What will be in demand during these volatile and uncertain times?
Editor’s Note: Part I can be found here: Will A Historic Printing & Spending Spree Be Enough To…
“The illusions of Keynesianism create a morally corrupt society” – Part II
Claudio Grass (CG): Overall, apart from the obvious economic consequences of the crisis, do you also see geopolitical and social ones, on a wider scale? Given all these “moving parts”, from the upcoming US election and internal frictions in the EU to the Hong Kong tensions and the rising public discontent in Latin America, where do expect the chips to fall once this is over?
Jayant Bhandari (JB): What I have told you about India to a large extent also applies to all of the Third World, where 5 billion out of the 7.5 billion human population lives. China is the only exception.
The Third World simply doesn’t have it in them to maintain the institutions that the colonial powers left behind. After a decade of rapid growth because of extraneous factors, the Third World has been economically stagnant for the last decade. They are all looking at a very bleak future, of disintegration, tribal warfare, chaos, destruction, crises, wars, and savagery.
By contrast, East Asia is, in general, the most orderly part of the world. Taiwan, Japan, Hong Kong, South Korea, and Singapore will be the countries to emerge the earliest out of Covid-19 and, as a result, might even benefit. Even China has mostly reopened the economy.
Of course, Hong Kong is slowly losing its independence. And, ironically, the more they fight for democracy and separation from China, the less independent they will become. If China gives even an inch to Hong Kong, similar protests will spread elsewhere in the country, destabilizing it. The Chinese government will not let this happen.
When we shift our focus to the West, it is interesting how Covid-19 has exposed all the deep and preexisting rifts in the US. It is also interesting that the biggest sufferers from the riots have been cities run by the radical Left.
Before the recent riots, I had believed that after Trump, because of demographic changes happening in the US, the country would eventually take a sharp turn to radical leftism. This turn to the Left is coming sooner than I thought. The Left is parasitical. It is anti-civilization, regressive and feral. Unchecked, it eats away the innards of any society.
The riots have shown how wide and deep the swamp is. Both the Secretary of Defence and the Chairman of the Joint Chiefs of Staff have taken a position that compromises the authority of Trump. I wouldn’t be surprised if he slowly becomes a mere rubber-stamp President.
Cultural Marxism, political correctness, and the naivety that afflicts Keynesian economists have inflicted massive damage on the culture and institutions of the US. It is still the best country in the world, but as time goes by, it is becoming increasingly unstable. And this has serious implications for the rest of the Western world. Without Pax Americana, Canada and Europe cannot expect to stay free and stable.
Whichever way I look at it, East Asia seems likely increasingly promising to me in the medium and long term. Unfortunately, while they are orderly, they lack the foundations of morality, individuality, freedom of thought, and many other western values.
CG: Precious metals have really played a major role for investors throughout this crisis so far, and gold once again proved to be a reliable hedge. What is your outlook going forward? Do you expect demand for precious metals to remain strong?
JB: If there’s anything we can all agree on, it is that the future is looking increasingly uncertain. The West, which has always been the source of stability in the world, is growing weaker, now rather rapidly. Their economies were stagnant even before Covid-19 hit.
With oil prices staying low and their economies mostly dependent on oil revenue, the Middle East’s good days are far behind them too. The Middle East and South Asia have been the biggest consumers of gold in the world. Savers in these societies know that their property prices are too high, and generating a return from investing is not easy.
In these volatile and uncertain times, anything that you can keep in your possession will be in demand. Gold is one of those instruments.
CG: Gold and silver miners also had a bit of a wild ride over the last few months. What is your view on the investment potential in this space?
JB: I have always found big gold mining companies to be too expensive. Generally, when the gold price goes up, gold miners tend to go up in sync. The smaller miners tend to lag. This situation provides an opportunity for those who are ready.
If you can identify good junior mining companies, there is still a lot of upside left. However, it is essential to remember that start-ups, in general, lose money for investors. So I strongly recommend that those keen on investing in the mining industry make sure to do their research to evaluate the companies they are interested in.
CG: What do you screen for when assessing precious metals mining companies? In your experience, what are the main red flags to look out for and what best predicts a solid performance?
JB: Incompetent people rise to positions of power not just in the government, but also in companies.
Irrespective of the sector or company I invest in, I want to make sure that I am giving my money to competent people. The top leadership should be technically competent, politically aware, socially conscious, financially wise, and honest, while also being street-smart. If the management is not good, your investment can easily become a value-trap.
Once I feel reasonably good about the management, I want to make sure that I have a buy and a sell price for the company. Doing this gives me directions on what to do when prices change.
Even in corrupt jurisdictions—like India or Zimbabwe—I have seen smart people make good money. But this is rare. Intelligent people don’t typically waste their time in corrupt jurisdictions.
CG: What about silver’s prospects? It’s been lagging gold until now, as it usually does historically, but do you expect a rally to follow this time around too?
JB: I don’t like to think of gold and silver following a specific ratio. I buy silver for its own sake. Silver has vast usage in the industry. And China will continue to gobble up a massive amount of commodities. I cannot predict the price, but silver is one of the pillars of my portfolio.
CG: What would be your advice for a conservative investor looking to protect and preserve their wealth in the current climate of uncertainty?
JB: I love western society because of its rational, moral, and Christian underpinnings. No other nation in the world is like that. However, the West is increasingly adrift and rudderless. Anyone with a long-term view, say, of more than five years, should look at East Asia as a place to live and invest. East Asia offers stability. One should consider investing and keeping some cash in East Asia. It is essential to diversify wealth internationally.
Claudio Grass, Hünenberg See, Switzerland