Part 1, 2 and 3 of a Jim Rogers interview where he lays bare the problems befitting the US and the UK.
Part 1
Interesting viewpoint on how the decline of the North Sea is a disaster for the UK. You could almost call it a North Sea Peak Oil crises.
Part 2
Part 3
A bit of a nonsensical video that is trying to make a point about how gold—even when rising–is not valued in the US.
Granted he was in California and I guess there can be some expectation of being out of touch with the real world with the distractions of beautiful sunsets, wine and weed. If you view the video you realize that he was so obnoxious that many thought that it was a scam—I would even though I know the value of gold and the value of a gold maple leaf.
Quite frankly I would assume it was a rip off given that he wants to sell an 1,100 dollar asset for next to nothing–you are definitely inviting the (it must be gold colored lead) crowd. He even speaks to one guy who knows the approximate value of gold and he didn’t even take a close look at it. It shows the approach was of course flawed. But what the heck the point came across. Many don’t know the price of something that has been rising for the last 9 years year over year. They invest in the stock market blindly even if it is lower now than t was 9 years ago.
The question begs to be asked –How can there be a bubble when most don’t even know the value of it?
If I understand the concept correctly George Soros reflexivity has not occurred and you only have the early adopters invested–like Jim Rogers and certain rich and wealthy investors such as Paul Tudor Jones and John Paulson etc. who are taking positions.
Curious to follow this interviewers methodology on a personal basis to see how far it goes and when.
I have discreetly polled friends and work colleagues and most are not paying attention to gold. One friend who used to work in the Treasury area of a large Canadian mining company still cannot believe the levels the metal is trading at. I remember speaking to him several years ago when gold was at 300. He could not believe that it would ever hit 500, I was discussing the Barrick hedge book at the time and he thought it was a good one. Kinda of a haha moment now that they are unwinding this book now at a horrendous cost–Billions of dollars. And they are considered one of the smartest companies in the room.
I am definitely taking a wait and see.
Jim Rogers on Bloomberg–November 2009
This host is a bit of a goof and can be distracting from the true message.
Basic message is that Nouriel Roubini has made certain predictions that I don’t personally agree with and Rogers is responding. It’s funny, I have been listening to the Robert Prechter crowd who advocate that we are entering deflation and that gold and commodities have likely peaked. These are without a doubt smart people and at times I feel compelled to agree with them–they are convincing.
However I don’t buy their arguments as I can’t believe that we will have deflation with this much money printing and unreasonably low interest rates. The market did not create this mess in my opinion and the market is not being allowed to get us out of this mess.
People want to raise their savings rate and pay down debt–yet the politicians and the Fed are discouraging that with interest rates below inflation and pro consumption policies.
I see first hand the big push to sell more derivative products in the Banks, and the push is going further and further down the food chain. Interest rate swaps for instance are not a dangerous tool in most circumstances, but if you don’t know what you are doing you will generate losses. Just ask Lawrence Summers who was Harvard President a short time ago and oversaw the institutional bet that rates would rise. They didn’t and the University endowment fund had paid close to 1 billion dollars to unwind the mess. Lawrence Summers is on Obama’s economic advisory committee.
I just listened to the first half again and have decided that the commentator is trying to goad Rogers—seriously he can’t believe that something is in a bubble if it hasn’t reached it’s all time highs!
Although they call them talking heads for a reason.
With Faber it is always important to keep track of when he is speaking of the short term market and the long term market. It can look like a he is changing his long term opinion when in fact he is discussing a short term correction. Healthy markets do not move in a straight line after all.
For instance he may discuss a US dollar rally but he has generally has disdain for the dollar due to the money printing, increased debt and the huge unfunded liabilities of the US government.
In the past he has discussed rising oil prices due to the increased demand from the developing economies, but when the prices overshoot the fundamentals he will advise caution—in the above video he has done this with the equities market. Yes it is a good run he says but it is not a time to create or add to positions—and remember they came off a low base (crash of 2008) so they are bound to look good.
There is a bit of non-answer sometimes in his comments, but that can be expected given his profile.
It’s funny. I work in the finance industry with some very intelligent people. Truth be told many of the individuals that I work with are probably smarter than me. Not only do they have academic credentials that are better than mine—they appear to have an innate intelligence that is way above average.
Having said that I can find no one who has any concern whatsoever about the concept of peak oil!
Including my friends outside of work who limit their concern to the price at the pump on any given day–they are totally oblivious.
I bet that if you casually mentioned the concept to any one who will listen the next few days you will for the most part get blank stares. This is happening despite the best efforts of people such as Matt Simmons, Jim Puplava, Richard Loomis and others who are covering the issue often and in great depth.
What is happening here? Do intelligent smart people really have a myopic view of the world that ignores long term trends. Maybe I should have a closer read of George Soros and Jim Rogers. Soros often talks about reflexivity which seems to explain what is happening and Rogers who continually refers to himself as the world’s worst trader always seems to be able to predict trends well in advance, particularly with the commodities markets. In addition, both act and profit from their research and predictions.
I realize that Canada may be shielded and in a somewhat unique position in that we are a net oil exporter, however our exports occur on our west coast to the US mostly—and we import on the east coast. This is mostly due to existing pipeline limitations.
However, When I listen and read the above commentators I hear the same comments—and they are located in primarily oil importing nations.
Has our world become so complex that we are unable to set aside any time to think?
What concerns me about the whole situation is what I discovered when I reviewed Mexico’s declining oil production recently.
Their “big field” Cantarell peaked in 2005 at 2.1 million barrels per day (bpd) and is now producing 0.5 million bpd. The latter occurred despite modern injection methods/horizontal drilling/steam injection and all other modern methods of oil production maximization. If I do “back of the envelope math” on this decline it works out to greater than 25% per year. I realize that these declines even out over time to about 25% of their peak production and if this holds and Pemex does proper field maintenance etc. then perhaps the worst of the declines are over.
Given Mexico’s challenging political situation of late—let’s hope so for the sake of political stability.
Mexico’s overall oil production peaked in 2005 as well at 3.3 Million bpd and is down to 2.5 Million bpd. The Cantarell decline was mitigated by the Ku-Maloob- Zaap oil field which was discovered in 1979 after Cantrell and with increased drilling is now producing 0.8 million bpd. it has now become Mexico’s largest field.
Food for Thought—Which Governments are Paying Attention?
There is an old saying for traders that goes something like this:
“There are old traders and there are bold traders, but there are no old, bold trader’s anywhere.”
On the surface this makes incredible sense. If you look at the history of high profile traders from the past you do see tragedy in many of their stories. My thoughts move to the story of Jessie Livermore whose life was fictionalized in the traders bible Reminisces of a Stock Operator and who committed after going bust (again) in speculation gone bad. The irony is that years before this suicide he had placed a substantial sum of money in long term annuities–that protected him from ever being poor again. However, the emotional toll of his latest speculative crash pushed him too far. There has been some discussion that his last wife may have been an influence in the suicide. Apparently she had been married several times and suicide had occurred more than once with her previous husbands.
However for any sad story such as this there are others that seem to defy the odds and after making their wealth move on to greater things. Joseph Kennedy comes to mind, Bernard Baruch and the more contemporary speculators of Jim Rogers and George Soros. The latter 2 have been featured before in other blogs on this website and can be found with the search function available on the top of this page.
Both Rogers and Soros have officially retired but offer insight into the various investment trends that are playing out as we speak.
Jim Rogers called the commodity bottom early and publicly in the late 1990’s and was a little early. He continues to pound the table on every time their is a pullback and calls for the trends to carry on for the next few years. George Soros who recently came out of retirement briefly in 2008 to make another 1 billion dollars never really calls trends but refers to what he calls reflexifity–where events are set in motion and market participants create a virtuous circle where the underlying rises or falls based on perception and not necessarily fundamentals (If I am wrong on the latter statements then research it yourself as this is how I understand it).
Why the statement that opened this post is timely is that Kennedy, Baruch, Rogers and Soros all left the speculator game when they were on top. They did not pull a John Meriwether who keeps climbing back in to the game—despite repeated failure.
That perhaps is part of the secret of the “spec” game. Do your research, position yourself, bet the farm if the trade starts working and get out when everyone else (the public) has figured out the game. The latter means it is probably near the end.
Norman Borlaug who is responsible for the green revolution calculated that we would need to reduce the world population to 4 billion people if we were to restrict farming practices to organic methods only. In addition we would probably be required to cut down more forest land to do so.
What makes this issue topical, in my opinion is that the real problems are population growth and the increasing demand for energy—primarily oil. The former was cited as one of our major problems going forward by Mr. Borlaug.
If peak oil advocates are even partially correct then we may be forced into a dramatic rethinking of how far we are willing to produce and transport our food (including organic). The economic implications of peak oil as it relates to business and agriculture are disturbing and given that modern agricultural methods are energy intensive this may increase the price of food and how we produce it quite dramatically.