NEW YORK Investors in oil, metals and grains shouldn't worry too much about selloffs in these markets as the vast sums of money being printed around the world will take prices higher, commodities bull Jim Rogers said.
"If the world economy gets better, commodities are very good place to be in," Rogers told the Reuters Investment Summit in New York on Wednesday.
"Even if the world economy does not improve, commodities are still a fabulous place to be because every government is printing money now. Throughout history, when countries printed money, commodity prices rose," Rogers said.
Commodity markets have stumbled since the start of December after debt woes in Dubai and Europe rekindled global financial fears and drove up the U.S. dollar, whose weakness in recent months had contributed sharply to prices.
U.S. crude oil has lost about 10 percent of its value since the month began. Wheat futures have fallen about 10 percent while gold futures have shed about 5 percent.
Analysts said the selloff may continue into the year-end as markets react to burgeoning stockpiles of raw materials that indicate lagging demand and traders resort to book squaring before the year is over.
But Rogers, a long-term investor in commodities, said market corrections come and go and another major upward cycle was probably underway in commodities.
"I have learned the hard way not to sell something short in a cyclical bull market. I'm not buying anything now, but if I am buying, I'll be buying agriculture, silver, natural gas, palladium and all things that are very depressed," he said.
"I wouldn't buy gold at these prices but I also wouldn't sell the gold I own", he said. Despite their recent correction, gold futures haven't fallen too far below record highs of nearly $1,230 an ounce.
U.S. gold futures settled just above $1,120 on Wednesday.
While many investors were surprised by the forceful rebound seen in commodities seen just months after the recession, Rogers said he was more surprised with last year's plunge, which he described as an "artificial reaction" to the collapse of Lehman Brothers and the financial distress at AIG.
"Prices may have come up too much and too fast and there may be a need for a correction. But is that the end of the bull market? Hardly. Oil has gone down 40 or 50 percent four times since 1999. It did not end the bull market in oil."
As an example, he cited the stock market crash of 1987 when equity prices around the world fell between 40 and 80 percent. "Those who didn't sell out later witnessed some markets rising a 1,000 percent."
While his approach to investing was almost always long-term, Rogers showed he could also have a shorter view on an asset if needed, and singled out the dollar as one.
"I'm still very pessimistic on the dollar but decided to accumulate some dollars over the last few months because there were too many dollar bears. When there are too many bears and you can expect some kind a rally in the dollar."
Although he describes himself as a "horrible market timer", the Rogers Commodity Index .RICIX set up by Rogers is up almost 30 percent this year, outperforming the more high-profile Reuters-Jefferies CRB commodities index .CRB, which is up about 17 percent.
(For summit blog: blogs.reuters.com/summits/)
(Editing by Carol Bishopric)