Pension funds must keep the faith in commodities –
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.
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.”