According to market expert Jim Rodgers, investors would be better off putting their money in hard assets like gold, silver and agricultural commodities. This is because he says that capital markets aren't going to calm any time soon and the euro zone debt crisis seems to be spreading from Greece to Spain.
Friday, 18 May 2012 09:02 AM
By Forrest Jones
Roiling capital markets aren't going to calm any time soon so investors would be better off putting their money in hard assets like gold, silver and agricultural commodities, says international investor Jim Rogers.
Greece is teetering on the brink of default, while the debt crisis appears to be spreading to Spain, as evidenced by a Moody's decision to cut ratings on 16 banks there.
"The world's got serious problems facing it, I don't particularly like saying it, but it's true," Rogers tells CNBC.com.
"Unfortunately there will be more debt and currency turmoil to come."
Greece goes to the polls on June 17 to elect a new parliament, and many worry voters will elect enough leftist and other fringe politicians who favor ditching austerity measures in exchange for bailout money, which could precipitate the country's exit from the eurozone.
The euro has taken a pounding on European uncertainty lately and will continue to do so.
"I hope the euro survives, I think it will survive in some shape and form," Rogers says, adding he's avoiding equities right now.
"I own real assets because if the world economy gets better I'll make money because of shortages and if things get worse they'll print more money," Rogers says, referring to loose monetary policies designed to spur growth amid downturns, which push up commodities prices as a side effect.
Greeks pulled the euro equivalent of close to $1 billion out of the country's banks on one day alone recently, as worried depositors stock up on euros fearing the country will ditch the currency and revert to the drachma, which would be much weaker.
Continued withdrawals will bruise an already beleaguered financial system, experts say.
"If you have significant deposit withdrawals, that's difficult for any institution to overcome no matter the macroeconomic factors. Of course that's not even taking into account everything going on in Greece," says Kris Niswander, associate director of European financial institutions for SNL Financial, according to CNNMoney.
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