Jim Rogers talks Gold, Oil, Sterling and the IMF

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Interviewer: Of course we are lucky and grateful to have with the Jim Rogers the CEO of Jim Rogers Holdings with us this live morning. Jim you caught a lot of stir here in the UK with your (?) falls in the latter part of January on the UK economy and the Stirling. Again oddly enough Stirling seems to have found a footing despite the underlying metrics and again I just wonder if this is a case of temporary respite for a further fall or whether you're seeing something even further down the road is even more troubling than you see now?

Jim Rogers: Well my comment about sterling was not meant to be for this month or even for this quarter. My comment about sterling was a comment on the big picture about what is happening in the UK. What I said was that North Sea oil is drying up and that the city of London is drying up and I don't see that the UK has any industries which can replace income from the North Sea and the city of London and therefore sterling is a bad place to invest, for the next several years. I hope that one of you is going to tell me something that is going to replace North Sea oil of the city of London in the UK because it will be a fantastic growth industry whatever it is. So far I don't know what it is. So - so far I have sold all of my sterling. I wouldn't buy sterling for another five, ten, fifteen or so years when I don't see good things happening in the UK economy. By the way the same thing is true of the US economy I am not picking on the UK.

Interviewer: Jim to your point about the North Sea oil, I know that some economists at the Royal Bank of Scotland they then subsequently point out that the UK has currently been running an oil deficit for the past four years and the current situation shouldn't necessarily change that. Having said that I just want to link into some of your questions, and get your call on where oil is heading. What type of price target do you see on oil for this year or so the next five years, and the same goes for gold.

Jim Rogers: Well to the Royal Bank of Scotland’s point yes, they are making my point. The oil decline been going on for some time and it’s going to get worse. If the Royal Bank Of Scotland thinks that the oil production is going to rise in the North Sea, then you know they should buy sterling. I think it's going to continue to decline as it has been for some time. What's going to happen for oil this year? Well again, you know I’m not a market timer or a trader. I know that the IEA recently came out with a study which showed that the world's oil reserves are declining at a rate of 6.7% a year and that's after it's been discovered. So Louisa it doesn't take much, you can figure out that in 15 years as not to be any oil at any price unless somebody finds a lot of oil very quickly. I bought more oil recently, more energy recently, it doesn't mean it won't go to 30 or 20. I do know that the world's reserves of oil are declining quickly and that is including the North Sea at a rapid rate. And as far as gold is concerned I got some gold today, so who knows if gold goes down I'll buy more if it goes up buy more but a price forecast for this year? I wish I was that smart.

Neil: I certainly share the views on oil, clearly the new oil has been found substantially higher. You could argue that finding oil in Canada is a waste of time because the energy required to turn into oil is too high so you know, you need very very high levels of oil. Jim my issue with gold and I would be interested in your dynamics from another perspective is that people see it as a hedge against inflation which may eventually turn up under my scenario in about 2011 or 2012 once we have worked our way through this debt deflation. Do you think people are too carried away with buying the inflation hedge now? Or are you buying it to some extent to hedge yourself against the dollar as well?

Jim Rogers: Well knew I'm buying gold just because I periodically by gold, because I do expect it to be much higher over the next decade. Maybe you right we’re not going to have much higher inflation over the 2010 and 2012 for all I know but I do know we've never had in world history a period when Central bank and every government in the world is printing money as fast as they can. It has never happened, throughout history we know that when a local central bank and domestic central banks print money it always leads to higher prices. So I know we're going to have serious inflation down the road, when it happens I don't know. So I periodically by gold I don't have any method to it is just writing about it I do it. By the way if the IMF sells their gold, knowing that IMF is going to sell their gold to bail everybody out then gold could go down a fair amount and that would be the bottom for gold if the IMF does it. Now I hope the IMF does sell their gold for two reasons. One we would get a low price for gold, and two we could get rid of the IMF because that is where they sell all the gold -no one else is going to give them any money so the IMF would have so dissolve somewhere along the road.