Jim Rogers 2012 investments


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Transcription of Finance News Network interview with American investor and author, Jim Rogers.

Lelde Smits: Hello I’m Lelde Smits from Australia’s Finance News Network. I sat down earlier with Jim Rogers, American investor and author based in Singapore, to hear about his 2012 investments.

Now Jim with all the volatility we’ve had, precious metals are typically seen as insurance. The price of gold is up 12 per cent for the year, but I know you don’t like to be on the side of the boat with company. Are we due for a correction?

Jim Rogers: Well Lelde, gold is up 11 years in a row which is very unusual for any asset, throughout history that’s very rare. So gold has been correcting for three or four months, it’s going to continue to correct in my view. I own gold, I own silver, I’m not selling them, I expect them to continue the correction and I hope I’m smart enough if they go down more, to buy more. And if they go down a lot more, I’ll buy a lot more.

It would not surprise me at all to see gold at $US1,200 or $US1,300 an ounce, sometime in the next year or so. If that happens I hope I’m solvent enough, and smart enough, and brave enough to buy more.

Lelde Smits: But many speculate gold will be north of $US2,000 an ounce, especially on another round of quantitative easing. Do you agree?

Jim Rogers: Well, yes absolutely. Gold will certainly go over $US2,000 sometime in the next few years, there’s no question about that - maybe go much, much, much higher if they continue to print money in the developed world the way they have been. Just in the meantime, I would not be surprised at a correction as I say, it is correcting. I hope it continues to correct, I hope I buy more.

Lelde Smits: So Jim at what price will you be buying gold?

Jim Rogers: Lelde I’m not smart enough, watch FNN. You can find people on FNN who can tell you every day.

Lelde Smits: You mentioned before between $US1,200 to $US1,300 an ounce, would that be tempting enough for you?

Jim Rogers: Well if it goes to $US1,200, I hope I’m smart enough to buy a lot more. I would not be at all surprised to see gold at $US1200 or $US1,300 an ounce sometime in the next few months. I have no idea why, except that it’s been so strong for 11 years in a row. But Lelde, if America goes to war with Iran, I might buy gold at $US2,000 - you know, I won’t wait anymore, I’ll have to buy it as it skyrockets. But at the moment I’m waiting for more correction before I buy gold.

Lelde Smits: OK Jim, so where else should investors be looking for safety?

Jim Rogers: Agriculture is probably the safest place in the world right now as far as I’m – but Lelde, I don’t like to use the word safe when I talk about the investing world. There’s no such thing as safe, at all. There’s no such thing as safe when you’re talking about investing. Even if people put their money in cash – what kind of cash? If you put your money in the wrong cash, if you put your money in Icelandic Krona a few years ago, you thought you were doing something very conservative and safe, and you got wiped out. So you have to be careful using the word safe. Agriculture in my view is going to be one of the best areas of the world economy in the next few years, whether you buy farmland or buy farm products or become a farmer - Lelde, become a farmer. If you really want to have a great future for the next 30 or 40 years, learn how to drive a tractor.

Lelde Smits: That’s certainly something I might consider Jim. But in the meantime, how is investing in stocks different to investing in commodities when both experience price fluctuations?

Jim Rogers: Lelde as I said, everything experiences fluctuations. I don’t know anything that doesn’t experience fluctuations. If you look at the stock market over the past 15 years or so, it’s fluctuated much more than the commodities markets. People say things like, ‘oh commodities are too dangerous' – ha! Look at the NASDAQ in the United States; look at technology in the United States if you want to see fluctuations and problems. Everything fluctuates and if people don’t understand that, they should not be investing. This is a difficult and dangerous way to make a living.

Lelde Smits: OK Jim, now if we can turn to your interests in Australia. You recently teamed up with a local group as an outside independent advisor for a new unlisted closed end rural land fund, called the Laguna Bay [Pastoral] Company. Could you explain what your role entails and how the fund works?

Jim Rogers: I’m just exactly as you said, I’m an outside independent investor. When they want somebody to give them a view, or a different view, they call me up and I answer questions. I help them try to figure out the best way to make money in the next couple of decades. And, as I said before, agricultural, farming- If you buy the right land and you find the right farmers, you’re going to make staggering amounts of money because agricultural prices will go up, the value of the land will go up, your profits will go up every year. That’s where the most money’s going to be made if you can find the right land and the right farmers.

Lelde Smits: So how many properties or hectares has the fund identified to buy?

Jim Rogers: We’ve found lots of hectares to be purchased. We haven’t bought any yet, we’re in the fund raising stage at this point. But we’ve found farmers, we’ve found hectares, we’ve got to find money.

Lelde Smits: And in which States have you identified those opportunities?

Jim Rogers: In the south-eastern part of Australia for the most part.

Lelde Smits:  So which countries are you eyeing for investment into agriculture?

Jim Rogers: Well you know the agricultural countries as well as I do. Brazil is big, Argentina, America, Canada. I’m not looking at America but the agriculture powerhouse as we all know. New powerhouses that are developing, maybe in Africa; we’re looking at Africa, not with Laguna but I am with other people looking at Africa. Myanmar is perhaps the most exciting investment nation I know, as we speak here in 2011. Myanmar is where China was in 1978; they’re just opening up and starting over. So Myanmar I find very exciting, especially for agriculture. There are places, and Africa - I cannot tell you how much money is going to be made in Africa. The Chinese are down there buying up as much agriculture as they can in Africa. There are great opportunities in the world. The West and the developed world may have serious problems facing us, but there’re spectacular opportunities out there Lelde. Don’t get despondent.

Lelde Smits: So what factors will keep the demand for agricultural land strong?

Jim Rogers: Well, one is that the world continues to become a bit more prosperous and the population continues to grow - no question. But more important Lelde, the inventories of food are now among the lowest in recorded history. We’ve been consuming more than we’ve been producing for at least 10 years now and we’ve got great shortages facing us Lelde. The average age of farmers in Australia is 58, in Japan its 66, in America its 58. Huge numbers of farmers in India commit suicide every year, likewise in England the highest rate of suicide of any profession is agriculture. In Spain you have old people just leaving the farms, they can’t do anything anymore. So we’ve got big shortages of farmers developing and the only way that’s going to change is that prices go high enough to make agriculture attractive, to attract capital, labour, management. Become a farmer, when I say learn to drive a tractor I’m quite serious.

Lelde Smits: I know you are and I also know you are very keen to invest in agriculture. Do you have any stock picks for the segment?

Jim Rogers: Well I mainly invest in the agricultural product themselves, because I’m not too optimistic about stock markets around the world. So I invest in the agricultural products themselves through index. I actually buy the Rogers agricultural index, is what I do. I’m sure that there are plenty of stocks that would do well in this period of time; I just don’t know many of them because I’m focusing on commodities themselves. If you were a good stock picker Lelde, you’ll make a lot of money picking the stock.

Lelde Smits: So Jim for investors keen to follow in your lead, how do they get their hands on the land?

Jim Rogers: On the land? Well get in your car and drive out to the farm belt and look around. There are many ways to do it. You can do something like Laguna Bay, you can put money in that fund. There are other people doing the same sorts of things. Buy a farm. If you’ve got a brother-in-law who’s got a farm, be very nice to him or you know, if your uncle is still a farmer, be very nice to him. There are plenty of ways to invest in farmland if you are ambitious and can do your homework.

Lelde Smits: So is it good enough to just buy the land itself or are managed funds the way to go?

Jim Rogers: Don’t buy the land itself unless you know what you’re doing buying land or unless you can find a farmer. No, there are plenty of people who are going to do foolish things and go bankrupt doing that. I wouldn’t buy the land myself because I don’t know anything about farmland. I wouldn’t farm because I wouldn’t be a good farmer. If you know those people – sure, otherwise if you can find smart people with a fund, be sure they are smart people, be sure they know what they are doing, then that’s the best way for many people.

Lelde Smits: But if we can look at some potential downsides here. When agriculture is so susceptible to out-of-control factors such as environmental conditions and commodity price fluctuations, is the risk really worth the return?

Jim Rogers: Lelde, what’s not subject to outside conditions? Stocks, you know, have got to worry about central banks and of war. They worry about all sorts of strikes, riots in the streets; everything is subject to outside influences. I don’t know anything that’s not subject to outside influences including gold and silver for that matter. So certainly agriculture’s got those problems. But, if you do the right thing and if you do your homework, in my view you’re probably going to make a lot of money. Because, the overall macro conditions in agriculture are very, very positive for higher prices in the future.

Lelde Smits: So how much consideration do you give to sustainability when buying and owning land when as we know, nature is such a finite source?

Jim Rogers: Well that’s the most important – I mean this fund for instance, Laguna Bay, it’s designed to be around for ten or twenty years. You’ve got to have sustainability or you won’t show any profits in the future. Many people who are in there to strip assets, especially in agriculture, will lose out in the end because it’s got to produce products every year, and you want it to produce more and more every year, if possible.

Lelde Smits: Now the Australian Government tells us we’re in a mining boom and you certainly still seem bullish on commodities. But can you foresee a bust and if so, when?

Jim Rogers: Oh no, the commodity bull market will end in a bubble someday and there’ll be a collapse but that’s at least 10 years from now, and that’s not any time soon. There is a commodity bull market going on, it’s been going on for 12 years now and it’s going to continue for at least another 8/10 years, I don’t know how long. But in the end, what would happen Lelde, is you will have the thing will end in a big bubble. I hope I’m smart enough to sell at the right time. But the bubbles a long, long way away yet.

Lelde Smits: So Jim if owning nature is the next best thing, where will you be looking once your side of the boat starts to get crowded?

Jim Rogers: Oh well I don’t know Lelde, let’s talk in ten years OK? Mark your calendar and I’ll see you in December of 2020 and we’ll talk about I hope, perhaps by then, the bubble will have developed in commodities. If it works that way, I hope I’m smart enough to sell. But then I’ll be looking around for whatever else is depressed and where the opportunities are.

Lelde Smits: Jim Rogers thanks so much for your time today and wishing you a very happy year of investing ahead.

Jim Rogers: Likewise, I hope we can do it again sometime.


Click to watch Pt I: Jim Rogers 2012 global outlook

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