Investment and commodities guru Jim Rogers says we’re heading toward the worst bear market in his lifetime.
Rogers recently spoke a the MoneyShow in San Francisco. He said the first thing we need to understand is that in the wake of the 2008 financial crisis, the Federal Reserve “came to the rescue” and drove interest rates to the lowest level in recorded history.
"Never in the history of the world have interest rates been this low. In some countries, they were actually negative. This has never, ever happened in the history of the world. Some Federal Reserve governors, when they think nobody’s listening, they acknowledge that this is an experiment. They don’t know how it’s going to wind up.”
But Rogers said he knows how it’s going to wind up.
"We’re all going to pay a horrible price for this someday. Interest rates are going to go back to normal levels, probably even higher than normal levels, eventually. And when that happens, all of us are going to pay a very, very serious price.”
Roger’s emphasized that we have always had bear markets and we’re on the cusp of another one.
"The next bear market is going to be the worst in my lifetime, and I’m probably among the oldest here, if not the oldest, so it’s going to be a pretty horrible bear market.”
Rogers noted that the last bear market was caused by too much debt. Well, today we have even more debt. In fact, the world is drowning in debt. The Fed’s balance sheet has gone up over 500% over the last decade. Over the last 30 years, the US went from being a creditor nation to the largest debtor nation in the world. No wonder Rogers isn’t optimistic about the bull market running on forever.
Rogers talked a little about the US dollar saying he holds a lot of greenbacks right now, but not because it’s a strong currency. In fact, he said he thinks we may well see a dollar bubble as investors turn to it as a “safe-haven.” But it’s not really a safe haven. Again, the US is the largest debtor nation in the history of the world. And as we all know, eventually, bubbles pop.
So what should we do?
Rogers didn’t get into it in this particular presentation, but MoneyWeek quotes him as recently saying gold and silver are both “going through the roof.”
"When the crash comes, gold will fall at first, just as it did in 2008. The dollar will rise as global investors flee to the safety of the world’s reserve currency. Once the damage to the US is clear, and investors remember America’s huge debt pile and penchant for money-printing, demand for gold is likely to jump.”