Legendary American investor, often known as the "King of Commodities," Jim Rogers stated this week that the U.S. economy is getting closer and closer to a "very serious" recession, which will lead investors to flock to precious metals. However, the seasoned investor mentioned that he is more likely to buy silver instead of gold to "escape" economic turbulence.

Rogers, the chairman of Beeland Interests Inc., co-founded the legendary Quantum Fund with billionaire George Soros in the 1970s.

He said: "History will show that we are getting closer and closer to a recession. Although I don't know when, I do believe that the economic recession will reappear, and the situation will be very bad at that time."

He believes that "There has never been a recession in U.S. history for such a long time," and it should have seen more economic problems occurring earlier.

According to data from the U.S. Bureau of Economic Research, the longest period without a recession was around 128 months from 2009 to 2020. During the COVID-19 pandemic in 2020, the U.S. experienced a brief economic recession. Prior to that, the U.S. went through the "Great Recession" from 2007 to 2009. It was one of the longest and most severe economic recessions since the Great Depression of the 1930s.

Gold, silver, and oil have bright prospects.

If there are indeed serious economic issues, Rogers, who is based in Singapore, believes that gold, silver, and commodities in general will perform well.

He said that when economic problems arise, it can lead to money printing and inflation, and people will hope to "hide in assets that can hold their value." "In situations of severe inflation and money printing, commodities usually play a hedging role."

Rogers specifically mentioned gold and silver, stating that "they have always been a safe haven for people during economic turmoil," "So I think gold and silver will perform well. Gold has taken off, and the situation for silver is also good," he said.

If he had to choose between gold and silver, he might choose silver, Rogers said. "Because it is still far from its historical peak, while the price of gold has repeatedly hit new highs."

Nevertheless, Rogers emphasizes that he does indeed "hold a significant amount" of these two precious metals.

Although he is not currently buying physical gold and silver, Rogers stated, "if there is time, he may buy some silver this week, but he will not buy gold, at least not now," unless its price drops.

Talking about precious metals, Rogers said he prefers "buying the real thing."

In addition, he said that buying commodity stocks is "a great thing - if you have the time and knowledge to do research."

"If you have time to research, if you choose the right stocks, whether related to gold and silver or anything else, you can make a lot of money," Rogers said.

At the same time, given the turmoil in the Middle East, concerns about supply disruptions from this oil-rich region have intensified, leading to another potential opportunity in the csi commodity equity index sector.

Rogers said, "If there are more wars coming, you should buy some oil". He said he hasn't actually bought oil yet, but hopes that if oil prices fall, he "can be smart enough to seize the opportunity to buy more oil".

He said: "The oil market is not over yet. I assure you, the world needs oil."

This view is contrary to some market expectations, which believe that global oil demand will gradually decrease, partly due to the growth in electric vehicle use and climate policies.

"Oil is a good investment because our supply is indeed declining, and demand may be increasing," he said.

Rogers also believes that a stronger economy in China "will promote demand for many commodities, including oil".

Rogers also mentioned that he holds stocks in China, but has not made any recent purchases. "If I come across something suitable, I will definitely buy. I hope I am smart enough to buy more Chinese stocks when the situation is right".

Protective measures

During an interview with MarketWatch in July, Rogers warned that the US stock market is showing all the signs of an aging bull market, and he expects a bear market to occur.

In early October, major US stock indexes reached historical highs, but with rising bond yields and market nervousness due to election tension, the market has been under pressure for the past week.

This week, Rogers told MarketWatch that many markets are reaching historical highs or nearing historical highs, but he does not like to buy things at historical highs. His basic investment strategy is "buy low, sell high".

Rogers stated that currently most markets are very strong. "There have been very few periods like this in history, which worries me. If everyone is making money, I get worried."

This week, when asked how investors can protect their funds amidst the concerning backdrop of the continuous rise of the US stock market, he replied, "I have cash. I have US dollar cash."

He said he mainly holds US dollars instead of other currencies at the moment because "when turmoil surfaces, people look for safe havens, and many believe that the US dollar is a safe haven asset."

However, "that's not the case," he said. He expects that when "the next turmoil becomes serious," the value of the US dollar will rise. If this happens, he hopes to be "smart enough to sell it in time."

At the same time, he mentioned that he is looking for another currency to "replace the US dollar."

He said, the United States is doing what the United Kingdom did about a century ago. He said, the United Kingdom used to be the world's largest country, the British pound was the world's currency, but the United Kingdom went bankrupt due to accumulating debts.

Rogers said, "So I'm looking for something else to compete with the US dollar for the status of world reserve currency. 'I don’t know what it is yet, but it must be something tradable,' he said, adding that the renminbi will be at the top of his list."

Lessons Learned

When Rogers was asked what he was most proud of investing in during his decades-long career, his answer was somewhat surprising but also emphasized the importance of priorities.

"I want to say, the best investment I've made in my life so far is two girls," he said. Rogers has two daughters, one 16 and one 21 - the first daughter was born when he was 60.

However, at least for now, his daughters have not shown interest in learning about investments.

Rogers said, "You should teach everyone, especially young people, about money and investment knowledge. Tell them that money is meant to be saved."