JR: It's a fundamental positive for anybody who uses oil, who uses energy.
It's not a positive for places like Canada, Russia, or Australia.
It seems to me that this is a bit of an artificial move:
- The Saudis, from what I can gather, are dumping oil because the US has told them to in order to put pressure on Russia and Iran,
- And it's probably not a real move.
- I read about shale oil like you do. But at the same time:
--- North Sea production is declining,
--- Russian production will start declining next year,
--- All the major oil fields that we know about — all the production is static or declining,
--- So it doesn't quite add up on any kind of medium-term basis I can see.
HB: You've been bullish in the last year or two on Russia, which is now going through something of a crisis. Has your view changed?
JR: No, no. I've been traveling a lot lately:
- I should probably try to sit down and figure out what to buy in Russia again,
- It has had a collapse, as you know, but I suspect if you look at things like Russian ETFs,
- they are down at previous lows, but not making new lows,
- And a lot of that is because of the ruble.
- To Russia's credit, Russia has not been sitting around supporting the ruble in any big way,
- My view of markets is you let them clean themselves out, let the system find a clearing price.
- To my astonishment, the Russians are being more capitalist than the Western capitalists,
- They are letting the currency find its own bottom. That will change soon.
- It will find its own bottom, and then Russia will be a good place to invest.
HB: And you say that even given Russian President Vladimir Putin and his aggressiveness?
JR: It sounds like you have been reading American propaganda too much:
- This all started with America, with that diplomat in Washington
[Victoria Nuland, the Asst. Secretary of State]; they have her on tape,
- We were the ones who were very aggressive,
- We're the ones who said, 'We're going to overthrow this government, we don't like this government, even though it was elected. They are fools and we don't like them, so we're going to get rid of them.'
- We were the aggressive ones,
- Crimea has been part of Russia for centuries,
- If it weren't for [Nikita] Khrushchev getting drunk one night, it would still have been part of Russia,
- That election was in process, anyway,
- Everybody would rather be part of Russia than Ukraine,
- Ukraine is one of the worst-managed countries I've ever seen,
- Of course people want to get out of Ukraine. You would, too. It's a disaster,
- And Russia has been much more prosperous.
Maybe Putin has been overly aggressive, but he has been subject to horrible stress in the West:
- The State Department says he's a bad guy,
- so the American press says he's a bad guy,
- They stop looking at the facts,
- It happened in previous wars, including Vietnam.
The other effect it's having is driving the Russians and the Asians together:
- That will hurt us — the US — in the end
- because the Asians have more money than the West,
- America's the largest debtor nation in the history of the world,
- China has huge assets, as do other Asian countries,
- So unfortunately, it's causing Russia to turn more toward Asia,
- That too will be good for Russia in the long term
- There are 3 billion people in Asia
- You see the Russians have made this huge gas deal with the Chinese,
- The Chinese and the Asians have recently started an Asian bank to compete with The World Bank,
- This whole thing, which we started, is only accelerating bad movements,
- These sanctions are not hurting everybody, but they're certainly hurting Europe,
- which is driving more and more people to look for competitors to the US dollar and the US banking system.
In the end it's good for Russia. I don't like saying it. I'm an American like you are.
But I have to deal with facts, not with propaganda and not with hope.
HB: What would make you lose faith in Russia?
JR: If Putin suddenly invaded Germany, I would certainly lose faith. If it turns out that Putin is deranged, or other people in the Kremlin are deranged. I was bearish on Russia for 46 years. I went to Russia in 1966 and came away with the idea that this will not work; this cannot work.
And only in the last couple of years have I realized that something was going on and changing at the Kremlin. If I suddenly find this is wrong, that this is the same old KGB and the same old Kremlin, then of course I would change my view.
Read more: http://www.businessinsider.com/jim-rogers-on-oil-russia-investing-mistakes-2014-11