Jim Rogers is a living legend. The co-founder, with George Soros, of the Quantum Fund, he and his partner delivered astronomical returns for a decade before Rogers walked away from managing money to tour the globe on his motorcycle. He set a world record along the way. His prescient thinking helped change the modern financial landscape. In this wide-ranging interview, he explains his deep pessimism about U.S. equities, the monetary system, the Middle East, and Europe and lays out why he still sees value in China, Russia, Zimbabwe, and — if its leadership changes — North Korea.
Octavian Report: Can you talk about your general view on the markets at the moment?
Jim Rogers: I happen to be short the U.S. I don’t own any stocks in the U.S. I own dollars, a lot of U.S. dollars in various ways. I am long China and short the U.S., in a nutshell. There are other things. I’m long Russia. I bought Russian government bonds short-term, ruble government bonds.
OR: What are those yielding?
Rogers: When I bought them? 11 percent on two-year bonds in rubles. You might make 30 percent. You might make negative six percent if the ruble collapses. I’m long agricultural commodities. China’s having problems but it’s not because of China. It’s because of the rest of the world. The Japanese are in recession. Many parts of Europe are in recession. Parts of America are in recession. China is a large trading country, so the people the Chinese deal with are causing problems in China. It didn’t start in China, but China’s the victim.
China also has a lot of debt now, which they did not ever have before — not since the war, not since the Revolution anyway. In 2008, when the world collapsed, China had a lot of money saved for a rainy day and they started spending it. That’s one of the things that bailed the world out in 2008 and 2009. This time, China has debt itself. It’s not like America or England, but China too has debt now and when the problems get worse, which they are going to, some companies in China are going to go bankrupt. At least Beijing says they will let people go bankrupt.
I hope they mean it. It will be good for China, good for the world. But that would shock a lot of people because most people have this view that China has been this economic powerhouse, which it hasn’t, and there won’t be problems — but there will be. There will be bankruptcies which will cause the coming bear market worldwide, not just in China, to be much worse. When there are bear markets, anything that’s negative is a surprise and causes people to panic even more. When you start seeing problems from some Chinese companies, that will just exacerbate things.
You’re going to see more bankruptcies in the West and in Japan than you will in China in the next bear market. So, yes, I am terribly skeptical. We’re going to have a bear market in the near future. It’s going to be worse than what happened in 2008 because the debt is so much higher now than it was in 2008. You should be knowledgeable and if you’re knowledgeable, you’re going to get worried, and I hope you get prepared.
OR: What do you think will precipitate it? A rate hike from the U.S. Federal Reserve?
Rogers: Rates are going to go higher whether the Fed knows it or not. So who knows? These things always start with a marginal company or a marginal country that nobody’s looking at. In 2007 Iceland collapsed, leading to more and more collapse around the world. We’ve been having some problems recently in markets in sectors. We always can look back and say, “Oh yeah. Iceland. Then Ireland went bankrupt.” You look back and you can see how the snowball works. There’s rarely a single incident, a single situation. It’s usually a snowball.
OR: You’re long China now even though you see this coming?
Rogers: I’ve got to be long something. First of all, the Chinese stock market is down 70 percent. The U.S. stock market is at an all-time high. At least the averages are at an all-time high. The Chinese had a big conference not long ago and they decided, “This is what we’re going to do. These are the sectors we’re going to emphasize and spend money on, like pollution cleanup.” I think everybody in the world knows that China’s filthy. The reason I don’t live in China is because it’s so unbelievably polluted. They know it too and they are spending staggering amounts of money to clean up China. I own China cleanup companies. If the world ends and America falls into the sea, those companies are not going to know. They’re so busy making so much money that they’re going to be fine. It doesn’t mean the stocks won’t go down. Stocks can go down in bear markets no matter how well the company does. But when you have a bear market and economic hard times, the companies that do well during those bad times come out the other side and go to the moon.
Then there’s agriculture in China. Mao Zedong ruined Chinese agriculture. They know it. Their statement was to the effect that for the past 35 years people in the cities have done extremely well at the expense of the people in the countryside, and that the government is going to change that. I’m bullish on agriculture anyway but especially Chinese agriculture, because now you have Beijing throwing everything they can into the countryside.
Railroads. You may have read about the One Belt, One Road policy where they’re building infrastructure from China into Europe, a staggering program. They said at that conference that the U.S. and China are the same size geographically but the U.S. has 250 percent more miles of rail than we do. They’re changing that.
Health care. Everybody who knows anything about China knows they are far behind in the quality and quantity of health care, so Beijing is now throwing everything it can into Chinese health care.
So these sectors of the Chinese economy, even if property developers in Shanghai collapse (which some of them will), are going to be making so much money they won’t have time to notice.
The U.S. stock market actually peaked out in mid-2014, if you look at the advance declines. What do they call that? The breadth. Even now we’re going back to all-time highs but most stocks are not participating, a classic sign that something’s wrong. I’m always too early but I can see talk like there’s distribution in the land, distribution in the U.S. Most stocks have peaked and are declining. The averages are being held up by a few big names. Parts of Europe are already in recession. It’s not just Greece.
OR: So your being long the dollar is a flight-to-safety trade?
Rogers: People look for a safe haven in times like those that are coming. The dollar is not a safe haven, by the way. It’s a terribly flawed currency. It’s a disaster itself: the U.S. is the largest debtor nation in the history of the world and its debt is going higher. But they don’t know what else to do and there’s not much else they can do. They’re certainly not going to go buy the euro or the yen. I own the dollar because when the turmoil gets worse the dollar will go up, it’ll get overpriced, it might even turn into a bubble depending on how bad the disaster is. I hope I’m smart enough at that point to sell my dollars. By then the renminbi may be completely convertible. If the renminbi is convertible by then — and the dollar’s gone up and everything else goes down — the renminbi would probably be the thing to buy at that point. Maybe gold. Often when the dollar goes through the roof, gold goes down. Often, not always.
OR: Do you own gold now?
Rogers: I own gold now. I have not bought gold for five or six years. I own plenty of gold. I’m waiting for the next buying opportunity in gold. If it goes under $1,000, for instance, I hope I’m smart enough to buy a lot of gold. Gold is going to wind up in a big bubble at the end of all this. I would expect a buying opportunity first.
OR: Do you buy the gold miners also?
Rogers: Ask me then. Ask me what goes down the most. If you can tell me what’s going to happen in the world, I can tell you everything I’m going to do. Unfortunately, I haven’t found anybody yet who can tell me exactly what’s going to happen.
OR: Are you currently negative on industrial commodities?
Rogers: No, because they’ve already been beaten down so much. I do expect hard times in the world economy but I’d rather sell things that are making new highs, not things that are down 50, 60, 70 percent. It doesn’t mean they can’t go down another 50, 60, 70 percent. But the odds are stacked against you, especially speaking specifically of industrial metals. A huge number of industrial cutbacks have already taken place. You’re not the first to know that industry’s got problems. They know it and they’ve been taking actions.
You know the stocks that are going through the roof. It’s the same old thing that happens at all market tops. A few names of exotic and exciting and “this time it’s different” stocks come along. This has happened at the top of every bull market in the history of mankind. It’s happening again.
OR: You’re long agricultural commodities also?
Rogers: Mainly commodities themselves. I’m not smart enough. If I were really smart, I would buy lots of farmland in the U.S. But I’m trying to get assets out of the U.S. so I would buy farmland in places where you can still buy remarkably cheap agricultural land. That industry has been in a bear market for 30 years. You remember the 1980’s when Willie Nelson was having special concerts for the farmers? It hasn’t gotten much better for most farmers. The average age of farmers in America is now 58. In Japan it’s 66. Australia it’s 58. In Canada it’s the highest in recorded history. The highest rate of suicide in the U.K. is in agriculture. In India, millions of farmers commit suicide. As I’m sure you know, more people in America study public relations than study agriculture. What more do you need to know? Agriculture is going to be one of the great industries.
We’ve had long periods when agriculture was on top. I was a student at Oxford when I was a kid, and my dons used to say to me, “What the hell is wrong with you? Why are you so interested in the stock market? It’s a backwater. It’s totally irrelevant to the English economy, much less to the world economy. What’s wrong with you?” Nobody had any interest in financial markets. Listen, I didn’t know better. I just happened to love what I was doing. If I had known anything, I wouldn’t have gone to Wall Street. I’d have said, “Jesus, that’s a dead end.”
Fortunately I wasn’t smart enough to listen to Oxford professors. That’s the first lesson that you should learn. Don’t listen to Ivy League or Oxbridge professors. So I went — but now every kid at Oxford wants to start a hedge fund in their dorm room. It’s astonishing. They don’t want to do anything except talk about the City of London and Wall Street. Oh, my God. That’s the wrong place to be.
OR: Do you think that the hedge fund business is very late-stage now?
Rogers: Oh, God yes. Of course it is. When I was in the hedge fund business there were five or six of us. Now there are 30,000. We can’t have that many smart 29-year-olds. I’m sure there are some very smart guys. There always are. But not 30,000. No. I try to explain to people that finance is now peaking, not just hedge funds. In 1958 America produced 5,000 MBAs and the world produced none. Last year America alone produced over 200,000 MBAs. The world produced tens of thousands more. There’s massive competition in finance.
There was very little debt in the financial community until recently. Lehman Brothers wasn’t the first to do it. Remember Bear Stearns. They’ve all gotten worse since. You’ve got gigantic competition, huge debt, and every government in the world is down on us now. Every morning they all wake up thinking, “Well, how can we attack the financial industry, those horrible people in the City of London and on Wall Street?” They’re always coming up with special taxes, laws, and regulations to put us out of business. It’s happening. I’m sure you read the same newspapers I do.
It’s hard to get a job on Wall Street now. It’s hard to make a lot of money in the financial industry now. Goldman Sachs had 250,000 applicants this year. 250,000 people have applied to Goldman Sachs for a job in the gold mine. I don’t know how they can count how many applicants they have, much less sort through them. We better learn to farm. Go buy yourself a tractor.
OR: You are famously bullish on North Korea — can you explain your view there?
Rogers: North Korea today is where China was in 1980 or 1981. Deng Xiaoping said in 1978, “This is not working. We’ve got to do something new.” Kim Jong-un is not Korean. The kid grew up in Switzerland. The kid was educated in Bern. The kid knows there’s something else out there. I don’t know why his father picked him — maybe because of that. The older siblings the father skipped over and went to the kid. But the kid is — let’s just say if his father were alive, the father would shoot the kid. I assure you.
There are 15 free trade zones. This is all in the last three or four years. You can go on bicycle tours in North Korea. You have movie tours. You can get telephones, mobile phones, computers. The first time I went to North Korea, I couldn’t even take my mobile phone into the country. Now at least 20 percent of them have mobile phones and the internet. They’re buying and selling apartments. This is a Communist country, remember. There is a black market. A black market is always an early sign that change is coming. Thousands of Chinese are pouring across the border, as well as Russians. The second time I was there people would speak to me in Russian. They thought I was a Russian.
OR: Do you see any chance of regime change?
Rogers: If Kim Jong-un gets kicked out, that’ll be Nirvana. All his generals, when they were captains and lieutenants, used to go to Beijing and Moscow if they went anywhere. They couldn’t go anywhere else. Now they go to Beijing and they say, “My God. You can’t believe what’s happened in Beijing.” They come home and they look around: “Ain’t nothing happened here.” It’s starting to happen. There are pizza restaurants in Pyongyang now. Everybody knows. Everybody knows what’s going on. Nobody wants to go back to the way it was under the father and the grandfather. If the kid gets thrown out, that’s hallelujah.
I’ve tried to find companies that will benefit. I have not. I mean, I own Korean Airlines which would be an indirect beneficiary. But that’s not the play. I have maybe cornered the market in North Korean gold and silver coins. They produce gold and silver coins — not many. They have their own gold and they have their own silver and they’ve been producing for at least 30 years. I have a few hundred.
OR: Is that a play on the currency?
Rogers: The play, if there’s a play, is like this. The bottom is gold and silver. It’s not going to go below the price of gold and silver. The other side is, when there’s no more North Korea (which I expect to happen in the next few years) you’ve got a major collector’s item. You have North Korean coins from 1992 or whatever and the country is gone. They’re pure. I’ve had them checked. It’s complicated for us from the land of the free to invest in North Korea but a lot of other people are pouring in there.
By the way, Americans can do things there. There’s a group of American Christians, fundamentalist Christians, who have been in North Korea since 1990. The leader had a vision that he should go to North Korea and save North Korea. He shows up. Says, “I’m here.” Instead of being executed or thrown out, the North Koreans said, “Well, what do you want to do? You cannot proselytize. You cannot come here and convert people.” He said, “What do you need?” They said, “We need goats.” So he started a goat farm up in Rason.
Rason is going to be the most exciting city in the world soon. It’s the northernmost ice-free port in Asia. Because it’s the northernmost ice free port in Asia, that alone gives it attraction. Putin has built a railroad, the Trans-Siberian Railroad, and rebuilt it into Rason. He’s built a couple more docks there. The Chinese have built a couple of docks there because the plan is: you produce the goods in Asia, put them on the train, it gets to Berlin two weeks sooner. I live in Singapore. It’s going to be a disaster for Singapore because Singapore became the largest port in Asia as Asia boomed. This is going to be much more competitive for getting goods from Asia to Europe.
It’s not often in history that geography changes but the Chinese are changing geography, they’re building this whole infrastructure to Europe including a railroad across Myanmar which will make another new port. All of this is bypassing Singapore. But Rason City will be the focus because it’s the northernmost ice-free port in Asia. It’s already happening. They offered me everything I wanted. I said, “Listen, guys. I’d love to help you but I’m an American. I’m not allowed.” They’ll give you any incentive. You name the incentive.
North Korea has 75 million people and it’s on the Chinese border. It’s got massive amounts of cheap, educated, disciplined labor, vast natural resources, huge amounts of capital in the south, expertise. Before 1970, North Korea was richer than South Korea because of the natural resources. You know the rest of that story.
OR: Do you have a view on Cuba?
Rogers: Cuba’s got great opportunities. But since we’re from the land of the free, for the past 30 years everybody else has been pouring in there and buying — Canadians, Spanish, Mexicans. So when we get there, they’re going to say, “Ah, gringo. I have a deal for you.” They’ve bought everything waiting for us. Now we can go. I’d rather go to North Korea myself.
OR: Do you have a view on oil?
Rogers: Crude oil has been and is in the process of making a complicated bottom. I own energy. It’s like everything else. You have the big collapse. You have the dead-cat bounce. Then normally you go back and test the lows. When the big collapse comes we may test the lows again but that will be the bottom. Known reserves of oil are in decline everywhere in the world and have been except for fracking. Well, the frackers are not so hot anymore and will not be even when fracking comes back — which will be slow if and when, even at $100 oil.
They all know they can lose money now. Before the frackers said, “This is heaven. We can never lose money. It’s like having a hedge fund. We can never lose money. This is magic.” Now they all know and their bankers know. That has slowed down for a long time so energy is a place to be. I’m not a good market-timer so I’ll leave that to you.
OR: You sound bullish on Russia — are you?
Rogers: Yes. I’m looking for more. I own shares in Russia, Russian companies, Russian ETFs, Russian bonds — which means I own the currency as well. I didn’t buy U.S. dollar bonds or euro bonds. I bought ruble bonds. The ruble had a big whack as you know. The sanctions were totally unjust. That’s State Department propaganda; they really outsmarted the Russians on the propaganda. But the Russians have now outsmarted the Americans because people are starting to understand that the sanctions were unjust. They were an American fraud. Besides that, it’s costing us money. The Germans hate it. Mrs. Merkel has a lot of constituents who sell cars. Mercedes used to sell more top-of-the-line Mercedes in Moscow than anywhere. All the German and European companies are now agitated and angry especially since the facts are coming more and more to the fore and so the sanctions will probably be lifted soon. They’re already being circumvented.
By the way, it’s terrible for us people from the land of the free. Now the Russians and the Asians are getting closer and closer together. The Russians were thrown out of the West, so what did they do? They went to Asia. Now the Chinese banks are all open in Moscow. It’s all happening. They’re building the pipelines, the railroad, the factories, everything. In 10 years we’ll wake up and say, “What the hell happened?”
OR: Are you concerned at all about China’s political system?
Rogers: Of course. I’m concerned about everybody’s political system, especially with the hard times that are coming. When hard times come, throughout history, the guy on the white horse comes galloping up and says, “I will save you. Don’t worry. Don’t worry, I have the solutions. It’s the goddamned foreigners. I’ll save us.” Look out the window. The guy is out there on his white horse, here to save us. It’ll happen in China. It’ll happen everywhere.
Let’s say there’s chaos in China, which there might be. So they throw out the Communists. That’s bad? The only problem is that these are good Communists. It’s astonishing at how successful they’ve been. China’s been the best-run country in the world for 35 years.
OR: What do you think of the stock market intervention that they botched?
Rogers: It was useless. We botch it, too. We do it. Those guys at the Federal Reserve, they say, “Oh, don’t worry. We’ll cut rates.” For 30 years they’ve been doing it, they’ve been intervening. The Chinese made a foolish mistake, an amateur mistake, but they’ve only been capitalists for 30 years. It’s not like us who’ve been capitalists for a long time. We should know better. It was a mistake. They say they understand that now. I don’t know. We’ll see. They said, at this conference I mentioned earlier, that in the future the market — that’s their term — the market is the best determinant when we have an unknown situation. Not the bureaucrats, not the politicians, the market. I wish in Washington and London and Berlin they knew that.
OR: How do you see Europe playing out?
Rogers: Europe has a serious demographic problem. They need immigrants. Singapore was a swamp 50 years ago. Half a million people, destined to disaster. Singapore has become the most successful country in the last 40 years. One of the things they did was beg people to immigrate. If you were successful or educated or smart, they did everything they could to give you a passport. It became the most successful country in the world.
Europe doesn’t have that luxury now. They did. Now it’s out of control. Anything that’s out of control usually leads to problems, especially when you have big debts (which they do). Italy, Portugal, you know the list. Great Britain is a huge debtor nation, one of the worst in the world, that the E.U. has been propping up. They propped it up partly with North Sea oil which is — well, you know that story. Partly with the City of London. The oil’s gone. The City’s gone. They used to make cars and motorcycles and all sorts of stuff. They still have Oxford and Cambridge but beyond that they ain’t got much left. If Oxford and Cambridge didn’t have this spectacular reputation, who knows?
OR: Why wouldn’t you just be long the dollar and nothing else?
Rogers: Maybe I should be. Why am I trying to be so smart? Some of these Chinese shares I bought 20 years ago. I would buy Chinese shares when there was disaster and I’d buy them and put them in the closet for my kids. I still have them. I don’t see any reason to sell them. The ones I have, I think, are the right ones. Then my kids will wake up one day and say, “He must have been a smart old guy. Look at all these Chinese shares in the closet.” Maybe I should go sell them.
OR: Do you see inflation coming or deflation?
Rogers: No. I would suspect there would be more inflation. There is already inflation. You ever taken a taxi in New York? You ever gone to a Broadway play? It’s going to get worse because of the money printing. We’ve had this bout because oil prices have gone down and many other things. When the collapse comes you might think about buying gold or sugar. Though sugar is already going through the roof. Maybe not sugar. Maybe rice. I’d rather buy rice than Facebook.
OR: Why did you leave the hedge fund business?
Rogers: Oh. That’s so long ago I forgot about it. You might as well ask me about my first wife. My plan was to leave at 35. Then we started really doing well and everybody else was losing their shirts, so I stayed. I always planned to have more than one life. I didn’t want to wake up one day and be 75 and still sitting in front of a computer. I wanted to do other things. I left two years after I thought I would but I set off to see the world. I wanted to go around the world on a motorcycle. That’d been a long-term dream of mine. My dreams are not very flashy. I didn’t want to have six Rolls Royces or to have eight houses. My dream was to go around the world on a motorcycle. So I set out to do all those things and here I am, out of work. Happily out of work. That was 36 years ago.
OR: How many hours a day do you spend trading?
Rogers: Virtually none. Brokers don’t like me. I’m a terrible client. I told you, I bought Chinese shares 30 years ago. I still own them. Chinese brokers still call me on the phone saying, “You ever going to sell?” It’s like I’ve never sold any Chinese shares that I’ve bought since 1999.
OR: These are Hong Kong listed shares?
Rogers: No, Shanghai. I have some in Hong Kong that I bought through Hong Kong. Now you can buy Shanghai through Hong Kong. In the old days it was something called B-shares which were only for foreigners. I won’t say some of the names but some of these guys went running over there and bought up a lot of B-shares and the Chinese took the money and bought Rolexes and cars — and the stocks collapsed. When I was there in the late 1990’s, the Chinese brokers had forgotten about the B-shares. They were that cheap. I started buying B-shares and still own them.
One of my larger positions is a wine company in China. They had B-shares. I thought it’s a miracle they have B-shares. I’d been riding across China, going around the world, and I liked the wine. You couldn’t drink the water. You had to drink either the beer or the wine. You couldn’t always get the beer so I liked the wine and I went and bought B-Shares. It’s now one of my largest Chinese positions, purely because I couldn’t drink the water in China.
OR: Is there anything that reminds you of Singapore 40 years ago other than North Korea?
Rogers: I’m not sure that would be the comparison. My comparison would be with North Korea and China.
OR: People talk about the UAE as being like Singapore.
Rogers: They’re trying to be. They come over and copy whatever they can. It’s a wonderful place. My only problem is when the war comes, that’s where it’s going to be. In the Middle East there are at least a dozen parties making mistakes. It’s not as though you have only the Arabs and Jews in the Middle East — you’ve got everybody. Everybody makes mistakes.
OR: Do you see a war coming?
Rogers: We have always had wars. We’re going to continue to have wars.
OR: A world war?
Rogers: Yeah, we’ll have a big war. I don’t know what they’ll call it next time.
OR: Where do you see the sides lining up?
Rogers: Everybody is making mistakes. The people who hate each other right now will probably be in love with each other down the road. Before the first world war, the German and English royal families had vacations together, were intermarried. They loved each other. Two years later — you know the rest of the story. Who knows how it’s going to wind up? I would suspect as I look around the world that the Middle East is probably where it’s going to be. For all I know it’ll be the Israelis and the Iranians attacking who knows what because these things change so much. Most people want to be on the side of the Israelis instead of the other people. I have no idea how it’s going to work, but I do know we’ve always had war. As I look around that is a logical place for it to start. While Dubai is a fabulous place and they’re doing a lot of amazing things, I’d rather go to North Korea than Dubai.
OR: Is this the most bearish you’ve ever been?
Rogers: Who knows? I don’t remember what I had for breakfast. This bear market is going to be worse than any bear market in my lifetime. There’s no question about that. We had a bad one in 2008 because of debt. As you know, debt has skyrocketed everywhere since then. Many people talk about austerity. There’s been no austerity anywhere. Greece’s debt is up 60 or 70 percent since they started “austerity.” No country has lower debt now than they did last year and none will have lower debt next year. The debt has skyrocketed. I’m sure you know the numbers and statistics as well as I do. The next bear market is going to be worse. It will undoubtedly involve huge amounts of printed money, which is going to make the stock markets a difficult way to invest.
When Germany went through this in the early 1920’s, stocks totally collapsed. You got totally wiped out in everything unless you bought at the bottom. If you had bought at the bottom, my God! You can’t believe how much money you made. Unfortunately, most people who bought at the bottom were guys who were janitors three years before and just said, “Oh, look at that. I want to buy.” They weren’t smart enough. They were so dumb. They bought at the bottom and they made huge amounts of money. That’s been the case in many of these things. When you wipe out the savings class, which they did, you ruin your society.
We have a horrible situation facing us. Will I survive? I don’t know who will survive because it’s going to be very tricky. I’m not sure if I told you I would expect gold to go down before it goes up a lot. Knowing my timing, I will buy huge amounts of gold at $950. This is an apocryphal story. I will buy huge amounts of gold at $950. It will go to $800. I’ll be wiped out. You will buy all my gold at $800 and you’ll be the richest guy in the Western hemisphere. It’s going to be bad. The point of that story is it’s going to be bad and difficult. More difficult because the politicians will be even more lost. They will do even crazier things than they normally do and it will be very difficult for me and other people to navigate the next bear market. Does that make me more bearish than I’ve ever been? Probably.
OR: Do you see gold going up in that context?
Rogers: Yes. Except politicians are now trying to get rid of cash, as you probably know, so they can control things more and more. Once they do that, gold loses some of its value because it’s not as easy to use gold as it was. Then what they may well do, and they probably will do, is make it illegal to use gold in transactions: you cannot buy a house with gold, you have to use our cashless mechanisms. If they do that, then a lot of gold’s value goes away. There’ll still be a black market and you can still do things on the black market in gold, but gold will not have nearly the same value. Right now I can go and buy a building with gold and silver if I want to. If that becomes impractical or illegal, gold will lose a lot of its value. I said to you before that politicians are going to do even worse things next time, and that may be one of the things.
My thought at the moment is, as I said before, the dollar goes up, gold goes down, I buy gold. Then gold goes through the roof — but then you cannot keep your gold because then they’re going to do something. I don’t think they’ll confiscate it like they did in the 1930’s because, first of all, in the 1930’s it was the monetary system. It’s not any more. They won’t need to confiscate the gold because they can just make it illegal to use it. If they confiscate it, they’ve got to buy it. They’ve got to store it. It’s a problem for them. If they make it illegal to use, then they solve what they think are their problems. Gold will collapse. It will still have some value and 200 years from now it’ll still be around and, if you still have your gold, you’ll be well off.
Consider the Indian temples: nobody knows how much gold the Indian temples have, but the Indian government is already on the attack and has been for a few years trying to do something about the gold in the Indian temples. I don’t know if they’ll ever be successful because it’s pretty hard to take on the holy men but, in some kind of chaos and turmoil, who knows what might happen?
I own gold. I plan to buy more gold. I expect gold to go much higher but I don’t think it’s going to go up forever. There’ll be a big dip. Yes, it’ll go up again — but you and I are not going to be around forever.
OR: So there’s nowhere to hide.
Rogers: North Korean farm land. It’s the best bet.
OR: You’ve mentioned in the press that you see opportunity in Venezuela — how do you see that playing out?
Rogers: Throughout history — as I have learned in my investing career but also in my reading — whenever a country collapses there are enormous opportunities for those who are smart enough to go there and capitalize. Venezuela is in a state of collapse, as you know. I would presume it’s going to collapse. I haven’t acted, but I’m watching because I have seen too many cases in history and in my life when those collapses produce fantastic opportunity. Venezuela is a big country with lots of agriculture, lots of oil, lots of smart people. So there’ll be plenty of opportunity.
OR: Historically, what has been the right thing to buy in those cases?
Rogers: Property’s been a great one. Prime property is always great. In Germany, when Germany collapsed, a lot of the people bought prime property — and the rest of the story is easy. I guess prime property and stocks if you know how to do that. I would say prime property and stocks have traditionally been the way to play.
I’ve been buying Zimbabwe stocks recently. That’s another country where a switch is in process. The problem is Mugabe says he’s not going to die and he may not. He’s 94 now. He doesn’t look like he’s going to die but if he ever dies, I’m going to buy a lot. I have started buying. It’s so small it’s not even worth mentioning but I have started buying Zimbabwe stocks.
OR: Do cryptocurrencies play a role in the future you outline?
Rogers: The world has a gigantic currency problem, a monetary problem. There’s a need for some solution. Most things are being changed by the internet now. My kids will never go to a post office. My kids will probably never go to a bank when they grow up. Whatever solutions to anything that happen are going to happen on the internet. We’re probably going to have internet money. The politicians want it because if you want to buy a cup of coffee, then you own the coffee and your money has been recorded somewhere else. Does that mean it’s going to be Bitcoin? I would bet you large sums of money it’s not Bitcoin, just because they were the first. It’s certainly going to be something on the computer and what exactly I don’t know yet. I don’t think it’s going to be good for you and me. It’s going to be good for the central bankers. They’re desperate for all the money that they can get.
OR: Do you think that they’re that strategic?
Rogers: No. They’re not. They only act in the heat of battle. When the currency is collapsing and Wall Street is down 90 percent and people are throwing money out the window, some guy in Washington will say, “I know what we’ll do!” They’ll close the airports so nobody can leave the country and then go and get everybody’s money. Whatever they do. Outlaw gold. They’re not that strategic at all. You look back at every crisis.
I was visiting Malaysia a while ago and a guy came up. In Malaysia in the late 1990’s everything collapsed. They came in with exchange controls. I was short Hong Kong. This guy thought I was short Malaysia. Soros said he was short Malaysia so fortunately they were vilifying Soros not me. This guy came up and said, “I’m the one who saved Malaysia by putting on the exchange controls.”
I thought he was a fool — and he was a fool. What he did damaged Malaysia immediately. He was in the treasury department at that time and he went to Mahathir, who was the PM and didn’t have a clue, and said, “The way we solve it is we have exchange controls.” Problems started on a Friday. By Monday this genius, frantically and in a panic, came up with a solution.
They don’t have a clue. They act in haste and their answers are nearly always wrong in the long term for the country. Like when Roosevelt made everybody sell their gold. That didn’t solve anything. It made the problem worse.
They’re not that strategic. They will come up with something that you know is not good and that no rational, knowledgeable person would do but they’re not rational. They’re not knowledgeable and so they come up with these harebrained schemes. You have to think like a harebrained schemer. That’s what makes it difficult because that’s what they’ll start doing. If there was some guy in Washington right now who would say, “This is what’s going to happen and this is how we’ll solve it,” that would be heaven. He ain’t there. I assure you. If he is, he doesn’t work for them. He’s probably in a prison somewhere. He’s probably trading North Korean bonds.
Jim Rogers, co-founder of the Quantum Fund, is an author, financial commentator, and adventurer.