Author and hedge fund manager Jim Rogers believes the commodities supercycle is far from over, he told The Bullion Desk on Thursday, singling out palladium among his top picks in the sector.
“In bull markets, there are always periods of consolidation and setbacks and this market is no different,” the commodities guru said in an exclusive interview.
There were several correction in equities between 1982 and 2000, he pointed out, drawing parallels between the bullish stock market then and commodities now.
“In 1987 stocks were down 40-80 percent worldwide and it took a long time for it to get above pre-correction levels but the bull market was not over,” he said.
“We are seeing the same normal correction happening in commodities now.”
“But we have not seen enough supply come on stream yet in any commodities sector, except maybe iron ore or something like that, to bring supply and demand back in balance,” he added.
With this in mind, he was not ready to call a top in the commodities markets yet, he said. “I may be wrong – I have been wrong many times in my life – but I suspect that we will see many more months of rising commodity prices,” he said.
But commodity investors will have to be more selective and careful as the end of the cycle approaches, Rogers warned. “Commodities will end in a bubble by the end of the bull market, whenever that is – whether that is in two years’ time or five years’ time.
Commodity markets normally end in a bubble and this one may be no different,” he said.
Still, the continuation of loose monetary policy by central banks around the world may yet extend the life-span of the current leg of the supercycle, he added. “I don’t think the cycle will last 10 years but who knows?
Governments are still printing money and this has gone on for much longer than anyone expected, which could help fuel the commodities boom,” he said.
He picked agriculture as one of his favourite picks in the commodities space but also sought to highlight palladium, which he described as “depressed”.
(Editing by Mark Shaw)