As China lets people go bankrupt to clean up their debt situation, it is going to cause pain but we all need it, says , Investment Guru Jim Rogers.

Indian market is at an all-time high. S&P is at an all-time high. All global markets are celebrating.
India is the hottest market in the world this year. China is not. America is certainly not; it has been but not now. The Indians once again are showing how smart they are.

How would you define what the Chinese government is trying to do? It started with a crackdown on Chinese gaming companies, came down to tech companies and now looks like the Chinese government is in double mind on how they want to approach Evergrande?
There was billions of dollars of unregulated lending going on in China which was a disaster waiting to happen. I am delighted they cut back on that because it gave some people an unfair advantage. So that was a good move as far as I am concerned. The rest of it, I do not quite understand what is happening but certainly China has been hitting out on a lot of people and it is causing their market to go down.

Now you can understand the Chinese mind and Beijing but I cannot. I wish I could. Look at India. The Sensex is at all-time highs, it is a very hot market. We should all learn from you but I just want to say that China has a lot of debt now. They did not have debt 20 year ago. Beijing says they are going to let people go bankrupt. They have been letting people go bankrupt. I hope they do. It would be good for China. It would be good for the world.

So what happens to global investors who bought into Chinese debt? What happens to global investors who bought into Chinese internet companies? China dominated ETFs are also losing money. At what point in time will the Chinese government’s action towards tightening their economy and cleaning up with the internal debt, start hurting the global economy?
It is always good to do something about debt. China had no debt 25 years ago. Now they have built up a lot of debt. Beijing is right to try to do something about it but it got so big that it is now going to hurt a lot of people. If you own debt in a company that goes bankrupt, you suffer. You know that as well as I do and China is going to learn that. As China lets people go bankrupt to clean up their debt situation, it is going to cause pain but we all need it.

The Chinese government is saying that they are going to let people go bankrupt but they have not had hundreds of people calling them on the phone saying save us, save us, save us. If thousands of people call them now and say you must save us, let’s see what they do.

If China slows down, it is a big engine which will slow down. Now China is trying to clean up its debt which is good news for the world in the medium to long term. But in the short term, China’s importance in the financial market is huge. If China slows down, it will have an immediate impact on the commodity market. Can we look through that?
I have been investing in many markets for a long time. We always have corrections and we always have bear markets. In the US we had a short collapse. We all cause the markets to go down for a while. It is not the end of the world and I do not think that the collapse of many companies in China will be the end of the world. It will cause many things to go down in price for a while but I hope I am smart enough to buy more of whatever it is if there is a bargain.

If hypothetically China slows down further, it will have a ripple effect in the short to medium term on global financial markets. Do you think that somewhere central bankers will be forced not to increase interest rates?
You know as well as I do that most central bankers in the world are more worried about their jobs than anything else and if things start slowing down, they are going to print money and they are going to buy bonds. They are going to do whatever they have to save their jobs which means printing a lot of money and being very loose. It is going to happen again. Is it good for the world? No. But they do not care about the world, they care about their jobs. I have been watching and reading about central banks all my life. We have had two or three good central banks in my lifetime; in fact, India had one of the best, it is gone now. But you had one of the best central banks of my lifetime. But unfortunately we do not have any good central bankers around anymore.

Are you still long on the dollar?
I am long on dollar still and the reason is it has not changed because there will be some turmoil down the road. In times of turmoil, people seek a safe haven and they think the US dollar is a safe haven for historic reasons. It is not a safe haven, but people think it is so. I own dollars, yes. Now if the dollar goes up given the turmoil which I expect I do not know what I am going to do with my money. Again it is harder and harder to find a place to put money that really is safe. I do not know what it is going to be. I am looking.

Why has silver and gold not participated? Why arethey languishing at the bottom of the barrel?
Silver has more than doubled in the last 12-18 months. Gold has gone up a good amount in the last year or so, over 50%. It appears very good to me.

Where do you think silver and gold are headed now? Will they be an important part of your portfolio for the next couple of years?
I have not bought any gold or silver in a good while. I am waiting for something to happen.I am waiting for the correction to continue and if and when that happens, I hope I am smart enough to buy more gold and silver. I certainly will not get the bottom, I am not good at market timing but I hope that I will be smart enough to buy more gold and more silver somewhere along the line because before this is over, gold and silver are going to go up a lot. When people lose confidence in governments and lose confidence in money, they always buy gold and silver, they always have and they will continue to do so.

ET Now: Say an investor in his late 20s or early 30s says I have got a five-seven year view and I have to choose between gold and silver on one side and Bitcoin and other cryptocurrencies on the other side. What should be the obvious go-to place?

Jim Rogers: For me it will be silver. If Bitcoin becomes successful as money which the polls say it will, governments in my view will do something because governments do not like to lose their monopoly and control. They never have and if it becomes successful they would do something. Now governments all over the world are trying to put money on the computer. In China, you cannot take a taxi with money, you have to use your computer. China is ahead of the US but everybody is working on it and eventually all money is going to be on the computer and when that happens, I do not think the US will say okay, this is money now and if you want to use that money you can. That is not the way the US government works, they would like to still keep control.

It is a 10-year old bull market in the US and still chugging along. What is the end game for the longest bull market in history?
Since it started in 2009, it is nearly 12 years now. Bull markets have always ended after a while. My view is that if we have a correction, the central banks are going to do their best to revive it again. They will be successful for a while at least but that would probably be the last boom up or may be even a sell up and then that would be the end. Then we are going to have a horrible bear market. But in 2008 we had a horrible bear market because of too much debt. Since then, the debt everywhere has skyrocketed, skyrocketed and the next bear market cannot be better. It is going to be the worst in my lifetime. I do not particularly like saying it. I hope I will survive it.

Apart from gold and silver, you have been very bullish on soft commodities like sugar, rice, wheat. Soft commodities have done exceedingly well and in the last one year, they have tripled. What is your view on soft commodities?
If I had to buy one thing now it would be a choice between agricultural commodities and silver. But if I have to buy one thing in September of 2021 it would be agricultural commodities. You know if agriculture has been a massive disaster for decades. The average age of farmers in America is 58, In Japan it is 66. The highest rate of suicide in the UK is in agriculture. It has been a disaster. More people in America study public relations than study agriculture. So, I would buy agriculture.

Anything specific which you like within agriculture?
Learn to drive a tractor, may be even buy a few acres and become a farmer. That may help you.There is an ETF on the New York Stock Exchange an Agricultural ETF and it is simple, easy and studies have shown that if you buy the index, you will outperform most active investors. So I buy the ETF.

What is that one thing you would like to short in September 2021?
Well I am not sure anything yet because there is so much money printing and I have learned it is dangerous to short when there is a huge amount of money printing. If I would short one thing, it would be the FAANG in the US because they are just so expensive and they go up every day. So may be Apple? I am not short Apple, but they just go up all the time because everybody thinks they will never go down. So, I guess I would short one of the FAANGS. I would probably short Apple if I could short one thing but I am not shorting it.

In the last 12-18 months, across the board, real estate prices have gone gangbusters. Whether it is emerging markets or developed markets, whether it is smaller towns or large towns in India, demand is coming back, pricing is coming back. Has that multiyear trend in real estate started again?
We do have a bubble in New Zealand, Korea, India and also parts of China. It is partly because interest rates are so low. When it is the lowest interest rates in history people like to buy property but when interest rates go higher, property is going to come down because prices have gotten too high and interest rates will go higher again and that is going to squeeze a lot of people.

I am not buying property because I know what is going on but if you can find property that is cheap in a good agricultural location, you should buy some and then you send me an email and I will do some research.

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By Marek

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