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I had the pleasure to
talk with the famed investor and world traveler Mr. Jim Rogers on February
2nd, 2009 and I have finally gotten to transcribing
the conversation. Unfortunately I
caught him in the middle of a festival and time was short and I didn’t
get to ask all of my questions. This will be a two part interview.
WB You’ve warned in the past that the
US dollar will not remain the worlds reserve
currency forever. You said the
Euro is the only other feasible choice today but in ten or fifteen years
possibly the Renminbi could be the worlds reserve currency.
JR Well what I said was that if things
happened today the Euro would replace the dollar because there is nothing
else. I said that twenty years
from now perhaps it might be the Renminbi because I
don’t expect the Euro to be around in twenty years. If it happens in ten years I
don’t know what would replace the dollar, but something is going to
replace the dollar. I have no
idea how it’s going to work out but I do know throughout history
currencies that have gotten themselves into this kind of trouble have always
lost their status.
WB Have you read or heard about the recent
story by the UN crime chief detailing how banks have been receiving drug
money as well money from governments?
JR Well, I mean I have no idea, the
banks are receiving all kind of money to keep them going. So I know I’m not putting money
into the banks. So I don’t
know where their getting their money, a lot of it’s coming from
governments around the world. And
I don’t know about the rest I have not read and am not familiar with
that story.
WB What are your thoughts on Geitner? He
came out last week and said that mark to market accounting has caused damage.
JR Well that is a very large part of America’s
problem and he’s been wrong for fifteen years in a row, he has never
been right about anything that I can see. He was in charge of the New York Fed
when he was supposed to be supervising the banks and Wall Street and he
didn’t have a clue what was going on then. And then when the problems erupted he
started taking the action which are going to make
things worse.
He is crazy if he thinks
mark to market accounting is the problem or makes things worse, I mean if
everyone continues to use phony books the banking system is never going to
recover. If you come to me and
say look, I’m worth a million dollars, and I look at your books and say
wait, these are phony books I’m not going to do any business with you
no matter what your phony books show.
If you come to me and say
look, I’ve had a huge loss, I’ve got a problem, I’m only
worth $93,000 but this is it, this is real then chances are you and I will
start doing something from a lower base but if we know the situation then we
can move forward. If you give me
phony books, and say let’s move forward, it’s not going to work
with anyone, maybe with Mr. Geitner, but not with
anybody else.
WB What do you think about the uptick
rule? Should it be reinstated?
JR Well I don’t think so, but if
they do, it’s not the end of the world. Short sellers are not what’s caused these problems. I mean Fannie Mae didn't collapse
because of short sellers. Bear
Sterns and Lehman Brothers didn’t collapse because of short sellers, look
at their balance sheets you’ll see why they
collapsed. Short sellers are just
the messenger they’re not the problem.
WB I agree, that’s not what brought
these institutions down, it would maybe have slowed
things down if the uptick rule was there, but that’s about it.
JR It just unjust, they don’t
have a down tick rule. No rule
that says you can only buy on a down tick, and my god every day people on TV
and in the press promoting stocks and promoting all sorts of things trying to
hunt for people to buy them there is nothing to protect the poor people who
believe that stuff.
So no I think it’s
a waste of time but if they want to do it, it’s not going to be the end
of the world.
WB Right. What are your thoughts on investing in
gold and silver ETF’s or ETC’s or even pool accounts rather than
the physical?
JR Everyone has to make their own
decision I use physical and I use many things like futures when I’ve
gone in the past but everyone has to make their own decisions.
WB What do you think about the disparity
between futures prices and if you want to go and buy a coin. You go and try to buy a coin of gold
and your lucky to pay
$1,000 today, silver your lucky if you can get it
for $18 $19 dollars american but you see the Comex price is $12.04, I think it was today.
JR Well I don’t know why anybody
would pay that kind of premium.
What happened was all the dealers went and bought huge silver supplies
back when silver was at $20 and now their stuck and
they don’t want to take a loss and so they are telling people they
don’t have coins.
I promise you sir if you
offer $25 for silver coins you’d get all you wanted. There is no shortage. It’s just that the shortage is
because the dealers bought huge inventories that they don’t want to
sell at a loss. So I think
it’s happening, dealers are just refusing to
buy them.
They’re there, I
don’t think we are running out of silver coins my god, there are
millions and millions of silver coins, it’s the dealers are stuck. And to some extent the same is with
gold as well.
I promise you, call up
and offer $1,100 for gold coins, you’ll get all you want.
WB I understand that, that makes a lot of
sense. What do you think about
all the base metals mines closing?
Do you think silver, as a byproduct of all these base metals, do you
think that will cause any trouble in the future?
JR The only exception that I know of in
the world that has an improving fundamental are
commodities. Nobody’s going
to open a mine of any kind probably for another decade or so, and it takes
ten years to open a mine.
Nobody will be able to get any money for a long time, in the meantime
the reserves of all the mines in the world continue to decline. I am sure some are closing. But the ones that are open are still
producing so you have declining reserves of oil, metals, agriculture
everything so all the things that are going on are improving the fundamentals
for commodities.
I know nothing else where
the fundamentals are improving because of what’s going on.
WB There have been quite a few gold companies
raising capital actually, one of the few industries that are able to raise
cash right now. There are a few
gold mines opening because the price has held up and they can actually make
money. Their costs are going down
recently, so that’s a good thing.
JR If you own gold it’s not a
good thing. If they are opening
it means even more supply coming.
But it’s my understanding that most of these mines are pretty
small potatoes, I shouldn’t really say that because I don’t
really know. But it’s not
good for gold if mines continue to open.
It is good for zinc that mines are closing and that other mines are
not opening.
The second part will be out on Thursday so please stay tuned. If you would like to receive it directly
in your inbox please sign up free for any articles and our free weekly gold
and silver focused newsletter ay www.preciousmetalstockreview.com or send an email to postmaster@preciousmetalstockreview.com with “subscribe” as the subject.
Thank you for reading.
Warren Bevan
www.preciousmetalstockreview.com
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