If you think that the U.S. dollar is a safe haven, think again. Despite the strength in the U.S. dollar exchange rate to many major currencies these days, billionaire investor Jim Rogers thinks otherwise.
Jim Rogers: U.S. Dollar Is Not Sound
Jim Rogers, chairman of Rogers Holdings, recently spoke with Bloomberg TV India and expressed his concerns about the U.S. dollar: “The U.S. dollar is not sound. But with a lot of turmoil coming, people think U.S. dollar is a safe haven. What I expect to happen is that turmoil will get worst and the dollar will go higher—it is already over-priced—and may turn into a bubble.” (Source: “‘Third Fed Rate Hike is Where You Have to Start Worrying’,” Bloomberg TV India, last accessed December 24, 2015.)
Rogers is worried about the debt problem in the U.S. He told the media outlet that the U.S. is a “terribly over-indebted country with the largest debt in the history of the world.” For him, the largest long currency position for the past two to three years has been the U.S. dollar. But right now, his plan is to sell the U.S. dollar and maybe get into gold or the Chinese renminbi.
Jim Rogers also talked about the Fed rate hike. On December 16, the U.S. Federal Reserve raised its benchmark interest rate by 25 basis points, marking the first interest rate increase since the financial crisis. However, Jim Rogers is not impressed. He said that “the Fed is just made up of bureaucrats and academics” and that “they don’t know very much.” He mentioned that market interest rates were already going up and Fed’s first rate hike “doesn’t mean very much.”
Jim Rogers: Third Fed Rate Hike Is the Time to Start Worrying
The Fed is expected to increase interest rates a few more times in 2016. To that Rogers said: “The third one is where you have to start worrying. If the Fed raises rates three or four times, then it is usually all over for the stock market. So just keep watching, be worried and be prepared.”
With the world economy at risk of a slowdown and commodity prices tanking, Jim Rogers sees potential in precious metals. He said that he has hedged his positions in gold and silver because their prices could drop further. However, once gold drops below $1,000, the billionaire investor would take his hedges off and “buy a lot of gold.”