Now May Be the Time to Buy the Euro: Jim Rogers
Web Producer, CNBC.com
Everybody is so bearish about the euro that it looks like now is a good time to buy the single European currency, famous investor Jim Rogers told CNBC Thursday.
Rogers' long-term bet is on commodities, as he predicts that governments will keep printing money to get out of their debt problems and this will flare up inflation.
"I'm as confused as anybody else… I'm basically short stocks and long commodities and trying to figure out whether to add to the euro yet," Rogers told CNBC.
"Everybody is terribly negative on the euro right now, it's unbelievable how many bears there are and usually that indicates a rally," he said.
Other contrarian traders are considering buying the single European currency.
"The euro is failing to rally on good news — whether of an economic or a political nature," wrote Audrey Childe-Freeman, senior currency strategist for Brown Brothers Harriman, in a note to clients.
"In this context, it is rather controversial to be anything but a euro bear, but this may be the time to identify a few constructive developments and to get prepared for a potential correction" to the upside, Childe-Freeman wrote.
The euro was trading higher versus the dollar Thursday, ahead of the European Central Bank's monthly meeting on monetary policy.
But Rogers said his decision to buy the euro would not be based on the soundness of euro zone policies to contain debt.
"Basically it's a technical rally," he said. "Once a technical rally starts, who knows where it can go from that."
But the only big bull market he sees over the next decade will be in commodities.
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Central banks will start printing money again "because that's all they know to do, they don't have more sense than that" and inflation will rise, so owning any hard assets will be good, he predicted.
But investing in commodities is not a safe game and those who are thinking about getting into debt to take advantage of a bull market should always know very well the market they are buying into, Rogers warned.
"If you cannot spell commodities I wouldn't suggest buying commodities. Please, you'd better know what you're doing if you're going to use a lot of leverage," he said.
He does not own stocks of companies linked to commodities, because there are lots of risks associated with stocks.
- Watch the full interview with Jim Rogers above.
"I actually own some Australian mining shares but I own them for 10-12 years and I'm not buying them now," he said. "Unless you're very, very good at stock picking, you should own the commodities themselves."
Rogers said he is shorting the technology sector, emerging markets and the US stock market.
In the financial sector, he said he was short "one major Western financial institution" with headquarters in North America. He was not short other banks, because their prices had not risen enough, he said.
His views on the financial sector are not optimistic and he believes Wall Street and the City are going to lose their appeal in the coming years as the economy turns more towards tangible goods.
"You should become a farmer, you should become a miner, go into the production of real goods," Rogers said.
The price of oil is likely to rise further because, following the Gulf of Mexico oil spill, there will be more restrictions on offshore drilling in the US and maybe elsewhere, he said.
BP is on Rogers' radar screen but he is not buying it yet and he does not have a price target where it would be a good buy. "I wouldn't judge it on price, I would judge it on time," he said.
If there is a slowdown in the US and in the euro zone, it is also going to affect China, he predicted.