-->ist schon etwas älter (Juni 2003) war also wahrscheinlich schon einmal hier?
Er spricht dabei haupsächlich von den guten Aussichten der Industrierohstoffe wie Blei und Co. ;-)

The Coming Commodities Boom


It may have been Meyer Rothschild, the German banker and patriarch of the legendary House of Rothschild who, when asked how he got so rich, attributed his success to two things. He said he always bought when there was blood in the streets - panic, chaos - when despondency gripped the markets. (In old man Rothschild’s case, investing amid the turbulence of the Napoleonic wars, the blood was just as likely to be literal as it was to be figurative.) And he always sold “too soon”. He did not wait for enthusiasm to peak. He always knew when to get out, and he got out in time with all his money.



I doubt Meyer would be buying U.S. stocks these days, since he always waited for serious despair. After all, many on Wall Street are still taking in big money, employment there is down only slightly, stocks are not cheap by historical measures, and mutual funds are still thriving. He would probably point out that Japanese mutual funds have lost 95 percent of their assets since 1990; that is more like real blood in the streets.



I suspect that old Meyer, if he were around today, would have moved his investments to commodities, after having gotten out stocks earlier. There have been long periods when stocks did well while raw materials did horribly - the 1980s and 1990s, say. The late 1960s and the 1970s saw the reverse. From 1906 to early 1920s stocks did nothing while commodities boomed. It may sound radical, but it has occurred repeatedly. These cycles always have occurred as supply and demand patterns have shifted. Everyone invested in stocks in the 1980s and 1990s, but little money went into productive capacity for natural resources. There was a glut after the great boom of the mines or offshore drilling rigs. Demand has continued growing worldwide, eventually to exceed supply, which has been flat for years. Asia alone has become a huge buyer; China is now already one of the world’s largest importers. Excess inventories built up in the Cold War have been liquidated. We now have a classic change. Raw materials supply and demand are out of whack again, and inventories are down. Commodities will do well for years, while stocks, recovering from the bubble, will do little.



The new commodity bull market has started, but few realize it yet, just as few recognized that a new bull market in stocks had started in the 1980s. Commodities rose more than 80 percent between 1998 and the beginning of 2003, while shares were down substantially. (RubbetNet’s Notes: A list of 20 commodities shows average gains of 77% since the historic lows recorded in the late '90s/early '00s period.) The government, Wall Street, and the media keep telling us that prices are not rising, but one can go over to the commodity pages to check reality. War and the printing of money just ensure that the commodity boom will last even longer.



But it will not last forever. Someday, in several years, we will have to sell our commodities and go back to stocks. Merrill Lynch no longer has commodity brokers because it is such a bad business. When Merrill Lynch goes back into the commodity business and CNBC starts broadcasting from the soybean pits in Chicago, sell and buy stocks.



And here is an extract of an interview he gave in June 2003:

Taylor: If we could, I would like to switch to the Rogers Raw Materials Fund and the topic of commodities. You said in our last interview that you thought lead would appreciate more in percentage terms than gold. Many of my readers thought that was kind of funny. But I don’t think you meant it to be funny. Do you still believe that in percentage terms lead will appreciate in value more than gold and if so, could you explain why?

Rogers: I got out my Wall Street Journal today Jay and looked it up. Gold is up 7.5% from a year ago. Lead is up 10%.

Taylor: Well that is a year ago, so I guess you were right.

Rogers: No, no. Neither one of us are talking about one year, but just to make a small point. Basically I was making a humorous point but it was also very real as you aptly point out. Most commodities are going to do better than gold. I am long gold. I own gold and gold is in the fund. But the best commodities will be other commodities. Lead and other commodities will probably continue to do better than gold over the next few years.

Taylor: Well the objective of your fund is to buy commodities that reflect the cost of staying alive. I suppose you could argue that gold is one of the least essential materials in your fund in that regard unless you believe we are heading for a deflationary event that takes commodity prices lower in relation to gold as people demand gold as a medium of exchange instead of paper money.

Rogers: Yes and that’s why gold has a lot less percentage weighting than oil in the Rogers Raw Materials Fund. Wheat has a bigger percentage weighting than gold. Food has a whole lot heaver weighting than precious metals. Gold does have uses besides jewelry, but it is not nearly as important to the world as wheat for example. Even if we have deflation, other things may do better than gold. Remember the world has used many, many things as media of exchange over the centuries. A currency collapse may cause people to use gold, but a currency collapse is not necessarily deflation. In fact currency collapses are usually inflationary. People might then use gold, but other things may have gone up more.

Taylor: I certainly think gold is mainly a monetary asset because there are 40 some years of above ground supplies. No other commodity including silver comes close. In most commodities you don’t have more than a supply for several months.

Rogers: Which is one reason I am more bullish on the others than gold. It has this gigantic inventory of gold and there are a lot of people who, rightly or wrongly want to sell those inventories including the dopes who run central banks.

But it has to be balanced because oil is a lot more important to a German than it is to say a South Vietnamese. Or rice is a whole lot more important to a South Vietnamese than it is to a German. There has to be a balance. It is very difficult to say that one percentage fits everyone around the globe. So we have had to make a judgment as much as anything else in making allocations to the fund.

Taylor: I think you have about 40% to hydrocarbons (oil, gas, heating oil, gasoline, etc.). That doesn’t change from time to time or does it?

Rogers: It hasn’t changed at all. It doesn’t mean that it wouldn’t be changed. For example if we find out that wheat causes cancer, chances are it would come out of the index. So if rubber cured cancer we would have to put a bigger percentage into rubber. The index is designed to be very stable and so there have not been any material changes since the fund’s inception.

Taylor: I think I understand the bullish arguments for oil and gas and I suppose it would not change much from last year when we talked to you. In general as I understand it, there has not been much in the way of new capacity in many commodities over many years. At the same time you have a reallocation of wealth toward China and other developing countries where demand is growing very rapidly.

Rogers: Demand is growing and supply is not. It is that simple for all of them. Remember Jay, it doesn’t matter if I am bearish or bullish on any given commodity or not. It is an index. If I bought the S&P Index it doesn’t mean that I like every stock in the index. I do happen to be bullish on oil and gas, but that isn’t why it is in the index. It is in there because it is the most important raw material in the world.

Taylor: I know you don’t own coal in the fund because there are no public markets for coal. But in the U.S. we have a tremendous amount of coal and we now have many clean burning technologies that could allow coal to be more widely used as an energy source in the U.S. Do you suppose there may be some good coal mining investments in the U.S.?

Rogers: Absolutely. But I can’t have coal in an index fund because you can’t price it every day unless it’s traded on a public market.

Taylor: But would you look at coal companies as an investment?

Rogers: Coal may have a very good future, does have a good future, especially if the price of oil and natural gas go up, because that would make coal more competitive. So yes, I am optimistic about coal. It is a raw material. I’m bullish on all raw materials but can’t put it in the fund since there is no public market for it.

Taylor: Since we last spoke, there has been increasing talk and concern on Wall Street about deflation. Stephen Roach of Morgan Stanley has been persistently voicing his concern that we are slipping into a deflationary position not unlike Japan. So, people like Greenspan and Bernanke have been assuring us there is no reason to worry about deflation because they can print all the money they want. I for one am skeptical that the Fed can print our way out of a debt deflation scenario because every time interest rates are cut, we increase debt. Debt is the raw material from which money is created in a fractional reserve banking system such as ours and now, total debt in the U.S., which stands at $34 TRILLION, is growing exponentially

Meanwhile, GDP, which is constrained by natural laws of economics, is growing in a linear pattern over time. So I see a problem with the argument that Greenspan can simply avoid deflation by printing more money, since money in our system can only be created by more debt and debt is deflationary. Most people, I believe you included, do not agree with my view on this that deflation is ultimately unavoidable. Assuming I understand your view on this inflation/deflation debate, could you tell me what I am missing?

Rogers: First you don’t quite get my view. My view is that there will ultimately be a deflationary collapse, but that there will be an inflationary crisis first. What will happen and what has happened throughout history is that you have the central banks printing money in an attempt to save the day, but ultimately it leads to a collapse. And for a while, a year, a decade or whatever, people will ultimately not take the money any more and then you have a deflationary collapse.

You say that to increase the money supply you have to increase the debt. But that isn’t true if you simply take an airplane and fly over the countryside and throw the dollar bills out the window. Bernanke said they will do what they have to. So they can just print money and push it into the economy without any debt added into the system. That is my only point. No Congressman or bureaucrat is going to say,"Ok let’s bite the bullet. Let’s address this problem because if they do, the pain will become very bad very quickly. And so they will then open up the gates again. They will print money, which will ultimately lead to an inflationary collapse, which obviously leads ultimately to a serious deflationary problem.

But if you think we are going to have a deflationary collapse first, you don’t understand"modern central banking." If that is your view, then you don’t understand what a"printing press" is. Bernanke said that out loud. He meant it. He can take 747’s and fly across the country dumping dollar bills out. Greenspan came along and reaffirmed it a month later so it is official policy. They will inflate and destroy the dollar before they will let deflation come first. In the end, we’ll get both so sell dollars and buy raw materials.

Taylor: I guess I’m closer to your way of thinking here than I thought. I know we have been very pleased with the inclusion of your fund in our Model Portfolio last year.

Rogers: But do remember there will be setbacks. There always are. The Rogers Raw Materials Index was the best performing index of any index in the world since we started it August 1, 1998. But, that leads me to say I’d be careful right now because something that has been that strong needs to consolidate. I would expect it to consolidate. I don’t know if it is going to happen or not. I’m not a very good trader. But few things go straight up. They have to consolidate at various levels on the way up.

Taylor: So patience and a long term view, identifying primary trends is what it is about right?

Rogers: When Merrill Lynch starts hiring commodity brokers again, that will be a sign that the end of the commodity run is nearing an end. They have no commodity brokers now. In the 1970’s they had a huge number of commodity brokers. By the way they decided to get out of the commodities markets exactly when the Rogers Raw Materials Fund got in. And it has been the best index in the world. So when they come back or when Marie Bartiromo begins broadcasting from the soybean pit in Chicago instead of the floor of the NYSE, then you will know it is time to get out of commodities.

Taylor: It certainly seems to me that since the U.S. produces so little in the way of commodities in relation to the amount we consume, rising commodity prices will continue to cause an erosion in profit margins of companies and will also take away spending power of the American consumer. That would seem to pose a big problem for the U.S. economy, would you agree?

Rogers: It is already happening. Have you paid the heating bill recently? Do you fill up your car with fuel? Do you pay tolls? Do you pay real estate taxes? Do you buy insurance? Do you have education expenses? Prices are going through the roof despite what the government is reporting. I get letters all the time from people who say they wonder how the government counts inflation because their prices are skyrocketing. There is a whole list in my book of things that increased double digits while I was traveling, that the government says has not gone up at all.

Taylor: Well obviously, the U.S. government may have some vested interests in deceiving us with respect to inflation. I would like to round out our discussion by asking you how well your fund has performed.

Rogers: When I talk about how the fund has performed, I like to go back to August 1, 1998 when I started the fund. I don’t like to talk about this quarter, this month, this year, but I like to go back to the time of inception. Since August 1, 1998 through April 30, 2003, this index has gained 76.60%.

Taylor: Long about then as the stock market was reaching new highs as I recall, you were suggesting people begin buying commodities. Of course few would listen then, but our readers are more of a contrarian group and as such more likely to listen to your advice than most. So I should tell them that they should contact grohrs@pricegroup.com to get into this fund.

I’m wondering if it is possible that the index fund might be housed within a closed end mutual fund some time in the future so that even smaller investors could get in with less than $10,000? Also because of liquidity issues, people have to give advanced notice to get out of the fund and they can only do it once per month if I’m not mistaken. A closed end fund could make it possible to get in for less money and also have liquidity.

Rogers: That may happen some day. But $10,000 is rather small amount to invest. You are right. Investors can only get out once a month. But if we were to form a closed end fund, the popularity of such a vehicle would probably provide a signal that we are close to the end of a commodity move.