Rogers: Debasement is "official" U.S. policy
It's not a surprise, but that Jim Rogers is so emphatic about bailing out of the dollar really gives me pause. According to Bloomberg, he says he's shifting all his assets out of the dollar and into Chinese yuan:
“I'm in the process of — I hope in the next few months — getting all of my assets out of U.S. dollars,'' said Rogers, 65, who correctly predicted the commodities rally in 1999. “I'm that pessimistic about what's happening in the U.S.''
Rogers, delivering a presentation late yesterday at an investors' meeting organized by ABN Amro Markets in Amsterdam, said he expects the Chinese currency to quadruple in the next decade and that he is holding on to commodities such as platinum, gold, silver and palladium.
Declaring "debasement of the currency" to be "official" U.S. policy, Rogers draw a historical parallel to Great Britain:
“The U.S. dollar is and has been the world's reserve currency, the world's medium of exchange,'' he said. “That's in the process of changing. The pound sterling, which used to be the world's reserve currency, lost 80 percent of its value, top to bottom, as it went through the whole period of losing its status as the world's reserve currency.''
Good Lord, the dollar's already lost 95% of its purchasing power since the creation of the Federal Reserve. But if you're using the present day as your benchmark, I suppose it there's still a long, long way down to go.
The Chinese currency, known as the renminbi, or yuan, is “the best currency to buy right now,'' Rogers said. “I don't see how one can really lose on the renminbi in the next decade or so. It's gotta go. It's gotta triple. It's gotta quadruple.''
The question is, when? The Chinese are still maintaining a loosey-goosey sort of dollar peg (instead of the strict one it maintained up until 2005). We've speculated elsewhere about when that time might come. Rogers, it's worth noting, predicted in his book Hot Commodities that the yuan would be "floating quite freely" by the time of the 2008 Olympics.
On other subjects, Rogers sees the yen carry trade unwinding eventually… and a boom in agricultural commodities that will overshadow the boom in precious metals. But it's his bailing from the dollar that's the big story. Coming on the heels of hedge fund legend Julian Robertson's prediction of a "doozy of a recession" — he says now and 1987 are the only times in his long and storied career that he's taken worries from work home with him — and it's sobering stuff indeed.