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Pension funds must keep the faith in commodities – EXCLUSIVE
21 October 2008

Written by Sophie Baker

Pension funds must continue to invest in commodities, despite recent scares and turmoil across the financial sector, says veteran commodity investor, Jim Rogers.

Rogers told European Pensions that a blanket exposure to commodities should be maintained “especially for pensions” as “it is the only way they can protect themselves from inflation and the printing of money”. He said that, for pension funds, investment in commodities is “one of the best [options] for the next decade, if not the best”.

At a previous media briefing, Rogers explained that he is optimistic about commodities, and predicted that the bull market for the products would only gain strength, citing past examples of commodity trends, and admitted that he had bought into some more commodities within the last week.

Pension funds must keep the faith in commodities Rogers said the downturn is “cyclical”, and while he said he anticipated it occurring, he did not expect the speed of the fall. He took questions on the next big commodity, and said he was unsure about water, since trading is difficult.

However, if something could be done, water “has a stupendous future”. He added that many US pension funds are investing in timber, and he is optimistic about its potential.

Talking more generally about the economic turmoil that is currently gripping the globe, Rogers said that Americans are making terrible mistakes, and “ensuring the recession lasts longer”. He said the system that has worked historically was to let the banking systems collapse – and since the US will not allow this to happen because of the bailouts, “the problems will probably last longer than they should”.

Rogers also admitted that he had lost faith in the American dollar, and said that by this time next year he does not want to own anything in dollars. He predicted that, should the dollar fail within the next year, the Euro, which he labelled a “political currency”, will step in for investments, but added that should it happen in the next 15 years he does not think the Euro will actually be around. “It could be a huge disaster – there’s nothing in place for it if it does happen.”