What do Jim Rogers, Marc Faber and Richard Russell have in common? All three men possess a gift for analyzing financial markets independently and cautiously, and do so with decades of experience. Each man sells nothing but what’s on his mind—the best kind of advice to cautious investors.
All three expect 2011 to be a troublesome year, with the growing possibility of unpleasant surprises, turmoil and wealth destruction.
Starting with Rogers, the commodities market prodigy of the famed Quantum Fund: he expects all real assets to enjoy a tailwind of inflation as central banks worldwide bailout banks, businesses and sovereign nations with as much fiat currency as required to forestall default.
“We’re going to, I think, see some of the highest prices we’ve ever seen in many commodities in 2011,” said the 68-year-old Rogers in an interview with India’s Business Channel, ET Now, Jan. 3.
“I’m very optimistic of all real assets—commodities. Government continues to print money. We have shortages developing of everything. And that’s going to continue,” he added.
As a humorous note, during a typical rant and condescending tone he regularly uses to express his disgust for U.S. Fed policy, Rogers’ audio cut out. In another candid moment, Rogers playfully commented, “I said the wrong thing.”
The no less candid Marc Faber, the publisher of the Gloom, Boom and Doom Report, strongly suggests that the result of the U.S. Fed’s policy to deliberately debase the U.S. dollar by setting short-term interest rates artificially low will lower Treasury bond prices over time. He has repeatedly warned of a Treasury market bubble.
“This [long-term U.S. Treasuries] is a suicidal investment,” Faber said to Bloomberg in a telephone interview from St. Moritz, Switzerland. “Over time, interest rates on U.S. Treasuries will go up. Investors will gradually understand that the Federal Reserve wants to have negative real interest rates. The worst investment is in U.S. long-term bonds.”
Faber has said repeatedly, “I will never sell my gold,” agreeing with the Rogers thesis of escalating inflation as a direct result of central bankers coordinated monetary policy headed by the U.S. Fed.
Faber, who heroically predicted a huge rally in stocks at the March 2009 lows, likes gold, commodities, farmland and emerging market opportunities as a means of hedging against the depreciation of the world’s reserve currency standard bearers—the U.S. dollar, euro, British sterling and Japanese yen.
In his latest missive, Richard Russell, the octogenarian and dean of investment newsletters, wrote in his latest issue of Dow theory Letters, “expect the unexpected” in 2011.
Russell, who served in WWII as a foot soldier in the European theater, sees trouble brewing in almost any parts of the world, and is also concerned that the U.S. debt load is no longer serviceable.
“This year might even be a black swan year,” Russell writes. “Certain events are now in place, events that have never been seen before in human history … we are dealing with debts so monstrous, so huge, that most people can’t fathom them … The Muslim community is huge, and it has moved heavily into many European nations. The radical Muslims intend to express their world leadership … Dictators in North Korea and Burma and Iran and Africa are no longer safe in that they can no longer keep their populations ignorant and in slavery,” he added.
“There is a huge disparity between the wealthy and the poor. The poor greatly outnumber the wealthy. This has all the ingredients for revolutions in the age of instant and world-wide communication.”
The makings of a “black swan” event are in place for 2011, he concludes.
Russell has remained firm for several years that investors should evenly split their portfolios between gold and short-term Treasuries until further notice. According to Russell, this is the first time in more than 50 years of publishing his newsletter that he suggests such a high portion of gold in investors’ portfolios.
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