The U.S. government deserves the downgrade Standard and Poor's slapped on its ratings, because the country has run up so many debts it will never get out of the hole, say famed commodities investor Jim Rogers.
Standard and Poor's cut the country's ratings on Aug. 5 to AA+ from AAA on concerns the government is not doing enough to address its debt burdens.
The agency is being too nice, as Washington probably doesn't even deserve the AA+ rating, Rogers tells CNBC.
"It seems to me it's physically, humanly impossible for the U.S. to ever pay off its debt," he says. "They can roll it over and continue to play the charade, but the U.S. is bankrupt."
Investors should go long on gold and commodities, which will perform well while equities and currency markets digest the extent of the fallout the downgrade will have.
"You should nearly always buy into panic just like you should sell hysteria," Rogers says.
"I own gold, I'm worried about gold, it's going so up so much, I'm not going to sell it but it looks like it's setting itself up for a nice correction. I hope so. Then I can buy more."
Gold has topped $1,700 an ounce for the first time on news of the downgrade.
Gold prices are up 20 percent in 2011, Bloomberg reports, as investors are buying it as a hedge to protect themselves against market volatility.
"In this current macro environment with high risk and uncertainty surrounding the financial markets, gold has boded very well," says Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland, according to Bloomberg.
"Gold is pricing in the one-notch downgrade as well as a component of lower global GDP growth."