Jim Rogers , Commodities, US dollar, Gold etc.

Jim Rogers , whom I like, said this about the US dollar and some other stuff.
Now I know Mr. Rogers has been right but he has been calling for the Raw materials and other commodities to go higher for a long time. Not sure if he saw the commodities crash coming. He did say that every now and then we have corrections, but this does not look like a correction to me.

Many might not know , but there is a view that there are cycles in the economy and the commodities bull cycle was correctly recognised by Mr. Rogers when he called for higher prices in 99. So in 99 or 2000 this commodity bull cycle started and acc. to Mr. Rogers and others it can last 16 years, yes 16. So we are about half way through according to them.
No one I know warned about this commodity crash, almost everyone who predicted the stock market crash and bank problems saw a deep recession but never thought that commodities would fall so much. Maybe they expected a normal correction.
A correction is around 10-20% , we have fallen a lot more than that.
Here is a link to the commodities index as tracked by bloomberg.

Now this is my logic: what happened is as the banks started having issues and the markets crashed , everyone started hoarding cash and the US $ as that's what they did usually in bad times. So the US$ started getting stronger.
Almost no one saw this , not anyone I know predicted this ( if I am wrong then please let me know who did ). They thought as the markets and US banks crash US $ will weaken and go to 1.9 to 2.0 against the Euro , meaning 1 Euro = 2 US $.
That did not happen because we saw a deflationary environment and therefore huge US$ buying and also European bank problems and recession.
I would count that as a big miscalculation by many many bears.

But now the view , as far I read things and hear them , is that we will have this deflationary situation around for some time and then later when things start working, we will have a Hyper inflationary or at least high inflation scenario .
Why? because the Central banks and govt's have brought down interest rates to almost zero ( ZIRP - zero interest rate policy). There is almost universal agreement that the US dollar will lose its value by a lot when that happens.
Well none of these bears saw the problems with the other international banks, non-US.
So though the dollar is weak , the other currencies are weaker.
So who knows what happens next, Bernanke says/suggests that as soon as things start getting better they will have to increase the interest rates to stop inflation.
But Bernanke is a student of the Great Depression and knows what will happen if he raises interest rates too soon.
So as of now it almost looks certain that we will have a inflationary period and you can see wide support for this in the price of Gold.
Gold is going up in anticipation of that. If Gold does not keep going up, then expect a little twist in the story of inflation.

To sum it up:
Right now we have deflation so commodities are down and US$ is up.
When the economy starts getting better , deflation will be history and we will have inflation and therefore commodities start going up and US$ will get weak.
Now here is my corollary to that, if the US economy does better than other economies the US$ still remains high and thereby "arresting" the rise of commodities ( Oil and gold especially).
Now no one as of now talks of that, but many agree that the US is doing a better job by being pro-active about not letting the economy slip into a depression.

So it is my view that the "coming" dollar weakness is not a given and therefore the commodities rally is not a given too.
Now commodities can rally but maybe not as much as some bulls might like.

So I agree the with the statement and commodities might rise again but so not agree that the US$ is going down a lot .
If the US economy improves then the Asian economies improve too, obviously, but they are dependent hugely on the US and europe that they cannot rise and rally without the US .

Of course these are my thoughts and I might be totally wrong as one thing I have learnt is no one knows whats going to happen 100% .
That is exactly why I am a trader and the trend is my friend.
But one has to have the bigger picture in mind while trading. But be humble , do not stick to your theory if things are not going according to that.
But the trick is that things might go against you for a loooong time and then start going just like you though.
But I am here to make money and I would rather be lucky than right.
making money in the markets is totally different than predicting what might happen or what might not. You might think that the S&P500 is going to rise but still not make any money even if it does rise. The market is a weird mechanism.
Example: I am expecting the consumer to save money and not spend too much , but I still got RIMM calls though RIMM is a high end device , but why did I buy RIMM then?
1. The Chart says so,
2. The chart says so and I believe it because the market overshoots in both directions and it overshot to the downside with RIMM too fast .
3. The trend is your friend and its up for RIMM at least for a while. There are traders who will buy this and take it up.
4. The Risk/reward ratio, risk to downside is limited with the heavily oversold condition , so all the bad news is in the stock ( careful there though as the banks show that oversold can get more oversold).
5. Finally its just a trade with tight stop losses and very little capital.

Timing is essential in trading, you might know that a sector is bad/good but if you short/buy it at the wrong time , it might go against you.

Good Luck.