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Jim Rogers: I Hate the US Dollar, But I Own It Anyway

Monday, 14 May 2012 09:27 PM

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The dollar is not the "safe haven" asset that everybody thinks it is, but it's a good investment in the short term because everyone is buying it, says famed commodities investor Jim Rogers.

European debt worries have fueled safe-haven demand for the U.S. currency, which has sent commodities like oil and gold falling.
That makes the greenback a good investment — for now.

"It's a horrible currency to own, but I own it," Rogers tells CNBC. "In times of turmoil, such as in Europe, everybody flees into the dollar. It's the wrong thing to do. It's not a safe haven, but everybody thinks it is so I own it, too."

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

"I own more dollars now than I've owned in years."

For Rogers, loose monetary policies have weakened the dollar and will keep it weak in the longer term despite recent gains.

Since the downturn, the Federal Reserve has pumped trillions of dollars into the financial system with the aim of stimulating investment and hiring, a policy tool known as quantitative easing that weakens the dollar in exchange for more robust economic activity.

Turning to gold, Rogers says recent price declines are normal.

The metal has fallen from a peak of over $1,920 an ounce in September of 2011 to around $1,560 an ounce today.

"Gold has been up for 11 years in a row. It should correct," he says.

Gold is dropping not only due to the stronger dollar but also due to import curbs in India, one of the world's largest consumers, as part of a measure there to narrow the country's trade deficits.

Long-term, agricultural investments look solid, including owning productive land, Rogers adds.

Turning to equities, Rogers says he owns very little — none in American companies — and doesn't expect a surge of retail investors to return to the stock market.

"Volume is not going to come back. Finance had a great 30 years. That's finished," Rogers says.

"Learn to drive a tractor if nothing else," Rogers says, referring to his bullish view on the agricultural sector.

The country also needs to brace itself for a fresh recession in 2013 or 2014, Rogers adds.

"In America, we've had recessions every four to six years since the beginning of the Republic. Next year is four to six years."

The European debt crisis, meanwhile, continues to send investors flocking to the dollar, especially as a political stalemate drags on in Greece.

Recent parliamentary elections left no bloc of political parties in control and despite talks, centrist and leftist political parties have been unable to agree on a coalition government, which has fueled fears Greece may be headed to a second round of elections, an event many see as sign the country is set to abandon the eurozone.

The head of Greece's leftist political party Syriza, Alexis Tsipras, has refused to attend negotiations with other political parties due to his staunch opposition to austerity measures tied to bailout money.

Gold, the dollar's traditional hedge, has fallen amid such turmoil.

"This puts the whole election back in doubt and suggests that we’re going to have a second election sometime in the middle of June," Boris Schlossberg, director of research at the online currency trader GFT Forex in New York, tells Bloomberg.

"We may come to a fiscal crisis point before we have a political resolution. All of that is pressing the euro down right now."

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

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