Jim Rogers Still Optimistic On Commodity Prices

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August 31, 2015 3:00pm NYSE:USO

jimrodgersTara Clarke:   When Jim Rogers speaks, investors listen.

His Quantum Fund gained 4,200% to the S&P 500’s 47% from 1973-1983 – just one feat exemplary of Rogers’ market intuitiveness.

The commodities guru is credited with calling the bottom in oil prices in the late 1990s.

On Aug. 24 – “Black Monday” – JimRogers appeared in an interview with BBC’s Radio 4.

At the time, the Dow Jones Industrial Average had just seen its largest intraday decline in its 133-year history.

It fell 1,089 points after the opening bell that day, ultimately closing down 586 points.

The S&P 500 came within 34 points of triggering a market-wide circuit breaker.

Jim Rogers

The stock market sell-off took its toll on commodities…

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Brent crude oil prices also slid into a free fall.

The international benchmark has plummeted 18.8% in August so far, dipping below $44 a barrel.

Futures have fallen 38.6% from the 2015 high of $69.94 seen just over three months ago.

WTI crude oil prices have fallen even more – the U.S. benchmark has tumbled 20% this month, 34.6% this year, to hit below $39 a barrel.

There are ample reasons to be pessimistic about commodities right now.

But according to the famously contrarian Rogers, investors shouldn’t rule out a comeback for the depressed sector…

Jim Rogers Interview Optimistic on Commodity Prices

“As far as commodities are concerned, it’s all about supply and demand, and you’re having huge cutbacks in supply,”

Rogers told BBC’s Radio 4. “We’re already having supply problems in some agricultural products, and we’re going to have problems with oil products.”

“So I don’t think that the bull markets in commodities have gone away forever, because supply is going to be a [factor]. You can have a bull market with flat demand or even declining demand if supply is not there.”

Of course, oil prices in particular have been under pressure since last summer.

The U.S. shale and fracking boom and high oil production have created a supply glut.

Still, according to Rogers, the oil market is perfectly capable of curing itself…

“One old saying in the investment world is that the cure for low prices is low prices.”

“They solve themselves as supply dries up,” Rogers said.

“Oil reserves have been declining all over the world.”

“We’ve been consuming more than we’ve been finding, and now the frackers are out of business.”

Or will be out of business soon, they may not know it yet, but they are going to be out of business soon.”

“So don’t give up on commodities.”

Money MorningWritten By Tara Clarke From Money Morning

We’re in the midst of the greatest investing boom in almost 60 years. And rest assured – this boom is not about to end anytime soon. You see, the flattening of the world continues to spawn new markets worth trillions of dollars; new customers that measure in the billions; an insatiable global demand for basic resources that’s growing exponentially; and a technological revolution even in the most distant markets on the planet. And MoneyMorning is here to help investors profit handsomely on this seismic shift in the global economy. In fact, we believe this is where the only real fortunes will be made in the months and years to come.

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