whilst you secretly print shitloads of your own currency in an environment where you have no requirement to report it.
Step 3 - dump your remaining treasuries
Just an idea however people in the west do not give the chinese any credit for how entrepreneurial they really are! Every time you go to pay with a 20CNY (US$3+) bill they check it for fakes. Their currency is incredibly bogus, I have been to printers in China that have currency in their display folios for you to admire their quality of work. Also you can buy 100 fake CNY for 20 real CNY if you like, they just say " you shouldn't use it" LOL
The west is fighting in a rigged game here and there's no lube being used by the Chinese.
But first the Soldiers must be very well fed.
Then the top 1% can stay relaxed.
+
grow your own....
How can you not like Jim Rogers? I especially remember seeing him do a CNBwhatever interview around December 08. Jim talked about commodities of course and how he was long physical silver and gold. And Jim was saying that he was really in on the physical stuff. He specifically promoted Silver and Gold Eagles. This was when spot silver was around $11. When Rogers had reached in his pocket to show the TV audience a gold coin the Talking Head had grabbed Rogers’ hand and pushed it down on the table like it was dangerous to possess or show gold to people. It was odd. Anyway, I’ll bet Rogers is correct big time on the agricultural commodities but like the Navigator I no longer do paper. Not with the current potential for instability. The only thing I never understood was how did Jim Rogers ever hook up with that Rothchild connected monster George Soros?
money knows money...
Ag commodities: they are real and they don't go to zero.
if i recall correctly he predicted that soon farmers will be driving (expensive luxury high-performance sportscar)s, and investment bankers will be driving tractors...
long
parsnips..
Jim Rogers is a genius and he's probably right about ag commodities going to the moon.
But I don't buy paper anything - stocks, etfs, bonds, BS, BS, BS - and since I can't store 10k bales of cotton in my garage, PHYSICAL Ag & Au are the only play left for me. But I'm happy with my Precious's.
Tyler - saw your story on Sarkozy dissing Dimon on the Max Keiser show (RT) today - big congrats and may the truth rein on.
don't have to buy the commodities and store them. Buy the farm ground! No better income producing property right now and one that is going to keep appreciating at breakneck speeds.
Buy a walk-in freezer and round up your own herd of frozen heifers! Just kidding, hardly more economical than the cotton bales, but just think, each pound of beef represents so many pounds of grain.
dupe
my attic is full of PORK BELLIES!!!!
so that's where Uncle Jimmy went ;-)
Tough business though farming, always some other organism that is looking to consume your production. Kind of like the government, except that unlike say, grasshoppers, the government doesn't go away in the autumn.
perfectly researched and well written! total genius! so, where could I learn more about agricultural futures?
http://covert2.wordpress.com
Growing your own food. What a concept. Non chemical real tomatoes and green beans and potatoes and herbs that you can smell at 25 feet. It's work, but the good kind. Free tans, plenty of Vitamin D and low cost exercise.
Kinda like owning physical gold, but you can eat it! (That was a funny. Being comic-ly challenged, I have the need to point that out.)
I find it a testament for humanities incapability to achieve something of real value...
Ok, so we can put someone on the moon, and build atomic bombs and computers... but we have problems to fight bugs and bacteria in our agriculture???
I see a big imbalance in knowledge...
Why so many people in economic sciences but no real breakthroughs in agriculture or water treatment???
Why??
Why???
i guess you ignored the whole monsanto, round up proof, seed debates