Gold, China and the commodities super cycle – Jim Rogers – by Geoff Candy ( – August 29, 2012)

“The Chinese will buy a lot more gold over the next decade”

GEOFF CANDY: Welcome to this week’s edition of’s Gold Weekly podcast. Joining me on the line is Jim Rogers – he’s a renowned author, commentator and investor. Jim, gold prices in dollars hit their highest point since mid-April on Monday, largely on hopes of further stimulus from the Federal Reserve. Are we likely to see these hopes dashed once more, do you think or are we likely to see something different post the Jackson Hole meeting?
JIM ROGERS: Well I have no idea what’s going to happen at Jackson Hole. I do know that the Federal Reserve is going to continue to print more money, whether they announce it or not because that’s all they know to do, it’s the wrong thing to do for all of us – for the world, but they don’t know any better. So whether they announce it or whether they call it something different, who knows. Until the world economy gets better these guys don’t know anything else to do so they’re going to print more money.
GEOFF CANDY: Is there any way to get the world economy better – one gets the sense that we’re almost at an impasse at this stage?
JIM ROGERS: No, we’re not at an impasse – the only way to get the world economy better is to do what has always happened after periods of excess. You take your losses, you let the people who made the mistakes get wiped out and the whole system starts over. So competent people take over the assets from the incompetent people and reorganise and start over. It’s not fun, it’s painful but my goodness for the past 40 years we’ve had incredible excesses in the West. We’ve run up some staggering debts and you don’t just wake up one morning and say, well you know that’s too bad, but let’s forget it and start over. You have to pay the price. Until we pay the price this is just going to get worse and worse. The debt is going to go higher and higher and money printing is going worse and worse. It’s not going to be fun in the end.
GEOFF CANDY: You’re on record as saying at the moment you’re preferring silver to gold. What are the reasons behind that?
JIM ROGERS: I just said that on an historic basis silver is cheaper than gold. Silver is about 40% below its all-time high, and gold is 10% or 15% below its all-time high. Nothing more than that.
GEOFF CANDY: There’s been talk over the last few days about the fact that the Republican Party put the potential for a return to the gold standard on their party document. It seems unlikely that that would actually happen. Is this purely a political ploy, do you think, or would we likely see perhaps a changed role for gold, should we see a change in the White House?
JIM ROGERS: No there’s zero chance of that happening – let’s say the Republicans win in 2012, zero chance it’s going to happen in the next four or five years. It’s a sop to Ron Paul and to some of the disgruntled members of the Republican Party – zero chance.
GEOFF CANDY: In terms of the gold market we’ve seen it hit record highs in rupee terms as well as in other currencies. There has perhaps been a weaker market in jewellery demand from India and from China of late. Is that purely due to higher prices, do you think, or is there likely to be perhaps a decline in some of the demand from a jewellery point of view from those two markets as prices go up.
JIM ROGERS: Well it’s the result of higher prices, full stop. Whenever prices go up if people are buying jewellery they stop and have second thoughts. Now are the Indians and Chinese going to continue to buy gold, yes I’m sure they are, but the Indians have been buying gold for a long, long time. The Chinese on the other hand have only been buying gold for a few years and they’re certainly not saturated. I don’t know if the Indians are saturated, but the Indians essentially have all the gold they need but I know that the Chinese are not saturated – the Chinese will buy a lot more gold over the next decade. Whether they’re going to buy this year, I don’t have a clue.
GEOFF CANDY: In terms of China and the current state of macro-economic policy there, there was talk of China perhaps easing policy slightly. What do you make of the current situation and how is it likely to play out?
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