Gold has not bottomed and the US Federal Reserve will collapse in the next 10 years, says renowned investor Jim Rogers.
“100 years ago you could not have named the head of most central banks in the world,” Rogers told Mineweb. “Now they’re all rockstars.” Gold and equity markets have increasingly been locked in Fed-watch mode in 2013, obsessing over when or whether chairman Ben Bernanke would taper the bank’s vast bond buying scheme.
Rogers however, an ardent free-marketeer, says the market’s narrow focus on the Fed reflects the bank’s rising and now extreme interference in global markets, propelling the likes of Bernanke in the US and Mario Draghi in Europe to near household name status.
“Everybody knows them,” he says, “but that’s only a phenomenon of the last 20 years, when central banks have been pumping money into the markets and everybody’s singing hallelujah.”
With Bernanke’s term due to expire in January, Rogers says he will be remembered as “the guy who set the stage for the demise of the Central Bank in America. We’ve had three central banks in America. The first two disappeared. This one’s going to disappear too in the next decade.”
“It’s not a possibility,” he adds, “it’s a probability. People will realise that these guys have led us down a terrible path. The Fed balance sheet has increased by 500 per cent in the last 5 years and a lot of it’s garbage.”
“The US went up because people said, ‘Now it’s done, we don’t have to worry anymore.’ But somewhere along the line, markets are going to start suffering. They’ll taper until the markets start hurting and then they’ll panic and loosen up again. They’ve got themselves in a terrible box.”
“It’ll turn into a bubble or a very inflated situation, but eventually the markets will say, we’re not going to take your garbage anymore, whether it’s treasury bonds or currency.” Inflation, Rogers says, has only been kept in check in the US by the country’s shale gas discovery, putting a “dampener” on energy prices.
Whist Rogers views mass money printing as untenable, in the short term, he expects equities to turn parabolic, rather than collapse.
“The Japanese Central Bank has said that it will print unlimited amounts of money,” he says. “That’s their word and they’re doing it. When people look back 20 years from now they’ll say that’s what killed Japan, but in the meantime, all the staggering, unlimited amounts of money have got to go somewhere and it’s going to go into Japanese shares.”
Full article: Bernanke has set the stage for the Fed’s collapse -Jim Rogers (Mineweb)