The front window of the US economy.
Rogers stresses that his predictions of doom will not come true in the next year. 2012 will see economic growth, and investors should not worry yet.
“This year’s fine,” he told CNBC in a recent interview. “Worry about 2013. Be panicked about 2014.”
This is why Rogers is legendarily short on both American and European equities. Weak currency policies will result in higher inflation, and the unwillingness of global authorities — particularly the United States — to take needed steps has made Rogers gloomy.
In the case of the United States, eventually the Federal Reserve will be unable to maintain its low interest rate policies or finance the federal deficit by expanding its balance sheet.
When this happens, Treasury bonds will have to compete for investment capital at market interest rates. This will send mortgages higher, devastating the real estate sector. Equities will suffer as fixed income instruments will offer much higher yields, as in the 1980s.
It is indeed a gloomy scenario. Investors looking to profit from it can follow Rogers’ lead by investing in silver (NYSEArca:SLV, quote), the Chinese Renminbi (NYSEArca:FXCH) and commodities (NYSEArca:GCC).
Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.