Tuesday, October 16, 2012

Why Jim Rogers is Long U.S. Dollar

When listening to the wisdom of Jim Rogers over the years, especially as to how the failed policies of the Federal Reserve have debased the U.S. dollar to the point of being valued at over 95 percent less than it was when the Fed was instituted almost 100 years ago, it's surprising to some to hear him say he's long the U.S. dollar.

Rogers continues to be long on gold, but because the U.S. dollar usually goes in the opposite direction, it seems counter intuitive as to the realities connected to the relationship between the U.S. dollar and gold.

Because Rogers believes there will be much more turmoil in the markets going forward, he sees people throwing their money at the U.S. dollar because it is perceived as a place of safety for capital.

But Rogers notes that his being long the dollar has nothing to do with the strength or safety of the dollar, but rather upon the fact that is is perceived to be a place of safety by the vast majority of investors.

So there is no doubt when the chaotic conditions of the market are reflected in the performance thereof, people and institutions will pile into the U.S. dollar, making it appear to be strengthening, even as the failed policies of the Federal Reserve continue to undermine and debase it.

In other words, Rogers is essentially investing in the guaranteed behavior of the stampeding crowd as it relates to the U.S. dollar in uncertain markets, and because of that he can be long gold and the U.S. dollar at the same time, and make money on both.

No comments: