Speaking with Alix Steel of TheStreet, yesterday, legendary commodities trader Jim Rogers said he isn’t buying into Wall Street’s popping commodities bubble thesis following the sharp sell-off in all commodities last week, especially those two commodities most widely watched recently—silver and oil.
Instead, Rogers said he’s “delighted” to see the massive sell-off in commodities prices—and in the case of the silver price, “was hoping it would go down” so he could buy some more of the white metal—a precious and monetary metal, whose price has still not achieved an all-time high to match gold’s multiple all-time highs first achieved in January 2008 with a $857 per Troy ounce closing print.
In all, the 68-year-old commodities market version of Warren Buffett has routinely stated that swooning corrections are normal occurrences during commodities bull runs—runs that grossly outperform stocks to the upside, downside and volatility.
And what does Rogers think of the latest across-the-board price plunge?
“Well, not much if you ask me. Markets correct all the time,” Rogers told The Street. “Silver went down a great deal but if you raise margin requirements 150%-200% you would expect there’s something to collapse. It’s good for the market as far as I’m concerned. Silver especially needed a set back and a consolidation. I’m delighted to see everything.”
Buyers who consume every day commodities, such as food and energy, don’t cheer during bull market rallies in “things,” so it’s natural for Wall Street to play down, or even attack the complex with negative comments and impromptu regulation changes, as witnessed by the Chicago Mercantile Exchange’s five margin requirement hikes within eight trading days in the silver market.
The prevailing view of financial commentators and their guests is that the sharp drop off in commodities is good for the world economy and, therefore, good for stocks.
Moreover, calls for bubbles in silver and oil prior to the CME’s coordinated attack on the silver market (and now, the oil market) created a scenario that can easily be spun as evidence of a finally-pricked bubble. Therefore, the crowd should move back into stocks now that the menace of escalating input costs, rising consumer goods prices as well as weaker consumer spending thereafter have now been dispensed with quickly, so goes the logic.
Rogers sees it differently, however.
“I hardly see how silver could be a bubble when, even at its top, it’s still below it’s all-time high,” Rogers explains. “That’s not much of a bubble. A bubble is when things are screaming up every day and they go to new highs, two to three times their old highs. We’ll have a bubble, we’ll have a bubble in commodities, we’re not there yet.”
In fact, when asked about any sales he’s made within his vast commodities holdings, Rogers said, “No, no, no I have not sold any commodities.”