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Jim Rogers: Now May Be a Great Time to Buy the Euro

By    |   Thursday, 10 Jun 2010 11:55 AM

Investment icon Jim Rogers is thinking about buying the euro after its recent drop to a four-year low against the dollar.

It’s not that he’s gained any confidence in Europe’s handling of its debt crisis – quite the contrary. But any asset that drops so sharply is due for a bounce, Rogers says.

"I'm as confused as anybody else. I'm basically short stocks and long commodities and trying to figure out whether to add to the euro yet," he told CNBC.

"Everybody is terribly negative on the euro right now; it's unbelievable how many bears there are. That usually means a rally is coming."

And it’s difficult to predict how long the rebound will last. "Once a technical rally starts, it could turn into more than that. Who knows?" Rogers said.

The euro dropped to $1.1877 June 7 before recovering to $1.21 recently.

Rogers remains bullish on commodities. He expects inflation to boil, as central banks continue printing money to protect their economies.

“That's all they know to do. They don't have more sense than that," Rogers said.

He prefers physical commodities over commodity-related stocks, because the stocks can move out of synch with the commodities themselves.

Like Rogers, many economists are bearish on the euro long-term.

Indeed, Europe’s weakened state will send the currency to its death within the next five years, according to 12 of 25 major London economists surveyed by the Sunday Telegraph.

Meanwhile, economist Jim Walker, managing director at Asianomics Ltd., says the euro may drop to 85 cents.

“I think people have misunderstood how difficult things are going to be in Europe for the next few years, not (just) the next few months,” Walker says.

“It’s going to get worse before it gets better … people are going to become much more risk-averse,” he recently told Bloomberg.

Economist Joseph Stiglitz says the euro will survive Europe's debt crisis even as spending cuts and tax increases restrain economic growth.

“Europe is likely to go through a weak period” as governments implement “more austerity measures in the face of a weak economy,” Stiglitz says. Political leaders will do “everything to save the euro and they will muddle through,” Stiglitz told Business Week.

European Central Bank President Jean-Claude Trichet twice skirted questions Thursday about the rapidity of the euro's recent decline, the Associated Press reported. The currency slid rapidly this year from more than $.150 last November in the wake of the Greek debt crisis.

"The euro is credible, keeps its value and it is a major asset for external and domestic investors," Trichet said.

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Investment icon Jim Rogers is thinking about buying the euro after its recent drop to a four-year low against the dollar. It s not that he s gained any confidence in Europe s handling of its debt crisis quite the contrary. But any asset that drops so sharply is due for a...
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2010-55-10
Thursday, 10 Jun 2010 11:55 AM
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