Friday, May 14, 2010

Jim Rogers: Commodities will Continue Roaring

The combination of increasing demand and decreasing supply has Jim Rogers a perpetual bull on the commodities market, and I think he's right.

Even with the news of China taking measures to battle its inflation, it's not a matter of whether they'll continue to acquire commodities, it's at what level they'll continue to buy them.

That isn't to say there won't be a slowdown in demand for specific commodities, but it won't dampen the bull market, but more than likely will extend it out further, albeit possibly a little smaller of a pace.

The same is true of the EU sovereign debt crisis. That, coupled with China, could definitely hurt individual commodities, and by extension, some raw materials companies, but the overall commodity bull market will continue, just some of the individual commodities within the sector may have prices drop.

Rogers likes to point out that oil demand will continue to grow while known supplies dwindle. That means ultimately oil prices will rise in response to that. It's only a question of when, not if, in Rogers' view.

One thing that Rogers has been warning about for some time and governments and central banks have refused to heed, is the bailing out of nations in Europe.

Rogers said if the European Union was really serious about the euro, they would never take the step of bailing out Greece. Not that they've not only bailed out Greece, but have put close to $1 trillion on the table for the welfare, socialist states to get hold of, he was shocked, and while before he doubted the survival of the euro, now he's adamant that there is no way it can survive in the years ahead, and it could come much quicker than he originally believed. That of course would mean the end of the EU, but that's no loss. Countries in Europe survived for centuries without the EU, they'll survive afterwards as well.

Rogers major thinking on the demise of the euro is, now that the irresponsible countries know they can get away with their over spending, they can continue on with their ways with no consequences.

While there are laws being written by these countries to put so-called austerity measures in place, we all know they'll write down anything and agree to it to get their hands on the trillion dollars.

Worst though, rumblings from the clowns running the Federal Reserve seem to imply there will be much more bailout money coming to the socialists, and they are attempting to spin that as the need to bail out the banks heavily exposed in the region.

While that's actually true, it's the banks enabling the entitlement cultures that have led to this, now those in northern Europe, and now in the United States are being called upon to rescue these deadbeats who continue to spend out money with impunity, while the banks of the world contribute to their drunken spending habit by buying up their bonds. That's why banks are in trouble. That's why we need to stop it.

Anyway, as far as commodities go, there is a finite amount of resources with the technology now at our disposal, and Rogers says that is the reasoning behind the extended bull market that could go on for more than another decade.

As far as currencies, Rogers said this will add to the commodity bull market, as they're all being debased, and investors are getting smarter and smarter as far as understanding that, and will put their money in real assets rather than paper currencies, which only survive as long as people have faith in them. That faith is waning, and that's good news for commodities, and good news for those doing their homework and investing in them.

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