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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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EVERYTHING under the sun comes down to one word"
INCENTIVES
With the right incentive (or removal of disincentives) ANYTHING can be done.
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Sad but true. If enough people become aware it can be turned around.
Buy Natural gas; if there is a pole shift occuring, commodity scarcity may be the LEAST of our problems.