Rogers: China Should Stockpile Commodities

Rogers: China Should Stockpile Commodities
Says Country Should Use Reserves to Buy Cotton, Wheat, Oil

Jim Rogers, who co-founded the Quantum fund with George Soros in 1970, says China should spend some of its $1 trillion in foreign reserves to stockpile strategic supplies of cotton, wheat, and oil instead of buying U.S. Treasuries.

[Editor's Note: Jim Rogers Predicts Huge Profits in Commodities -- Click Here]

"If I were China, I'd be putting money in something more productive, or more strategic things such as wheat, that they might need in a problem or crisis," Rogers told Bloomberg in an interview yesterday. "I would certainly stop buying U.S. government bonds."

Jim Rogers predicted the stock market rout in China on Feb. 27, saying on a TV interview on Jan. 26 that Chinese stocks were overvalued and investors were in a "hysterical" state of mind.

Rogers also forecast the start of the commodities rally in 1999, and says that commodities are in a 10 to 15-year bull-market cycle. Rogers is the author of the book, Hot Commodities. "China does not have the stockpiles of cotton or oil or lots of other things," said Rogers. China has not had "a chance to adjust to all this money, and now they have got to figure out what to do with it."

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"It used to be the world had far-reaching droughts and we haven't had those in a long time," pointed out Rogers. "If we do have a drought again, prices of agriculture are going to skyrocket."

China, the fastest growing major economy, is the second-largest oil consumer behind the U.S., and the biggest buyer of soybeans, cotton, and a range of industrial metals, according to Bloomberg.

In fact, the country is already building a strategic reserve of oil, and ministers have said that it will begin building reserves of other metals.

[Editor's Note: A run on the dollar has already begun. Protect yourself now.]

Vice Premier Zeng Peiyan announced on Jan. 22 that China will use its foreign reserves to "build a stockpile mechanism for mineral resources."

China recently announced that it will set up an agency to advise the government on how to manage part of its foreign reserves. Yu Yongding, an adviser to the People's Bank of China, has said that the agency will manage at least $200 billion of the country's $1 trillion in reserves, according to Bloomberg.

If China were to stop buying U.S. Treasuries, it could mean trouble for the U.S. dollar. Because of the huge trade and budget deficits the U.S. runs, foreign buying of U.S. Treasuries effectively finances the standard of living in the U.S. If that were to dry up or merely be reduced, the value of the U.S. dollar could slide significantly.

Editor's note:
Jim Rogers Predicts Huge Profits in Commodities -- Click Here
A run on the dollar has already begun. Protect yourself now.
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