Ukraine crisis: Commodities the best place to be right now, says Jim Rogers

I suspect sometime in the next few days the market should bottom out and then see a sharp rally, says Rogers

The markets have been on a roller-coaster ride over the past few sessions against the backdrop of the war between Russia and Ukraine. The development has sent prices of most commodities, including oil, soaring with Brent crude hitting $113 a barrel. JIM ROGERS, chairman of Rogers Holdings, tells Puneet Wadhwa in an interview that investors should buy asset classes that they know and are comfortable owning. Edited excerpts:

What is your interpretation of how the recent geopolitical situation has unfolded and the way markets have reacted to it?

Historically, the markets do not like war. The (war) outbreak happened when the markets were strong and expensive. Inflation is coming back strongly and interest rates, too, are on an upswing. All this triggered a market correction. I think the geopolitical situation will calm down soon and then the markets will rebound. Central banks are worried and may not hike rates aggressively. As a result, the markets will have a big rally — maybe later this year — which can be their last rally.

How sharp a downside do you see from the current levels?

Typically, panic situations like th­ese mean that the bottom is near. I suspect sometime in the next few days the market should bottom out and then see a sharp rally.

How should investors navigate this uncertain phase for the markets?

People should always invest in something they know about. Stay with what you know and be in your comfort zone. I own silver and agriculture (stocks & commodities) and may buy more. If you do not know about asset classes you plan to invest in, it is better to avoid them.

Will global central banks continue with money printing until the geopolitical situation and its fallout is under control?

Mr Vladimir Putin (Russian president) has become a central figure and the markets are reacting to his actions. All I can say is things are not going well for him. I suspect he will like to get out of this situation somehow. If the world can find a way for Mr Putin to get out of this, there is a lot of money in the system waiting to get deployed. Peace, liquidity, and central banks not hiking aggressively can trigger a market rally from here on. Global central banks will not hike aggressively hereon as they’re scared. That said, inflation will get worse and there is no escaping this. If you invest accordingly, you will make money. Commodities still look cheap at the current levels and that’s what I am looking to buy.

So, which commodities are you looking to buy more of — gold, silver, oil, or metals?

I have invested in silver and gold; will buy more upon a correction. That said, I will buy more agriculture-related stocks and agricultural commodities than anything. There is a fundamental reason to buy as well, which is electric vehicles that can trigger a huge demand coming for lithium, lead, and copper.

Do you think global central banks will not hike aggressively as envisaged earlier?

The US Fed has never been smart and its rate stance has led to inflation. More inflation will lead to higher interest rates. The US Fed will try to stop it but eventually, the markets will take control. No matter what the US Fed does, interest rates will edge up. It’s dangerous when central banks no longer have control; that’s what causes bear markets, and we are headed there.

How do emerging markets look against this backdrop?

Some emerging markets have a lot of commodities and natural resources, and are low on debt will benefit when commodity prices start going higher. That said, I own Russian shares and will buy more once this geopolitical crisis calms down.

What about India?

Indian equities have been strong and are among the best in the world. I don’t like buying things/markets that are strong. I will buy Indian stocks upon a correction. The Reserve Bank of India (RBI) has supplied enough money. Hence, the Indian equity markets can continue to be very strong. That said, I do not own any Indian stocks right now.

Which other asset classes and equity markets do you find expensive?

The bond markets are in bubble territory and have never been this expensive ever and so is property/real estate in New Zealand, India (some cities) & South Korea. Some stocks across the globe are also in the bubble zone. However, silver and agri commodities are some asset classes not in a bubble zone still. Hence, commodities are the best place to be right now. I prefer to look/invest in the markets that are down and not up.

What’s your advice to investors in the equity market?

In my experience, when the markets get hit by outside events, such as a war, it usually is a chance to buy. That said, I would start buying soon and focus on commodities as they’re the cheapest assets right now. But, buy only things that you know about.