3 Minute Gold News
A Quick Read for Busy People
A 3 minute synopsis of the interview with Jim Rogers, chairman of Rogers Holdings and author of Street Smarts: Adventures on the Road and in the Markets by Amanda Lang from CBC News – Lang and O’Leary Exchange
Bull Market in Commodities
World Wide Collapse
Potash Lay Offs
BULL MARKET IN COMMODITIES
Commodities have pulled back, but in all bull markets there are periods of correction.
In 1987, during the great bull market in stocks, stocks went down 40 – 80% around the world. And again in 1989, 1990, 1994 etc., etc..
Every time people said, “Ah, the bull market is over.”, but it wasn’t.
That is what is happening with commodities in Jim’s view.
But not all commodities move together. Just as all stocks don’t move together in a bull market or a bear market.
It’s mainly going to be continued growth and demand, but there are supply constraints. Nearly everything has supply constraints going into the future.
We’ve had some increases in supply but not enough to take care of world demand.
There has been some increase in capital expenditures but for the most part no. Especially given the fact that prices continue to rise for everything. Even if you have a mine, or open a mine, if your good ore is not there it’s still very high cost to do business.
You can have demand going down and still have a bull market.
Jim is most optimistic about agriculture. Sugar is down 75% from its all time high. He is very bullish on sugar and also on most agricultural products.
Natural gas is down dramatically from its high.
Fracking has been wonderful and the price came down, but we’re finding out it’s not as much fun as we thought. Those wells decline dramatically after the first year. After three or four years they’re nothing more than stripper wells.
The number of drilling rigs for natural gas is down 75% in the US. The number of orders for pumps to keep those wells going is down 50%.
So far the dramatic drop seems to be something to do with nature and is not solvable by man. Not yet anyways.
Jim suspects that the price will catch up to this reality in another year or two but claims to be a lousy short term market timer.
Oil is having the same effect with fracking as natural gas. We’re also starting to find out that these wells drop pretty quickly too in production. They go down anywhere from 35 – 60% after the first year.
All the regular known reserves are in decline all over the world.
We’ve had this temporary glut, and Jim doesn’t know how long it will last, but says not to get too excited about fracking.
WORLD WIDE COLLAPSE
World wide collapse could change Jim’s view on where he is putting his money. If Spain suddenly goes bankrupt, Italy suddenly goes bankrupt, and they well might, then he may change his views. But he doesn’t see this happening any time soon.
Eventually the whole world is going to collapse.
We in the west have staggering debts. The United States is the largest debtor nation in the history of the world.
It’s going to end badly. We’re all floating around on a sea of artificial liquidity right now. When it ends then the bull market in commodities will probably end too.
But the bull market in a lot of stuff will end as well.
Eventually, when the next big collapse comes, and we’ve had them every four to the six years since the beginning of the American Republic and the Canadian Republic, you’re going to see serious, serious problems.
The next correction, when it comes, will be really bad because the debt is so very, very high.
2008 was worse than 2002 because the debt was so much higher.
Wait until 2015 or 2016. The debt has gone through the roof, so the next one is going to be really bad.
Be prepared. Be worried. And be careful.
POTASH LAY OFFS
This is all short term.
Remember the bull market in stocks between 1982 and the year 2000. There were times when things looked bad and bleak.
In 1987, people thought the world was coming to an end.
In 1994, Mexico went bankrupt and Southern California went bankrupt. People thought it was the end of the world.
Another Week on Wall Street
words and music Elaine Diane Taylor
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