Jim Rogers is one of my favorite commentators because he has a lot of common sense and keeps it simple. His decades of investing success proves that common sense is a true commodity in investing.
In the following interview, Jim Rogers reiterates his bullish stance on commodities. No surprise here. However, in a change from his long-standing position, Rogers he is finally going short stocks. I have opened up small short positions myself, so I am in agreement with him. In my opinion, this is definitely one of the better times to be holding bearish options.
I disagree with Rogers in that I think commodities are a little overpriced in the short-term. Chinese farmers are hoarding cotton and I feel the recovery trade is a little overdone. A 20% correction or so would be constructive. Chinese stocks have been rolling over for some time now; this may be a harbinger for commodities in the short-term.
Gold
As for gold, it was not able to follow through on yesterday’s solid rally. It appears like gold will close at critical the support level of $1350. This is a level that absolutely needs to hold. Although I will probably be buying at $1320, a retest of this level is not the ideal scenario. A rally in the spring or summer is much more likely with another breakdown below $1350.
Treasuries
Yields on treasuries have quietly crept up to 3.64% on the 10 year. Treasuries, along with gold and the dollar, are one of the most important markets. Not only will mortgage origination suffer with higher rates, but so will our ability to service our debt. RIsing treasury yields continue to demonstrate that QE2 is outright failing. Stay tuned. 4% on the 10-year is a very important level.
We are gettug closer and closer to a time when volatility will spike ala 1931-1932. Sovereign defaults are coming and outright confusion will drive investors to gold. We still haven’t seen anything yet in the gold market.
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