International investor Jim Rogers warns investors that the United States is long overdue for a recession and that the dollar is far from sound.
"The U.S. is terribly over-indebted country with the largest debt in the history of the world," the chairman of Rogers Holdings recently told Bloomberg TV India.
"The U.S. dollar is not sound. But with a lot of turmoil coming, people think U.S. dollar is a safe haven. What I expect to happen is that turmoil will get worst and the dollar will go higher — it is already over-priced — and may turn into a bubble," he said.
"My plan is to then sell US dollar. What I will buy, I don’t know — gold or the Chinese renminbi," he said.
Meanwhile, he expects economic growth to continue to stall around the globe.
"I expect nearly all economies around the world to slow down. In America, we have had nearly six or seven years without a correction in the economy or the markets. It is long overdue. Normally, we have corrections every four to seven years in the United States. So we are overdue," he said.
"The debt is going higher and higher. Many of our customers are slowing down — China is slowing down and Japan is in recession. Now, I certainly expect more slowdown to come worldwide," he said.
As for the Federal Reserve's recent interest-rate hike, Rogers is far from impressed. In fact, he thinks the tactics of the central bank are actually far more harmful to the U.S. economy than being of nay help.
"The Fed is just made up of bureaucrats and academics. They don’t know very much," he said. "The first interest rise from the Fed doesn’t mean very much. The third one is where you have to start worrying. If the Fed raises rates three or four times, then it is usually all over for the stock market. So just keep watching, be worried and be prepared," he said.
Rogers went on to explain his own investment strategy.
"I have hedged my gold and silver holdings. I expect gold to go under $1,000 an ounce. What does that mean for silver — $12 or $10 an ounce — I haven’t figured it out. But certainly under a $1,000 for gold at which point I hope I am smart enough to take my hedges off and buy a lot of gold — whether its $950 or $900, I don’t know," he said.
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