Jim Rogers fears the worst for Japan.
In an interview with Fusion MarketSite, the emerging markets and commodities guru says there is no way Japanese PM Shinzo Abe’s growth policies can possibly succeed — there are already many trends working against him, and his plan will only make things worse.
Here’s the exchange:
Fusion: How does it end in Japan – in tears ?
Rogers: Of course it does. Japan has a very serious problem. When we look back, Mr. Abe will have ruined Japan. Huge debt levels, horrible demographics, they won’t let in foreigners, the population is declining. Mr. Abe comes along and says he’ll ruin the currency. It is a disaster in the long term, and not guaranteed to work in the short term, either.
Rogers went on to say he remains bullish on China, and that the only thing that can stop it is a resource crisis — specifically, with its water supplies:
The only way the China story runs into big problems is if they run out of water. China has a major water problem. They are working hard to solve it. I believe they will solve it. If you want to make a lot of money find companies that are working to fix that problem. As for their stock market, it’s getting closer to a buy. I bought a few shares on Friday. Their market is getting to the point it should be bought.
Rogers said he believes the U.S. shale revolution is overhyped:
Regarding natural gas, the fundamentals on the ground are not nearly as good as the hype. The number of rigs on the ground has gone down 75% the last couple of years, as the wells are very short-lived, and it takes an enormous amount of money to keep them up. A number of companies have had to lower estimates of their reserves. As for oil shale, typical wells deplete at 38 per cent the first year. Thus you need a lot of drilling, money, and a high price to keep up production rates. All you have to do is go out in the oil patch. I believe the investment world will be disappointed with the notion that supply is so great that oil will collapse.
Finally, on gold, Rogers is convinced recent declines are merely a hiccup:
It’s gone up 12 years in a row. I don’t know of any asset that goes up 12 years in a row. So just from a technical point of view, maybe it needs to go down some more. But from a fundamental point of view it will be a buy. There are some short-term factors hurting gold. The Indians are trying to restrict the purchase of gold, as it’s the source (along with oil) of their trade deficit. I have not sold my gold and plan to buy more if it keeps dropping. And yes, I did call for a correction a while back, and sometimes I do get it right !
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