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Thursday, May 21, 2009

Another Bottom for Stocks Coming: Jim Rogers

The stock market may hit new lows this year or the next as the current rally has been largely caused by the money printed by central banks and fundamental problems remain unsolved, legendary investor Jim Rogers told CNBC Wednesday, May 20, 2009.

His views echo those of renowned bear Marc Faber, who told CNBC last week that the rises in share prices did not mean the world was embarking on a path of sustainable economic growth.

"I'm not buying shares if that's what you mean. Not at all. The bottom will probably come later this year, next year, who knows when."

"Governments have not solved the essential problems that caused the crisis but instead they "flooded the world with money." Trying to solve the problem of too much consumption and too much debt with more consumption "defies belief" and will not work.”

A long-term advocate of commodities, he reiterated that this will be the first sector to rise when the world gets out of the crisis, as investment in new mines, the oil sector and agriculture has been curtailed during the crisis and this will create a shortage.

"I think I'm going to make more in agriculture, I think I'm going to make more in some other real assets for awhile, I think I'll make more in silver. But I do own gold."

"The price of oil is also likely to remain high despite the fact that the recession is taking its toll on demand. You know supplies worldwide are declining at the rate of anywhere from 4 to 6 percent a year, yes, demand is down at the moment but in longer term, unless somebody discovers a lot of oil very quickly, the surprise is going to be how high the price of oil stays, and how high it eventually goes."

Next Crisis Will Be in Currencies

"For the moment currencies may look safer than anything else in the markets, as stocks may face a new bottom since they were artificially lifted by the amount of money created by central banks, but there are pitfalls ahead.”

"If I am right, you're going to see a lot of currency problems in the next decade or two."

"Governments around the world are doing their best to destroy currencies, many currencies in fact. And people need to understand that; if they don't understand it now, they're going to find out, they're going to find out the hard way."

Source: Extracted from CNBC website

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