Jim Rogers, Chairman, Rogers Holdings in an interview with ET Now talks about emerging markets, commodities as a space, Chinese property bubble and the expected economic slowdown. ( Watch )

Let’s start of with gold first because gold is back clearly at new highs. Where do you see it moving from here and more importantly, what are the factors right now dominating this move? Do you think it is a safe haven buying or it is the dollar movement or the Eurozone crisis which is still playing out?

It is all of the above. People in times of crisis frequently throughout history have looked for gold, not always but sometimes and that seems to be what is going on now. You have central banks which used to sell gold are now buying gold and you have massive amounts of people around the world clutching for gold, paper money everywhere is suspect, paper money everywhere is being debased.

What is your sense because there seems to be an emerging disconnect between natural gas and crude prices? Indian players like ONGC and Reliance Industries maintain that we will witness an upward bias from the current levels of $4.2 per unit. You have been long on natural gas, how much more of an upside are you foreseeing?

I am long on natural gas as a matter of fact but I have never said that someone should buy natural gas. You might look at it instead of crude. Crude is very very high compared to natural gas. I would think you will probably find opportunities in natural gas. How high will it go, I have no idea. I am not smart enough to know that. You should watch your TV everyday and then you would know. The world is running out of known reserves of oil and over the next decade or so, the surprise is going to be how high the price of energy goes and how high it stays. We are running out of energy whether you like it or not.

But talking about sugar as well, sugar has corrected almost 48% from its highs. One can believe that there is further downside while the others are averaging their stocks because they feel there is a bottom in place, what is your view?

I am not quite sure how you are looking at; sugar is down 75% or 80% from its all time highs. Sugar is up 300% or 400% from its lows of a few years ago. If you are talking about just this year, it has come down dramatically. I would rather be long sugar than short sugar. I have not owned sugar at the moment but I do not know whether one should buy it or not. I am not very good at market timing but sugar is another way to play energy plus sugar is another way to play the emerging prosperity in much of the world.

Several Asian economies including India are currently grappling with high inflation, you think governments could be swift enough to act upon this and will inflation really eat into returns for commodity bulls?

Rising prices is inflation. Inflation does not call prices to go up. Price is going up because of inflation. So I am optimistic about the price of commodities going forward. The governments spend a lot of money, that is going to lead to higher prices at least it always has. Now if governments stop printing money, then we are going to have other things going on in the world.

We have economic decline, continue the economic decline but so far, governments do continue to print money all over the world and many nations in the world acknowledge they have inflation. India happens to be one of the ones that are honest about it. America is dishonest, America lies about inflation. The UK lies about it but many Australia, Norway, China many others tell the truth and we do have inflation in the world and it is going to get worst.

What is your thought on the latest news really coming out of China? There has been a sharp minimum wage hike in the government sector. Do you think that is going to take away from China being the low cost manufacturing hub?

I am sure that China’s wages are going to go up a great deal over the next few years. Look at what happened in Japan, Japan used to be one of the lowest wage countries in the whole world and their wage is now among the highest in the world if not the highest and they are still very efficient in competitive manufacture of many goods.

What is your thought on agri commodities because most people are now turning bullish? Which pockets do you think would have emerging strength at this point of time and more importantly, what geographies would you be focussing on when it comes to agri commodities?

If I am going to look at commodities, I would rather look in Asia just because this is where the countries and the economies are sounder. There are some great places for agriculture, Canada, Australia, Brazil. Many countries not in Asia which have vast amounts of agricultural potential and there are probably wonderful opportunities.

I am of the opinion that agriculture is going to do better in the future, suffer less if you want to look at it that way, then most industrial nations are going to suffer less in stocks. At the moment, I happen to be long commodities and short stocks because the stock markets in the world are going to continue to have problems. If that is the case, I would rather own commodities than stocks and if the world gets better, commodities are going to do well as well.

Talking about China, China has been hungrily acquiring commodities globally; do you see this space actually accelerating with any signs of recovery playing out?

Many countries especially the Chinese, I guess they see what I see that there is going to be in the next decade or two serious shortages of commodities of raw materials developing around the world. Chinese are buying plantations and farms and mines and oil fields but now the Japanese are starting, some of the Middle East is also starting and it is clear that the world is going to face shortages in the future.

So they are buying them up. I would rather own farms than a seed on the New York Stock Exchange. I would rather own farms than many currencies. So you are going to see more and more of that in the future because people see the same things I see that there are problems coming in commodities.

But what is your sense, do you think India can compete with China space if acquiring energy security without significantly overpaying?

India does not have as much money as China does as you know. China is the largest creditor nation in the world. India has got a lot of foreign currency reserves but India also has huge amounts of debt. That is one of the things that worries me about India anyway; all the huge debt spilt up in India plus your government is continuing to add debt. So it is going to be difficult to compete.

India should be one of the great agriculture producing nations of the world. If your government did not have these bureaucratic nightmares against farmers and making it so difficult to be a farmer, you have got the soil, you have got the climate, you have got everything. Your government makes it almost impossible to be a successful farmer as you know; thousands of Indian farmers commit suicide every year because the government just makes it almost impossible. If that changes, India should be and could be one of the great agriculture producing nations of the world. You have been in the past in your history, you could be again.

Which according to you is the strongest currency at this point of time and which one would you be most bullish on right now?

I am trying to deal with that very very problem. There are currencies like the Singapore dollar which is very philosophically sound. I own the yen. I own the Swiss franc. I am thinking about selling my US dollar. The Canadian dollar is certainly sounder than the US dollar. It is a complicated issue for me these days. I own the renminbi but you cannot just buy and sell the renminbi, it is a blocked currency.

It is like the rupee; you cannot just buy and sell the rupee easily. I am looking for the place to put my money and of the place that I am actually thinking about at the moment is the euro. I own some euros which are not helping at the moment but it is getting so beaten down and the US dollar has been so positive and so popular that maybe these are swapping my US dollars for euros, I have not done it yet but I am thinking about it.

And do you invest in the Chinese property market? Would you be buying anything there?

No, one of the bubbles in the world right now is the urban cost of real estate in China. No I expect and the Chinese Government is doing its best to call its prices to go down in China. I am sure they are going to be successful, I would not think about buying property in China right now but I probably would not think about buying property in most places because if we are going to have an economic slowdown again which I am sure we would have over the next few years, there will be better opportunities to buy property and of course interest rates have to go up eventually and when interest rates go up, that is going to hurt property as well. So for most people in most places there will be better chances to buy property in the future.

What is your call on frontier markets? Some of these markets are running away while the emerging and the developed world has really been giving negative returns at this point in time. Sri Lanka seems to be quite hot favourite with some of the investors. What is your thought? Are you looking at any of these frontier markets?

No, I have been investing for frontier markets and is now a call for 30 years. At the moment, I am not looking at any of those places. I am so stocks sure that one of the areas that I am so sure has been emerging markets because they were very very overexploited in 2009 and part of 2010.

So I certainly would not be investing in frontier markets. There may be some wonderful opportunities and there probably are but even if there are and if I am right about what is going to happen in other stock markets and other economies, there will be better opportunities. I have them on my radar screen, I am watching to see what happens but I do not see anything that is really cheap anywhere in the world right now as far as the stock market is concerned.

What really are the big bets for 2010?

Jim Rogers: 2010 is almost over. I am not really thinking too much about 2010. It is 2011 that one has to worry about. I expect more currency turmoil in the future. I am shorting stocks, I have been shorting emerging markets, I have been short technology, the NASDAQ in the US because that was very very strong in the last 18 months or so, stronger than the world economies going to be. I am sure a major international financial institution that people think is very sound, I happen not to think so and I own commodities.

I hope that if the world collapses, shorts protect me on the long side and then short side and if the world starts going into even more money printing, then commodities will save me on the long side. This weekend, the G-20 finance ministers met and they said that they are going to withdraw fiscal stimulus.

The Americans did not say it but the others did. If that starts happening, you are going to see more and more economic slowdown around the world and that is why I am not optimistic about stocks but if that happens, if we do have more slowdown because the G-20 starts withdrawing stimulus, I suspect the central banks will print money because that is all they do. So I would rather be long commodities and short stocks which is what I am doing.