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Commodities have been extremely volatile over the past one-week. Copper, aluminium, and zinc have all cracked under heavy speculative trading. On Wednesday, prices rebounded sharply, but only for a while, before slipping once again. Investment Guru, Jim Rogers says that all markets have big reactions and consolidations and it may be so with commodities as well.

But he futher adds that he will not sell any commodities even if they correct 30-40%. Rogers says that copper and zinc were overdue for correction.

In his opinion, commodities may have peaked for the moment but will not stay that way for a decade. China is the only emerging market that Rogers is invested in.

He is bearish on the US dollar and hence advises people to sell the dollar.

Excerpts from CNBC-TV18's exclusive interview with Jim Rogers:

Q: Was the crack we saw in commodities only a technical crack or is it the beginning of a downturn?

A: All markets have reactions and consolidations even within the context of the bull market. In the 1970s, gold went up 600% and then it went down 50% over a two-year period only to turn around and go up another 800%. So there may be big reactions and we may be overdue for one. Although I don’t have a clue, I am not selling any commodities, even if they go down 30-40% because they will be going back up later.

Q: Will all commodities go back up because some people are saying that industrial base metals may not reach the tops again?

A: I can see that copper and zinc and few things have gone straight up for a few months and they are certainly overdue for a correction. But one has to know that nobody has opened any mines in years and all the existing mines are depleted.

In Asia, India and China are growing.Some of these people may have to come up with lots of new mines very quickly because the world is running short of these stuff over the next decade.

Although copper is touching new highs, it is still far below its all time high adjusted for inflation and so is zinc, lead and others.

Q: You and others have pointed out that historically, commodity bull runs have lasted between 15-20 years and we are only in the 6th or 7th of this bull run. But has it ever happened before that commodities, stock markets, real estate all of them have gone up together; is this a change?

A: Real estate everywhere hasn’t been going up. It is ceratinly not going up in the US. Nor is it going up everywhere in India. It is going up only in some sections.

Although we have seen stocks and commodities going up, one must remember that the commodity bull market started in early 1999, and commodities are up 300% and stocks as measured in the west are only up 20-30% in that period of time.

Stocks and commodities have not been acting together. Although in the last 1-2 years, people think they have, but in the last 2-3 years in the US, the stocks are essentially flat. If one measures the averages, commodities have been going through the roof. Certainly in India, stocks have been going through the roof. But India is a special case.


Q: You are a legendary commodity investor but are you looking at emerging equity markets at all?

A: The only emerging market that I have invested in the past few months is China. That is because the Chinese market went down for several years. Other than China I am not investing in other emerging markets.

Q: You said that the only thing that could bring the Indian economy down is its governmen. Have things changed?

A: I know that the Indian government is saying the right things. But unfortunately they have been saying it right for the last 15 years. They just haven’t acted. Now they seem to be saying the right things and taking better actions. But I am still a little skeptical. They seem to be saying that they are moving in the right direction. If they are moving in the right direction then buying India now will be one of the great buying opportunities of one's lifetime. But it will happen only if the government and bureaucrats mean what they say.

Q: So you are not buying India only because of the government or is it because of valuations?

A: The market has gone through the roof and I missed the move in India. It is like copper going straight up. I am bullish on copper but I am not buying copper. India is going straight up but I am not buying India right now.

Other thing is that there is a huge number of foreigners flocking into the Indian market. The foreigners are always wrong, when they flock into a market. I have been investing for 40 years. When the Australians started buying Spain or the Japanese started buying Argentina or the Americans started buying Germany, it was the end of the move. Right now, foreigners are pouring into India and it is always a very bad sign.

Q: What is the call on the dollar?

A: Sell it. Do not own US dollar, it is a terribly flawed currency. We are going to see the demise of the US dollar currency in the next decade or so.

Q: So is that bad news for emerging markets and Japan?

A: Not necessarily. When the UK pound sterling lost its status of world's reserve currency, there were serious ramifications for a while. But I don’t see it as bad news for Japan because Japan does most of its business in Asia and not in the US anymore. Although 30 years ago, it would have been a disaster for Japan. Of course, it is not going to help Japan if the US dollar is in trouble but it is not going to be a disaster for them either.