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Jim Rogers: Dollar Is Doomed, Own Real Assets

June 13th, 2011

When it comes to the U.S. dollar, Jim Rogers is “incredibly pessimistic about the long term, or even the intermediate term future.” He’s also long the dollar and feels there are “plenty of reasons that the U.S. dollar could rally.”

How can he reconcile the two? Easy: he’s a trader.

The legendary investor and author of multiple books on trading, global economics and even advice for his children isn’t one to mince words or hedge an opinion. He’s both blunt and clear about his feeling that printing endless money will end in tears for the greenback. He just doesn’t seem to see how such a view should screw up a long dollar trade.

“Ninety-eight percent of the world is pessimistic on the U.S. dollar,” says Rogers with a shrug when asked to flesh out the conundrum of being long an asset he thinks will end up being worthless. It’s a trade, not a bullish theme. Of course, Rogers never made a trade he wouldn’t exit, and his long-position on the dollar is no exception. “If it goes down, I’ll have to sell it.” he says, adding, “if it goes up, I’ll probably sell it.”

Rogers won’t be hiding in the euro any time soon, either. He calls the prospect of Germany and other relatively disciplined EU nations being asked to bail out “ouzo-drinking Greeks” absurd on an economic and moral level. It’s becoming increasingly expedient for non-PIIGS (Portugal, Ireland, Italy, Greece, Spain) to pull the plug on bailouts. Doing so would be both logical and wise, and the United States illustrates the folly of trying to avoid paying the price for economic profligacy.

Where can a non-trader turn? Gold and hard commodities. Rogers regards both as a way to play Asian growth and avoid being stuck in dollars when the inevitable day of reckoning for the dollar arrives. Gold isn’t a bubble, he says, despite being likely to end in a bubble blow-off, as so many long-term rallies do.

Related ETFs: SPDR Gold Shares (NYSE:GLD), First Trust ISE Global Copper Index (NASAQ:CU), iShares Gold Trust (NYSE:IAU)



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