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22 December 2009 at 05:35 IST
Farmers, not bankers will drive Ferraris: Jim Rogers
NEW YORK (Commodity Online): Where is the global economy heading? Legendary investor Jim Rogers and global investment guru Marc Faber have interesting outlooks on how the financial crisis sweeping across the world is a tip of the ice berg.
Rogers and Faber argue that the US dollar is on a path to death and gold prices will continue to rise on the declining dollar value. Both of them agree to Stansberry & Associates Investment Research founder Porter Stansberry that if you divide US gold reserves by the total number of Federal Reserve base money, you get something $6,000 per ounce of gold.
”Agricultural commodities are the place to be in for investors,” points out Rogers saying that it will be farmers not bankers driving Ferraris in the coming decades.
According to Rogers, governments have not addressed the underlying problems which triggered the crisis, but instead have "flooded the world with money." He argues that trying to solve the problem of too much consumption and too much debt with more consumption "defies belief," and will result in epic failure.
Faber's outlook echoes the sentiments of Mr. Rogers. He says, "If we agree that excessive credit and excessive leverage led to the crisis, then what the FederalReserve is doing is giving a wrong medicine to the patient—they are giving the drug addicts more drug instead of sending them to rehabilitation, which is not good for the economy. So I think that the whole policy will eventually end in another disaster but we don’t know when and many things can happen in between."
So where do Faber and Rogers see opportunity? Well, both are extremely bullish on agricultural commodities and companies. Rogers says that it will be farmers not bankers driving Ferraris in the coming decades. Faber likens investing in agriculture to investing in oil in 2001 or 2002.
If you are interested in a fairly simple and straightforward way to act on the advice of Rogers and Faber, the PowerShares DB Agriculture ETF (NYSE: DBA) tracks the price of corn, soybeans, sugar, and wheat. Another way to take advantage of a surge in commodity prices in the coming years is to invest in managed futures or buy currencies such as the Australian and Canadian dollars which are linked to the price of commodities. This can also be done with ETFs. The Australian Dollar Trust ETF is ticker symbol (NYSE: FXA) and the Canadian Dollar Trust ETF is ticker symbol (NYSE: FXC).
With inputs from www.benzinga.com
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