Jennifer's avatar
$14.7m follower assets
Hot Commodities
Commodities are your best bet when inflation is high - Jim Rogers

I can't state enough how much I appreciate the Commonstock and Twitter communities. A big thank you to my Twitter friend Trevor Boland for passing this Jim Rogers article onto me this morning. Coincidentally, Jim Rogers' book "Hot Commodities" is currently at the top of my reading pile.

For those unfamiliar with Rogers, he was the co-founder of the Quantum Fund and Soros Fund Management. He was also the creator of the Rogers International Commodities Index (RICI).

In an Informist interview released yesterday, Rogers states "the main asset class I see now that is not overpriced is commodities. Bonds are certainly overpriced - they have never been this expensive in history."

Rogers notes that silver is down 60% from its all-time high, and that most commodities are still very depressed compared to their all-time highs. Rogers expects commodity prices will continue to rise as we transition to electric vehicles, which use several times more copper, lead, and lithium. This will require more investment in mines and alternative sources.

Anticipating energy prices to decline once the war in Ukraine ends, he mentions that known oil reserves have been declining for sometime with the exception of fracking which is not what it was previously. "Eventually, central banks will raise rates enough to break inflation, but I will not sell oil. I own energy; I am not selling it at all because I now that worldwide, known reserves are on the decline."

ThomasFJE's avatar
What about wheat, soybeans, corn for example? All tend to be correlated to the economic environment and some are close to 2007 levels. Would love to know your thoughts about this!!

Jennifer's avatar
@smh Interesting you should ask! My weekend project is to research some ag plays to add to my portfolio. If you haven't read GoRozen before, it's a must for commodity investors. Portfolios with 25/25/25/25 allocations to mining & metals/energy/agriculture/precious metals have brought among the best returns historically over the past 130 years!

"Constructing a natural resources equity portfolio that consisted of 25% energy, 25% metals and mining, 25% precious metals, and 25% agriculture would have significantly beaten the stock market in each of these cycles. For example, had you invested in such a natural resource portfolio in 1929, your return would have been 122% by 1940, which doesn’t sound like much, but compared to the Depression ravaged stock market, the returns were almost spectacularly good. Between 1929 and 1940, the stock market fell 50%. Also, the 1930’s was a period of chronic deflation and consumer prices fell over 20% between 1930 and 1940. In real terms, commodity prices (and related equities) offered real returns of almost 180% -- not bad in a period that included one of the greatest bear markets in history and a full-blown banking crisis that required the temporary suspension of the world financial system."