News: I do not think you will see another round of negative oil price: Jim Rogers-21-04-2020
Updated On : 21-04-2020
What happened with WTI was for a special reason, says commodities guru.
Are you rubbing your eyes in disbelief that crude price became zero last evening? What do you think the implications of this would be for oil-producing nations, for oil-producing companies, for shale gas producers? Are we staring at a serious bankruptcy coming in for the entire oil supply chain?
You are already seeing bankruptcy. Some shale producers in the US have declared bankruptcy, and some drilling companies. So it is happening. But last night was an aberration. I do not think you will see another one like that. The June contract is over $20. In Europe, oil is over $20. So I do not think oil is going to stay at zero. It was only one night for one special reason.
When commodities crack, it is nothing else but pricing power shifts from commodity producer to commodity consumer. Are we looking at a new order in the world where the total wealth effect will shift away let us say from oil producing nations like Russia, Saudi Arabia, Kuwait, Nigeria, Venezuela to consuming nations like India and China?
This is great. You are very preceptive. This is good for China. It is good for India, good for Germany, good for Japan. It is good for Korea. It is good for oil-consuming nations. Oil producers are suffering now. And many other companies in those countries as well. So for the world, yes, it is good. There will be bankruptcies, but you go out and drive to Mumbai. You will have fun.
You have been making a point from last couple of years that central banks will continue to print more money and that will ensure liquidity, which will take commodity prices higher. Would you still argue that it is a matter of time commodity prices will start going higher?
Yes. See what happened to gold. Gold is making eight, nine-year highs. So some commodities have already started being affected. Oil is collapsing for special reasons, which we have discussed, it’s the oil and gas price war between Russia and Saudi Arabia and America’s shale producers. But some things are already starting to go up.
When I spoke to you five years ago, you said if you want to get rich, you need to stack up some sugar in your pocket, get a silver spoon and start eating rice with that. So in the post Covid world, if somebody has to make money or get rich, what should one do?
You can go buy sugar, I hope you stock up. I hope you purchase yourself some sugar, buy yourself some rice. Agriculture products will be going higher, especially things we eat. Because this is having a knock-on effect with farmers everywhere. But also make sure, you have some gold. Most of the Indians have some gold. Most Indians love gold. If you do not have some gold, be sure you have some of it, because before this is over, gold is going to go much higher. I prefer silver at the moment. In fact, I am buying silver as we speak, both will do well.
Would you be tempted to take a relook at equities, because you have not liked equities in a long time? After the recent fall and given that things will change in the short term, would you be looking at buying equities?
I bought a shipping company yesterday and a Chinese wine company. So yes, I am looking at it now as we speak. Transportation and tourism have been crushed everywhere in the world.
What is your understanding of what will do well and what will not do well in the post-Covid world?
Things that are going to do well are things that have been crushed. I mentioned transportation, shipping, tourism, hotels, restaurants -- all of them are being crushed right now. They will recover and do well. Some of the things are obviously going to succumb. You have made great progress is medical care over the internet, most people never would have tried it. But now they are being forced to try it. So it is going to accelerate. Likewise with home delivery, most people never would have tried having food delivered at home, but now they have to. So healthcare delivery, food delivery anything like that, education. My children are out of school, but they are doing schooling on the computer. Most people never would have tried it, but now they are being forced to try it. So all of these things are going to accelerate.
I must admit this on national television that I love reading your books. I have read a couple of them and some of them couple of times also. So if you have to write a book on how can one make money and reboot themselves both in terms of productivity and asset allocation in the post-Covid world, what would be the title of that book? How will the book start and how will it end?
First, I want to tell you that ETNOW is my favorite or certainly one of my favorites in the world. Whenever I am in India I watch and I read the newspaper as well. What you need to do no matter what is happening in the world is stay with what you know. Please do not listen to me or other people you see on the internet or on television. If you want to be successful, stay with what you know. If I told you that you could only have 20 investments in your life, you would be very successful, You would not be jumping in and out. You would know what you are doing.
So, my book would say stay with what you know and then some of things that we all will know, we all will know about medical care over the internet. My children will never go to a post office when they are adults. My children may very rarely ever go to a bank, when they are adults. You are going to see a lot of empty property – banks, post offices all over the world. So there are going to be great opportunities. But stay with what you know. Please do not listen even to ETNOW. Stay with what you know. The world is changing. As I said, my children will never go to a bank, but they will have money and they will save and they will invest, but everything will happen on the internet.
