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JIM ROGERS: Sell Bonds, Buy Precious Metals, Rice on Supply Shortages

July 8, 2010

Bloomberg | By Ranjeetha Pakiam – Jul 7, 2010

Investors should sell bonds and buy commodities like silver and rice as a “refuge” as the world economy may continue having problems, Jim Rogers, chairman of Rogers Holdings said.

“Bonds are not a good place to invest in,” Rogers said at a conference in Kuala Lumpur today. “You should own commodities because that’s your only refuge” whether it’s silver or rice, said Rogers, who predicted the start of the global commodities rally in 1999.

Gold has gained 8.3 percent this year, leading advances in precious metals, as investors seek haven assets to protect their wealth amid concern the global economic recovery will falter. Still, commodities overall capped their worst quarter in more than a year on investors’ concern that slower growth from China to the U.S. will sap demand.

The best place to be is in commodities and other natural resources, including precious metals like silver, platinum and palladium, said Rogers, who co-founded the Quantum Hedge Fund in 1970. Commodities are good to buy as supply shortages are already developing, the Singapore-based investor said.

Gold prices will rise to more than $2,000 per ounce, said Rogers, without giving a timeframe. Bullion for immediate delivery declined 0.4 percent at $1,187.85 an ounce at 6:34 p.m. in Singapore. It reached a record $1,265.30 on June 21.

‘Straight Up’

“I do own gold,” he said. “Gold has been extremely strong of late, but I’m not rushing out to buy gold. I don’t like to buy things that have been going straight up.”

While gold has been trading at all-time highs, silver remains 60 to 70 percent below its peak and is a better investment, he said. Silver reached an all-time high of $50.35 in New York in 1980.

Silver for immediate delivery fell 1 percent to $17.6413 an ounce at 6:22 p.m. Platinum dropped 0.6 percent to $1,507.68 and palladium declined 1.2 percent to $433.35.

Still, agricultural commodities are better than metals as prices are “very depressed,” he said, pointing to sugar which is 75 percent below its all-time high in 1974. Raw sugar for October delivery slid 1.2 percent to 16.49 cents a pound on ICE Futures U.S. in New York. It reached a record of 66 cents in November 1974.

“Not many things are 75 percent cheaper that 36 years ago, but that’s true of sugar,” Rogers said. “Agriculture commodities are desperately cheap compared to 20, 30, 40 years ago.”

Rice futures on June 30 touched $9.55, the lowest price since October, 2006, on rising production and declining demand. The contract for September delivery gained 0.7 percent to $9.935 per 100 pounds on the Chicago Board of Trade at 6:15 p.m. in Shanghai.

To contact the reporter responsible for this story: Ranjeetha Pakiam in Kuala Lumpur

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