Jim Rogers Speaks Out on Oil & Gas
By Jon A. Nones
16 Jan 2006 at 05:22 PM EST
ASPEN (ResourceInvestor.com) -- Famed Wall Street legend Jim Rogers told institutional investors at the International Oil & Gas Investor Forum in Aspen, Colorado, to move toward commodities – and fast.
“If you’re good at buying stocks, do so, otherwise you’re better off investing in commodities,” said Rogers.
In a presentation that went around the world, Rogers examined the U.S. currency, stocks, bonds and, of course, Asia to explain his viewpoint. Overall, he said commodities are in a bull market and oil & gas could be investors best bet.
Picking up where Frank Holmes of U.S. Global Investors, Inc. left off in the morning, Rogers wasted no time in hitting upon China and its soaring economy, telling listeners to “teach your kids Chinese.” He painted a picture of insatiable demand for commodities in the country, fueled by an enormous population, thriving economy and a will to succeed.
“China is the next great country of the world, like it or not,” he began.
According to Rogers, China has the best capitalist market in the world right now. Asians are willing to work as hard as they have to in order to become as prosperous as those in the West. They don’t ask how many sick days they will get, or what holidays they will have off; instead they ask when they can work, Rogers said. And they work for far less than we do.
“Most Chinese don’t have electricity, they’re going to get electricity,” said Rogers, adding that the power will obviously have to come from energy sources like oil & gas.
Rogers next tackled the topic of the U.S. dollar and where it’s headed – a popular topic with analysts these days.
“It is now a terribly flawed currency,” he said.
The U.S. now owes the rest of the world $8 trillion, and adds on average $1 trillion every 15 months, according to Rogers. The total U.S. debt remains at about $43 trillion.
Future Federal Reserve Bank Chairman Ben Bernanke, as most of us have already heard, has said that the Fed controls the printing presses and will run them as much as needed to keep the economy going. And, as most of us already know, this quick fix has serious long-term repercussions, mainly mass inflation.
Even Asian banks – the five largest investors in U.S. bonds – are becoming concerned, Rogers added.
So with this said, where should investors put their money? You guessed it: commodities.
“You have to find a way to make money from it,” Rogers urged.
He listed the three possible avenues investors can take.
Bonds
Stocks
Commodities
Rogers plainly said the bond market is “not a place for your money.” A meager 4% gain per year is not going to do it, he said.
Rogers said that stocks would continue to fluctuate in the market, and for the most part, investors would not get the gains they seek.
But commodities…
“Most people in the world don’t know that you can buy and sell commodities,” Rogers explained.
He said when people do catch on, this could launch the bull market for many years. Rogers added that in his experience, the shortest bull market in commodities lasted 15 years, while the longest lasted 23 years.
“It takes a long time for bull markets to come on stream and a long time for people to take advantage,” he said. And Rogers said the oil & gas sector could be just the place to take advantage.
According to Rogers, all the great oil discoveries were made over 30 years ago. Reservoirs in Alaska, Mexico and the North Sea are in decline, he said. Not to mention, nobody really knows how much oil Saudi Arabia really has.
“Since 1988, Saudi Arabia has said it has 260 billion barrels of oil – that’s 18 years of the same number!” Rogers said.
He added that the U.K. has been an importer of oil for years, and China has recently gone from an exporter to an importer. Although Russia has huge amounts of reserves, it hasn’t put forth the work to get wells online, Rogers said.
“When supply goes down and demand goes up, that’s a bull market,” he frankly put. “Unless someone discovers a substantial amount of oil soon, the price is going to keep going up.”
Aside from oil & gas, Rogers did add that agricultural commodities could prove very valuable as well. He said sugar, wheat and soy haven’t moved nearly as fast as the metals and are far from all-time highs.
“By 2018, everyone is going to be investing in commodities and everybody is going to be screaming that commodities are going to go up forever,” Rogers concluded
