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June 30 (Bloomberg) — Jim Rogers, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, said investors should steer clear of the dollar as the U.S. economy slows and favor commodities this year.
The dollar has slipped 7.7 percent against the euro and 5.9 percent versus the yen in 2008 as the Federal Reserve cut interest rates to stave off a U.S. recession. Oil prices have doubled in the past 12 months, while gold is up 44 percent.
Avoid the dollar “at all costs,” Rogers, chairman of Rogers Holdings, said in a speech in Shanghai today. “The best investments in 2008 are commodities and natural resources. Agricultural prices have much higher to go over the next decade. We have a shortage of everything, including seeds.”
Oil and metal prices in New York have surged as a slumping U.S. currency made them cheaper for non-dollar investors to buy as a hedge against inflation in a slowing global economy. The dollar has stabilized in recent weeks, with currency volatility falling by the most since 1999 this quarter.
The comments from Rogers, 65, come two days after he told investors at a conference in Nanjing not to “give up” on Chinese shares, which have made China the world’s second worst performers this year. Rogers, who first started buying Chinese stocks in 1999, said he hadn’t sold any of his holdings.
Investors failed to take heed today, as the benchmark CSI 300 Index extended an eight-month slump amid expectation government measures to slow inflation will hurt corporate profits. The gauge is down 53 percent from its Oct. 16 record and has dropped 23 percent in June. That would be the index’s worst month since it was introduced in April 2005.
Rising food and fuel costs have helped to drive China’s consumer prices to their highest in almost 12 years, prompting the central bank to lift interest rates six times last year and order banks to set aside a record amount in reserve to curb loan growth.
Speculation that the People’s Bank of China would raise borrowing costs for the first time this year dragged the CSI 300 down by 5.5 percent on June 27.
Rogers, who now lives in Singapore, is best known for being a commodity bull since 1999, before the market started to rally in 2002. His Rogers International Commodity Index has more than quadrupled since it started in 1998.
The price of wheat, rice and soybeans reached records this year after adverse weather curbed global output and reduced stockpiles amid rising demand.
`Not High Enough’
Rogers is anticipating further gains in crude oil, which reached an all-time high of $142.99 a barrel on June 27. Futures were recently at $142.74.
“Crude oil prices are not high enough to stop people from consuming more energy,” the investor said. “The bull market will not go to an end until supply and demand come to a balance.”
His comments today echo the themes in his latest book “A Bull in China: Investing Profitably in the World’s Greatest Market,” in which he tells investors to get out of the dollar, teach their children Chinese and buy commodities.
Rogers said last October he planned to shift all his assets out of the dollar, which fell to a three-week low against the yen on June 27. He predicted last month that the U.S. currency’s decline would pause in the second quarter because it was overdone.
Last Updated: June 30, 2008 06:33 EDT