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Jim Rogers sees U.S. property crash and is selling his mansion!

Commodities guru Jim Rogers believes so much in a real estate crash that he is selling his $15 million New York mansion and moving to Asia!

Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.

"You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York.

"It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops.

....

"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.

....

When the last bubble burst in Japan, said Rogers, stock prices went down 85 percent despite the country's high savings rate and huge balance of payment surplus.

"This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse."



By Theo at 2007-03-21 13:33 | Jim Rogers | Theo's blog


So what are we supposed to do?

What the hell are we supposed to do when the 'liquidity party' ends? During the great depression, all asset classes lost value, including gold (albeit, gold did not suffer too much). This time, Ben Bernanke (Mr. Printing Press) thinks he can open the money spout and solve the deflation problem (apparently, he was unaware of the failures of Quantitative Easing and ZIRP in Japan). He'll finish killing the dollar.

How does one best protect one's wealth? My limited imagination can't move beyond physical gold.

By smtkr at Wed, 2007-03-21 14:55 | login or register to post comments

RE: So what are we supposed to do?

I would liken the current situation to the 1970s and 1980s.  Back then, like now, the following were true:

  • Rising inflation.
  • Rising interest rates.
  • Stagflation - weak economy and rising prices.
  • High oil prices.

What happened?  Gold went to $850.  Whenever there is a crisis in all financial markets, it is accompanied by a flight to safety, aka gold.  So buying the bullion is not a bad idea.

Gold stocks, like now, will fall at first, but should rise even higher than the bullion itself.  Mutual funds that are my favorites are "Sprott Canadian Equity" and "Sprott Gold and Precious Metals".  They own a mixture of both the bullion and the junior miners.

Foreign currencies is what Buffett is doing.

Basically, I think you want to own hard assets that will inflate along with everything else.


-theo
By Theo at Wed, 2007-03-21 15:32 | login or register to post comments

Gold and the 1929 Great Depression

smtkr:

Here's an interesting read on what happened to gold mining companies during the great depression.  $10,000 in Homestake Mining in late 1929 increased to almost $62,000 by December 1935.

According to my favorite gold book, "The Coming Collapse of the Dollar and How to Profit from It", in 1931 people began pulling money out of banks and converting dollars into gold.  Franklin Roosevelt took the dollar off the gold standard and began confiscating privately held gold.  Anybody hoarding gold would be fined $10,000 or imprisoned for 10 years or both.

Keep in mind, America had a 100% gold standard back then.  When the market started crashing, people began hoarding money like crazy, then gold after Britain left the gold standard.  This time around, however, since our dollars are no longer backed by gold, the first hard asset of choice will be gold, silver, and their respective mining companies.


-theo
By Theo at Thu, 2007-03-29 02:44 | login or register to post comments

farmland

I've post about farmland before.  It gets more and more appealing to me as time passes.  Productive farmland can be used as a hideaway from the city and avian flu.  It can be used to grow corn and other foodstuffs.  You might benefit from the government boondoggles in ethanol.  Also farmland will give your relatives something to do (not to mention eat) when and if the next depression hits.  Also land probably holds its value decently in an inflationary environment.  The problem with farmland is it isn't so easy to buy for the small investor, and what the heck does a city slicker like me know what to do on a farm?

Beezwax
By beezwax at Wed, 2007-03-21 20:29 | login or register to post comments

Worst case scenario

I started reading about gold last June when I predicted a subprime crisis spilling into the rest of the economy. I convinced my friends to start investing in gold and precious metals. One even invested in industrial metals via mutual fund and performed very well. Because of my attention on this matter, most of what  Theo says is familiar. I'm a real fire and brimstone guy when it comes to the precarious state of the U.S. economy.

Beezwax, I like your idea too (for the worst case scenario). Even if a depression does not hit, you can rent the farmland out in the meantime with crop prices so high and the risk of your investment is fairly low. Getting the capital to buy land is always a problem for a beginning investor.

I'm fairly young myself (graduated from college in December). I'm still feeling around for doors into the investing world. For example, I still can't buy Canadian stocks. The only American brokerage that I know of that allows it is Penntrade, but the commissions are steep. Etrade is moving toward this, but it is still not hot. I've missed a lot of good runs because of it.



EDIT: Have you seen how HNC.v has performed in my portfolio? I read a report 2 months ago about how nickel is expected to be in short supply for the next five years. Couple that with money growth at ~10% in the United States and you have commodity appreciation milieu where nickel has great prospects.
By smtkr at Thu, 2007-03-29 07:54 | login or register to post comments

RE: Worst case scenario

That's unfortunate you are not able to buy Canadian stocks.  I always thought Americans had easy access to Canadian markets.

RE: Nickel
Nickel has definitely been hot.  The sector looks to be consolidating as well with the recent acquisition of LionOre Mining (LIM.TO).
By Theo at Thu, 2007-03-29 12:29 | login or register to post comments

hnc

smtkr hnc went up a lottttt...congrats! I intended to buy this but missed it by a few cents :( is it going up becuz of a takeover spec? or is it waiting for some other news?

By YY at Thu, 2007-03-29 14:00 | login or register to post comments

HNC and my fantasy portfolio

Like I said above, I just thought nickel would be a good comodity play based on a few articles I read and and interview I watched on Bloomberg. I'm not sure where I heard about HNC. I found an ancient (probably months ;) ) note on my desk that just had the letters 'HNV-V' scratched on it and looked it up. The keyword nickel and my memory of the projected future supply crunch created the synergy to pick it for my fantasy portfolio. See, no true clairvoyance on my part. I just like the fundamentals of it in general.

My fantasy portfolio here is full of stocks that I wouldn't even consider with real money (low volume penny stocks are not my cup of tea--liquidity is a must for all of my investments). I like the idea of buying junior minors. It has come to the center of my attention that the major gold mining stocks are completely devoid of exploration and just stalk the junior minors. That's why you see me hopping on a lot of speculative junior miners in my fantasy portfolio here.


By smtkr at Thu, 2007-03-29 19:21 | login or register to post comments

nickel

I hadn't thought nickel would be this strong!! v.ggl went up like a rocket today just based on some samples :( I am too shocked
By YY at Wed, 2007-04-04 15:06 | login or register to post comments