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Jim Rogers On QE3, Gold, Silver and Oil

By , Contributing Writer, Money Morning •

The U.S. Federal Reserve is ready to launch a third round of quantitative easing, dubbed QE3 or QE Forever - but legendary investor Jim Rogers is shaking his head.

In fact, Rogers said repeating the same program the Fed has already attempted will make policymakers "look like fools again."

In an interview with CNBC before the Fed's announcement, the chairman of Rogers Holdings said he was skeptical that additional stimulus measures could have any meaningful effect on the U.S. economy. He added that despite his reservations, he expected the Fed to unveil QE3.

The iconic financier also lashed out at the new developments in Europe, including a move from Germany last week to funnel taxpayer cash into the European Central Bank's OMT program, their own version of quantitative easing. Rogers maintained they are not addressing the root of the problems plaguing the Eurozone area.

On Europe's move to implement a euro version of QE, Rogers said it affords the Western world "unanimity towards mutual destruction."

Any relief will be temporary, warned Rogers.

"We're all going to pay a horrible price for this in a year or two or three," he said.

As for why the Fed will continue its ineffective stance of zero to 0.25% interest rates through at least mid-2015, and the tossing good money after bad, Rogers advised the reasons are simple.

It's an election year and "Mr. Bernanke wants to keep his job."

That's why Rogers is getting defensive with commodities.

QE3: Gold, Silver and Commodities Win

As global central banks continue to print copious amounts of cash and the underlying values of the dollar and foreign currencies deteriorate, gold, silver and other commodities stand to benefit.

The proof was seen in robust rallies in precious metals and oil immediately after QE3 was announced.

"I'm very pessimistic about the U.S. dollar. It's going the way of the pound sterling when it lost its status as the world's reserve currency," Rogers said in a recent interview.

The more money the Fed prints, the more valuable gold and silver becomes in dollar terms.

And the idea of a growing economy from more Fed stimulus leads to a growing demand for oil, which leads to higher oil prices.

Rogers, a commodity guru, is betting on gold, silver and oil as winners for the duration of the decade.

He has taken a particular shine to silver. Over the past several months, as the volatile dollar has lost value, the silver market has taken on a new sheen and investor interest is once again glistening. The white metal has been testing multi-month highs as traders prepare for inflation amid more stimulus.

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Rogers points out that silver's volatility makes it especially attractive in a QE3 climate. He currently favors silver over gold because silver prices are roughly 40% below their highs while gold prices are about 10%-15% below highs.

"But I'm not selling any gold. If it goes down I hope I'm smart enough to buy more. If it goes down a lot I hope I'm smart enough to buy a lot," Rogers noted.

The bull market in gold, he stresses, is not expected to end until a bubble is reached sometime near the end of the decade.

Rogers also sees oil as a good investment.

"The price of oil may well go down for a while," Rogers told CNBC in mid-June. "China is slowing down, India is slowing down, a lot of places are slowing down. But over a decade the price of oil is going to go through the roof. The surprise is going to be how high the price of oil stays and how high it goes. That doesn't mean it cannot go to $70 in the meantime. But if it does, you should buy a lot of oil."

As for investment vehicles, Rogers is a big fan of ETFs.

"Exchange traded products are convenient for commodities. I always buy exchange traded products and it's terrific," Rogers said at a June Alts Virtual Summit.

The most heavily traded and active gold ETFs include the SPDR Gold Trust (NYSE: GLD), Market Vectors Gold Miners ETF (NYSE: GDX), and the iShares Gold Trust (NYSE: IAU).

Volume has picked up in several silver ETFs including the PowerShares DB Silver ETF (NYSE: DBS), iShares Silver Trust (NYSE: SLV), and the Silver Miners ETF (NYSE: SIL).

A few oil ETFs to consider include iPath S&P Crude Oil Trust (NYSE: OIL), United States Oil (NYSE: USO), and ProShares Ultra DJ-UBS Crude Oil (NYSE: UCO).

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