Financial Post: The Market 'Correction is Not Over': Jim Rogers on Where to Find the World's Cheapest Assets

May 06, 2020

Article by Chris Flood in Financial Post

Best known today as a market commentator, Rogers appears regularly on business television in Asia and the United States. A skilled public speaker, he prefers to deliver non-technical analysis based on his investment experience blended with lessons from history, skepticism about political leaders and a deep commitment to the role of free markets.

Even before the coronavirus crisis erupted, he believed that U.S. equities were overdue a correction following an 11-year bull run and that an unstable pricing bubble had developed in bond markets.

“Financial markets were very expensive prior to the virus outbreak. It was absurd what was happening,” he says.

He questions the rebound in U.S. stocks triggered by the extensive emergency support measures introduced by the Federal Reserve and Washington.

“The rally will go on for a while and who knows when it will end. President Trump will do everything that he can to get re-elected. But a lot of damage has been done to the world economy by the virus. The correction is not over,” he warns.

Commodity markets represent the most attractive asset class in his eyes. He firmly believes that inflows into gold and silver will increase as voters lose confidence in governments’ money-printing experiments. He added to his personal holdings of both in April.

“I have never sold any gold that I have bought. I stopped in 2010 and restarted in 2019. The gold to silver price ratio is near its record high and so I prefer silver to gold because it is cheaper (on a relative basis),” he says.

Some of his strongest criticisms are directed at central banks for facilitating an enormous increase in global debt that will burden future generations.

The transformation of the U.S. into the largest debtor nation in history reminds him of the U.K. after the First World War.

“The U.S. is making the same mistakes now that the U.K. made in the 1920s by moving deeper and deeper into debt. Nobody seems to learn the lessons of history.

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