Tuesday, October 21, 2008

Commodities are in "Forced Liquidation" - Jim Rogers

Jim Rogers, CEO of Rogers Holdings said in an interview with Commodity Online that the commodity bull market will last longer than he originally anticipated because of the financial crisis around the world.

Historically, said Rogers, there have been eight or nine periods of what he calls "forced liquidation," where people sell everything regardless of the underlying fundamentals. He added that this is one of those periods.

He explains it this way: ”The cyclical demand for commodities may slow, but the secular supply will be badly affected so the commodity bull market will last longer and go further in the end.”

What this means is the rate of growth will slow, but nothing has changed in the long-term demand for commodities in the emerging markets. Natural resources will continue to be needed for many years to come, and that means commodities will remain in demand.

Illiquidity is what's holding things back at this time, not the demand that hasn't changed. As Rogers said, people are being forced to liguidate in order to get access to immediate funds. When that's over, we'll go back to the commodity bull market as defined by the fundamentals of the market.


Other Insights from Jim Rogers:


Jim Rogers: Where he's putting his money

Jim Rogers: We're Facing an "Inflation Holocaust"

Jim Rogers: History Reveals Bailouts do more Harm than Good

Jim Rogers: Government Bailout a Huge Mistake

Jim Rogers: People Don't Understand Commodities

Jim Rogers Says Commodities Should Come Back Strongly

No comments: