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June 05, 2006
Jim Rogers, Commodities and the Dollar
Jim Rogers gets the lead story in Barron’s over the weekend. Among other pursuits, Rogers worked for George Soros in his famed Quantum Fund and rode a motorcycle around the world for 20 months (see Investment Biker at Amazon.com). He not one to mince words and this paragraph sums up his outlook pretty well:
To Rogers, the past few years have witnessed another changing of the guard; commodities will rule over stocks and bonds for the next decade or more. Inflation will continue to flare and not just because of rising raw-material prices. According to Rogers, new Fed Chairman Ben Bernanke is "an amateur with no knowledge of markets" whose academic work revolved around how nations could avoid depressions by printing more money. And, finally, he throws into this witches' brew the likelihood of a collapse in the dollar as a result of America's accelerating debtor status. Rogers views commodities as the ultimate refuge from these scourges.
What would Rogers see if he were a technical analyst?
The US Dollar Index bounced off support at 80 and he would expect the index to break 80 and head much lower. This would break a 16 year support level and be mighty bearish for the greenback. Notice that the index recently broke rising wedge support (gray oval) and is already headed for a support test.
Rogers is also bullish on commodities and would view the breakout at 250 in the CRB as the start of a 20 year bull run. The CRB trended lower for 20 years so why not trend higher for 20 years. The only problem is that if the world stock markets turn south and take the world economy with them, demand for commodities will dry up.
Posted by Arthur B. Hill at June 5, 2006 03:29 PM