In Part Two of my interview with storied hedge fund manager and bestselling author, Jim Rogers, we talk about what Jim calls the “most hated market in the world.”
The country’s currency is in free fall.
Its president is functionally insane.
And the supply glut in oil could tip the populace into chaos.
Yet despite the fear and loathing, Jim remains steadfastly bullish… especially regarding one particular stock, whose share price is defying gravity. Click below to listen now.
Founder, Wall Street Daily
Robert Williams: Welcome to Part Two of my interview with celebrated hedge fund manager and bestselling author, Jim Rogers. Jim, let’s jump right in. The Russian ruble seems to drop further every time we look at the tape. Do you ever read on how low it can go?
Jim Rogers: Well, I own some Russian stocks. To my astonishment, the main one I own is not even down in all this. I guess it’s because it’s – it sells in dollars. Its expenses are in rubles, and it sells in dollars. So that’s helping it, and that’s – Aeroflot is another one I own, which is also sort of benefiting these days.
But to answer your question, I don’t have a clue. I do know – I think we all know – that markets go up too far, and they go down too far. Once you start building their momentum, panic develops. People get more and more scared. Marching calls go out. So I have no idea.
As far as I’m concerned, the Central Bank in Russia has been doing the right thing. They said they were not going to intervene anymore. Yesterday, they intervened for the first time in a while. But I think it’s very smart – not intervening. Let it collapse. Let it find its own level. And then we’ll have a staggering rebound.
But who knows? It’s 52 right now. I guess, it’s 52 right now. You’re right. It changes every three minutes. Who knows? Why not 60? In Russia, they talk about 60 as some kind of catastrophic bottom. Who knows? I don’t anyway.
Robert Williams: Is it fair to call what’s happening with the ruble a crisis at this point?
Jim Rogers: Well, I don’t quite see it as a crisis. They still have huge foreign currency reserves. This is helping their balance of trade, obviously. They still get paid for oil in dollars. And it’s certainly not – it’s not causing imports to go up in Russia with the currency collapsing. So I don’t see it as a crisis. They have many debts coming due – U.S. dollar debts, which I would suspect they can finance. But, again, I haven’t sat down and put pencil to paper to really determine whether it can be done or not.
Robert Williams: Jim, can you talk a little bit about the Russian agriculture stock you presently own? I want our readers to take particular note of this play.
Jim Rogers: Yes. It’s called PhosAgro, P-H-O-S-A-G-R-O. It’s one of the largest fertilizer and phosphorus companies in the world. It’s run by a bunch of young guys now. And, I mean, it’s a big, big company, even though it’s run by young guys. And I became a director in September, I guess, it was – and partly because I’m bullish on agriculture and partly because I’m bullish on Russia. The ruble, of course, has been a disaster since then, but, as I said, this stock is still up.
Robert Williams: So despite what’s happening, you remain steadfastly bullish on Russia.
Jim Rogers: Yeah. Obviously, the oil market drop is not good for Russia – no question about that – and it’s making the ruble go down. But, no, I see this as an opportunity. Unfortunately, I’m not very good at timing, so I don’t know when the opportunity will be.
Oil prices are not gonna stay down forever, I suspect. And Russia will rebound with oil or when they get their own act together. I mean, they’ll have to – if oil stays down at $60, they’ll have to get their act together and reorganize. But they’ve got enough resources. It’s a vastly, vastly rich country as far as resources are concerned. And it’s a very, very cheap market. I think it’s selling at half of book value right now. That’s not an expensive market.
It’s perhaps the most hated market in the world except for Argentina, I guess. And – well, not even that. Argentina’s not as hated, ’cause people are trying to raise money to invest in Argentina. So I guess Russia must be the most hated market in the world, which normally is an opportunity, Bob – normally. I mean, I emphasize normally. Who knows where the bottom is? I don’t.
Robert Williams: Yes.
Jim Rogers: But I’m looking for more investments, not less.
Robert Williams: Jim, talk about another hated market. The junior miners on the Toronto exchange are down as much as 80%. Might this market also represent an opportunity?
Jim Rogers: Well, it’s a place to be looking around. I am not buying precious metals at the moment. I’d rather buy base metals, actually, at the moment than precious metals. But it’s – if you can find ones that have good management with good reserves, good assets, and aren’t over-leveraged, I’m sure there are gonna be great opportunities there. I’m not buying precious metals yet. But, sure, anything like that that’s down 80% – it’s not going to go away. You know there are gonna be great pickings there if you can figure out which ones.
Robert Williams: Jim, are there any parallels we could draw from what’s presently happening now to when President Nixon closed the gold window? In your book, you discuss how gold shot 600% higher when the gold window closed, only to lose 50% of its value in the months that followed. But that proved to be an epic buying opportunity.
Jim Rogers: Well, certainly, and that’s a very, very good analogy. I – one reason I’m not buying gold at the moment or silver or gold, specifically, is that gold has not had a 50% correction in many years. Now, you know, Bob, as well as I do that most things correct 50% every few years. It’s just the way markets work. It’s normal. They may correct 50% – within the context of a bull market even.
Gold has not done that for several years, which is why I’m waiting. I don’t know that it’s going to correct 50%. But if it does, I’ll certainly be buying a lot more. But that’s a very good point. Gold back in the ’70s went up 100% in a year or two, and then it turned around and went down 50%. It scared the socks off a lot of people before it turned around and went up 850%.
So, in my view, the same sort of thing is happening with gold now. A difference is we have a lot more bulls on gold now than we did in the ’70s. In the ’70s, gold hadn’t traded in most markets, or certainly not in the U.S. in the big Western market for decades. So you didn’t have many people who even knew gold could trade.
Now, you have a lot of people who think that gold is holy, who are very faithful to gold. In my view, we gotta shake out a lot more of those people before gold can really have its ultimate bull market top. But gold will end in a bubble someday, in my view. But we cannot really hit that solid bottom until we shake out some of the faithful.
Robert Williams: I know timing is virtually impossible to predict. But, Jim, is there any tell-tale sign that the weak players have cleared out, and it’s time to buy gold?
Jim Rogers: Well, it’s not virtually impossible for me. It’s impossible for me.
I assure you – I wish I – I’m the world’s worst market trader and timer. Well, yeah, when there’s panic. I – we haven’t seen panic – I haven’t seen panic yet in gold. When it happens, and when you see some of the faithful throwing in the towel and say, “Gold has mistreated me. She cheated me. She lied to me. I’m never gonna touch gold again,” then that’s gonna be a – some kind of a bottom. But I haven’t seen that yet, and I don’t even know how visible that will be. If you watch television, you’ll probably see a lot of people giving up on gold. But I haven’t seen that happen yet.
Robert Williams: Thanks again, Jim. For Wall Street Daily, I’m Robert Williams.