NEW YORK (Reuters) - Investor Jim Rogers, a prominent commodities bull, said on Thursday the U.S. government bond market will be the next bubble to burst due to unsustainable borrowing, and agricultural commodities and precious metals are among his favorite investment picks.
Rogers also said stock markets could head for a pullback following a strong rally.
“It’s overdue for a correction. Certainly, it would not be surprising if there were a correction after a straight-up move for six months,” Rogers told Reuters Television in an interview.
He was not “selling the market short,” and the equities market could keep rising for a long period of time, Rogers said.
After the Reuters interview, Rogers said at a seminar hosted by ETF Securities that the bull market in U.S. Treasuries has come to an end.
“The next bubble that I see developing is in the United States government bond market. It is inconceivable to me that anybody would lend money to the U.S. government for 30 years in U.S. dollars at 3 to 6 percent interest rate,” he said.
“So, somewhere along the line, this bubble is going to pop. If any of you own bonds, I’d be terribly worried, I would think about getting out of the bond.”
Rogers said agricultural products, precious metals and oil remained among his favorite commodity picks.
“I know that inventories of agricultural products are the lowest they have been in decades. We have shortages of everything developing in agriculture,” he said.
He said sugar, which recently hit a 28-1/2-year high, could go much higher in the next decade.
Among precious metals, Rogers said palladium and silver looked more attractive due to cheaper prices, but he would buy gold in the long term because the metal has historically been regarded as a real asset.
Rogers said he was certain crude oil could trade as high as $200 per barrel over the course of the bull market because of depletion.
Rogers, who resides in Singapore, had co-founded the Quantum Fund with George Soros in 1970. The fund, since closed, returned 4,200 percent over the next decade, compared with a 50 percent gain in the S&P 500 index.
Asked about his investment philosophy, Rogers warned against chasing hot markets and venturing into unfamiliar assets.
“Investors should only invest in things that they know a lot about..., and that’s how you are going to get through all of these and survive. Even though that means just putting your money in the bank,” he said.
“It’s better to earn 1 percent a year than to lose 1 percent a year.”
Reporting by Frank Tang and Rhonda Schaffler with Reuters Television
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