Speaking to hosts Matt Nesto and Jeff Macke of the Yahoo finance’s new daily trading and investing show “Breakout,” world-renowned investor Jim Rogers said he is considering buying the U.S. dollar at current levels.
Rogers, a U.S. dollar bear in the longer-term, has in the past repeatedly stated that it’s unlikely that the dollar will go straight down and that from time-to-time overly negative sentiment on the dollar in the short term could pose a buying opportunity—as when he predicted a rally in the dollar in the fourth quarter of 2009.
The U.S. dollar reached an intermediate low of 74.227 on the USDX on Nov. 25, 2009, then rallied strongly to as high as 88.708 on June 7, 2010.
“I’m actually thinking of buying the U.S. dollar. I see that it is really getting pounded right now,” he said.
For decades, significant geo-political concerns have herded investors to the safe harbor of the world’s reserve currency. Now, dollar weakness shown throughout the period of rolling crises in N. Africa, Middle East, and now, Japan, has Rogers hedging his view of the greenback.
But today, Rogers sees another opportunity to buy the dollar, but with a condition.
“We’re at a moment of truth for the dollar,” Rogers continued. “If the dollar breaks and keeps going down now . . . there’s a lot of good news for the dollar: the Middle East is erupting–supposed good news for the dollar. All of these people are supposed to be fleeing to the U.S. dollar as a currency for safety. But it’s not happening. When you start seeing good news for something and it goes down, it’s usually a good sign that you better get out fast.”
The dollar’s next move is critical, he said, as a break down to near the all-time lows for the currency at approximately 71 on the USDX achieved just prior to the Bear Stearns meltdown of March 2008 will turn him into a seller of the dollar.
“If it [dollar] keeps going down, I’m going to have to dump the rest of my dollars, and then it’s all over for the dollar.”
However, if the Greenback stops sliding from its present 75.60 level on the USDX, Rogers will consider buying dollars again for what he sees could be another significant rally.
“I am thinking about buying it [dollar], because if it doesn’t keep going down, then it’s going to have a big rally,” he offered. “If it holds here, it probably could go up 10% or 12%–no, maybe 20%.”
But on the downside, Rogers put the dollar on a short leash, “If it goes down 3% or 4% from here, I would have to sell and get out and hope I’m still solvent. Then it’s going to, you know, multi-decade new lows.”
“Somewhere along the line we’re going to have a tipping point for the dollar, then, it’s all over,” he concluded. “I thought it would happen in a few years; maybe it’s going to happen in a few weeks.”
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