according to Jim Rogers. In a April 10th interview with the editor of Omega Research’s Hard Asset Investor, Jim reaffirms his long held belief that commodities, as an asset class, are in a 10-20 year bull market. Examples of his reasoning are:
Rogers, who runs his own index to capture the growth in commodities, argues that the commodities market runs in what might be called “supercycles”; 10-20 year stretches when pent-up demand meets the long lead times required to bring on new supply, sending prices steadily higher. With China and India growing fast, he thinks the current commodities bull market has plenty of room
to go..
According to Jim, rational investors should undergo the following thought process.
Nobody has discovered a gigantic oil field for thirty years. That’s not a theory; that’s a basic fact. In the meantime, demand for oil has been going up for many years. That’s not a theory, either; that’s a simple fact. Likewise, there has been one lead mine open in the world for the past twenty years, and the last lead smelter was built in the U.S. in 1979. I could continue: the number of acres devoted to wheat farming has been declining for 20 years.
Those are simple facts that lead me—and, I think, any rational person—to conclude that we’re in a bull market for commodities that has a ways to go.
Commenting on the signs of the commodity boom coming to an end…
Rogers: They should understand that until somebody brings on a lot of supply, commodities will do well. If people start seeing windmills on every roof and solar panels on every house, then maybe this [commodities boom] is coming to an end. If somebody discovers a gigantic gas field in Berlin, maybe this will start to change. Investors need to watch and see when and if new sources of supply develop.
Read it complete interview
