Markets just seem to be going from strength to strength and we are continuing to see new records being made all the time. Are you eyeing what could possibly be the formation of a bubble as commodities are spiking and other asset classes setting new records?
Yes, bubbles are beginning to develop. We do not have full-fledged bubbles yet except in bonds, bonds everywhere are a full-fledged bubble. At the moment, if I will buy countries I would buy Japan, I would buy Russia; both are still down dramatically but lots of money is going to pour into both of them because they are cheap and likewise agriculture. I am not buying America, America is at an all time high. So, Japan, Russia, agriculture.
The latest data out of Japan was encouraging on the commodity front. Given what we are seeing on crude, I want to get your perspective on the blackouts in the US, the fact that we are seeing supply shortage versus outlook on growth. Would crude come back to pre-Covid levels?
Well crude is at the highest it has been in over years. The production of crude and the reserves of crude have been going down. The bubble popped in fracking and now people realise oh! my gosh world supplies are declining. At the end, I am buying Russia because Russia is depressed and Russia has a lot of oil and a lot of agriculture.
You have been bullish on agriculture for a while. Would you be looking at the commodity exchange or would you also be looking at key markets where you see this emerging as strength? India has been focusing a lot on domestic and rural recovery. Would India feature or would certain themes within the market feature on your radar?
I love India as I have told you many times. If you can only visit one country you should visit India it is the best place to visit in the world. I do not have investments there now because the markets are at high. I would rather buy places that are down and as far as agriculture is concerned, I am a little lazy. I would like to buy the index. All studies show that index investing outperforms most people, especially lazy people like me. I buy RJA on the New York Stock Exchange because that is an agricultural index but if you know what you are doing, you should buy the individual commodities.
Agriculture commodities some would argue was a function of demand and production, but now there is mechanisation, genetic seeds. The borders which existed between various countries are no longer there. Do you think the agriculture bull market this time may not be all that strong?
We have had mechanisation and technological advances in agriculture for a 150 years. The number of farmers in America has dropped by 90% in the last 100 years. Everybody has machines now but somebody still has to make this happen. We still have to have human beings and maybe we are never going to have agricultural cycles again. We have had agricultural cycles for centuries and we will again because of weather, humans, diseases, all sorts of reasons.
Fuel prices in India are skirting around the all-time high — both petrol as well as diesel. Is the trajectory of crude prices going to remain intact barring a few odd aberrations here and there?
We are going to have much higher prices of food, fuel and nearly all commodities. The single cheapest asset is steel commodities. Bonds are a bubble as we discussed, a bubble is developing in stock exchanges also. Commodities are still very cheap on a historic basis, silver is still down 45% from the all-time high.
