Market Voice: Jim Rogers, Investment expert

'Crude oil prices will continue to rise for years'

The price of crude oil climbed to its 30-month high of $106 a barrel on escalating tensions in Libya. Investment expert Jim Rogers, in an interview with Krishna Merchant, said crude oil would continue to go higher because the world was running out of known reserves of oil. He also said the dollar was losing its status as the world’s reserve currency and expected the renmibi to appreciate a lot in a few years. Excerpts:

Crude oil prices have been rising. Do you see supply constraints on mounting pressure from West Asia or speculation?
Of course, it’s supply constraints. Libya has closed down some of its oil production, while Egypt is having problems with its production. There are turmoils in many countries and this is causing supply problems.

These may be temporary problems, but the world, in the mean time, is losing some of its inventory. So, if there is calm and peace tomorrow, we may have oil go down for a while, but the basic problem that the world is running out of known oil reserves continues.

What is your medium-term outlook on crude oil?
Crude oil will continue to go higher, though there can be intermittent corrections. The price of oil is going to continue to rise for years to come.

The dollar index has fallen almost 6 per cent in the past three months. Do you feel that the dollar is losing its appeal as the reserve currency?
Yes, it is an ongoing process. The correction has been severe. But, that is going to happen with the US dollar, as it continues to lose its status as the reserve currency. It is a terribly flawed currency.

Are you investing in other currencies? Which is your favourite and why?
The renmibi is my favourite currency. China has a gigantic balance of trade surplus, and it is the largest creditor nation in the world.

It has a lot of things going for it. Clearly, a currency that can and will go up is the renmibi.

The Chinese are trying to hold it down now, rightly or wrongly. And, I think it is a mistake to try to hold it down. But, the renmibi is the currency that has to appreciate a lot in the next few years.

The bull run has just begun in agricultural commodities. How long do you see that lasting?
I am very bullish on agricultural commodities, probably more than other class of commodities. My favourite agri-commodity is rice.

What is your outlook for gold and silver?
I own both gold and silver and I am neither selling nor buying these two precious metals at current levels.

This week, there are supposedly going to be mass demonstrations/protests in Saudi Arabia. If this happens, gold and silver prices will surge and I will then buy. So, I am not buying gold and silver right now, but I am certainly not selling.

After the recent correction, how are you viewing the Indian equities?
I am just watching. I have sold/short emerging markets and emerging market (EM) ETFs.

EMs have been one of the most exploited sectors of the market in the last two-three years. I have sold/short emerging market and I am not buying any markets anywhere except commodities.