How do you evaluate the role of precious metals as a hedge and an insurance against political and monetary excesses?
Editor’s Note: This is Part II of a two-part series. Click Here for Part I.
Interview with Fernando del Pino Calvo-Sotelo: Part II of II
Claudio Grass (CG): In your analyses and articles on the issues around the covid crisis, you have adopted a very rational and calm approach, focusing on evidence and scientific facts. Why do you think it is that so many people, both among the governing and the governed, have failed to use these logical tools in dealing with this pandemic? Why does emotion prevail over logic so often?
Fernando del Pino (FdP): Pascal wrote nearly 400 years ago that “the heart has reasons that reason cannot understand”. We are human beings, and thank God we are not cold robots using reason alone. Man is a combination of head, heart and soul, meaning reason, emotion and spirituality, and it has been wonderfully created that way. When all three remain in balance, each of them collaborating from its realm, everything works fine. But when an extremely powerful exterior force is exerted in order to imbalance them and negate any of them, bad things tend to happen. That’s what has happened, with governments and media (with Big Pharma salivating from the sidelines) artificially provoking an inordinate amount of fear, uncertainty and guilt. That is not to say, of course, that we should minimize the sad death toll of covid and the human tragedy for so many.
Let me tell you my personal path of discovery this year. For nearly two decades one of my hobbies has been reading medical research. Therefore, it was only natural to me to start reading research on covid and trying to apply logic and distinguish facts from opinion. The two tend to be confused nowadays and, surprisingly, have the same value in the eyes of the public even when an opinion denies facts. Quite soon I discovered that the most part of whatever politicians, the media and most doctors were saying about the illness and the measures to fight it were not supported by scientific evidence but by hearsay and obvious conflicts of interest, so I decided to start a series of articles out of respect for the truth. Behind each article that I wrote (with 15- 30 footnotes each, linking to scientific research that supported any assertion) were many, many hours of study, research and thought (you might find them at my bilingual blog www.fpcs.es). I also got in touch with a few doctors surprised about the inaccuracies portrayed by the establishment.
As is the case for many illnesses, statistically speaking, covid’s seriousness and lethality are completely different between a minority (the “at-risk population”) and the majority of the population. Seriousness and lethality rates for the elderly and those with comorbidities (specifically, hypertension, obesity, diabetes or cardiopathies) have nothing to do with seriousness and lethality for healthy individuals or the youth. For instance, it is estimated that a 35-year-old individual has at least 1,000 times less probability of dying from covid than a person 80 years old. Survival rates (1-IFR) for people 80 years and older who get covid is at least 90%, exceeding 99% for 65-70 years old, 99,9% for 45-50 and 99.99% for 30-35. For reasons mostly unknown, women have much less lethality than men (for some ages, 60% less!). There are also enormous differences by race or ethnicity. Therefore, a focused approach would have been much more scientific than the indiscriminate approach taken by most authorities.
Lockdowns, mandatory masks even outdoors (including amateurish cloth masks) and most other restrictions were not supported by scientific evidence and therefore were quite ineffective in reducing the transmission of covid, but very effective in translating into a permanent state of fear and bringing the public into submission. The brutal terror campaign put in place by the media everywhere astonished me. First, they made people think that indirect contagiousness by fomites (a contaminated surface or object) was very probable, when scientific evidence said otherwise. People started developing OCD (obsessive compulsive disorder) with this issue. Then came the campaign of using ICU images and publicizing the statistically unlikely serious cases among healthy individuals or the youth, the extremely rare so-called reinfections, the supposed link to Kawasaki syndrome in children, the supposed “long covid”, the supposed killer strains (starting by the B.1.1.7 or British one, then Brazilian, South African, Indian…), and so on and so forth. People were literally being terrorized by superstitious beliefs that were scarcely supported by scientific evidence. Governments and the media created this image of a super-virus with superpowers that, of course, does not exist. Although it’s difficult to rank these issues, maybe the UK government has been the most unethical one, with its PM calling SARS-CoV-2 the “invisible killer”. Go figure. Nothing could be better to start a stampede – which is precisely the reason he chose those words.
One of modern man’s weakness is his illusion of control, in the sense that he likes to think he controls his life. Therefore, uncertainty scares the modern man much more than it did his ancestors, who took it for granted, embraced it as a fact of life, and probably had a more profound feeling of awe towards their Creator and a more realistic and humble judgement of the smallness of this simple creature called Man. Now, with an “invisible killer” on the loose, particularly one that appeared to defy the laws of physics and medicine, everyone seemed to be in permanent danger, even those who had passed the illness and developed immunity. So the threat posed by covid was overestimated, exactly the opposite of what’s been done with the systematic underrating of the potential risks of the speedily approved adenovirus vector vaccines and mRNA gene therapies currently authorized “for emergency use only”. Vaccines are a great invention of medicine and it would be great to have vaccines for every deadly virus out there, but acknowledging the pros of vaccines does not mean you should bypass your capacity of judgement for each new one that appears on the market, since not all vaccines are equally safe or equally effective or equally necessary.
Having blind trust (usually a bad idea) in regulators and “authorities”, plagued as they are with structural agency problems, information asymmetry disadvantages with Big Pharma and conflicts of interest, is not a mature approach to reality. The truth is these vaccines have been developed too fast while their long-term side effects remain unknown and very powerful economic and political conflicts of interest have been in play. Knowing that the risks from covid are vastly different for different individuals (depending on age and comorbidities), the assessment of a risk-benefit analysis should be made individually. Also, those who have already had the disease have a higher quality systemic immunity that will probably last for years (in the case of SARS-CoV-1 it lasts decades). Therefore, mandatory covid vaccination (cynically called “voluntary”, under different threats such as the infamous vaccine passport) seems unacceptable to me. But mandatory vaccination of children, the youth and those who have already had covid is a medical and moral scandal.
Finally, the media campaign has used guilt to make people comply with the outrageous restrictions that have been imposed upon us. The message was “someone will die if you disobey”. Thus, answering your question, you can see that people have not been allowed to take a more reasoned, calm approach on this because they have been aggressively, successfully, mercilessly manipulated for months on end by fear and guilt. Panic prevents thinking, and guilt is the most manipulative weapon in the world, as all psychopaths know (many of them in politics).
I should also point out that it is amazing that until very recently a wall of silence has been erected around the Chinese origins of this coronavirus, which has already killed around 3.5 million people worldwide. Those who dared ask questions about a potential leak from a Wuhan lab were labeled as paranoids fond of conspiracy theories, members of the Flat Earth society. But logic is on the side of doubt of a supposed natural origin. Let me just ask you a sober statistical question: what are the chances that, of all the places in the world, a new coronavirus emerges spontaneously, precisely in the very city where there is a lab that’s been playing with that same kind of coronavirus for years and has had security concerns in the past? That’s the base rate, and I tend to respect base rates. In this regard, I recommend reading the interesting investigation made by a US journalist called Nicholas Wade. It’s an eye-opener, though it will make sense to anyone with some knowledge of probabilities or with some familiarity with doctors playing god and with the structural deception of Communist regimes, which is as indispensable for their survival as water is for life. It seems remarkable that only ten years ago the international media still questioned China on human rights and political freedom. Now, in an ironic turn of events, the Chinese leader comes to Davos to lecture and admonish us all, while Western leaders and the media remain as silent as a tomb.
CG: The European response to this crisis, both on a national and an EU level, has been often criticized as ineffectual and chaotic, despite the extremely harsh restrictions on businesses and citizens. We saw EU members shut their borders to their neighbors, seize supplies and equipment ordered by other member states, while the centrally planned vaccination rollout was also botched. Do you think this crisis has damaged the image and the credibility of the EU?
FdP: What Charles Dickens wrote about France in Tale of Two Cities can be applied to the EU: “it rolled with extraordinary smoothness down the slope”. For some time now, the EU has been losing its marbles, forgetting its origins, its role as the cradle of Greek philosophy, Roman Law and, most importantly, its Christian roots and culture, or the very concept of freedom, enslaved as it is by a gigantic bureaucracy that, strangely enough, resembles more and more the unelected institutions of the defunct Soviet Union. It was not supposed to be like this. There is a deep spiritual, political, social and economic crisis, whose inevitable catharsis may take longer than expected, since such systems have lots of inertia and powerful vested interests. This totalitarian experiment that we have witnessed under the alibi of an epidemic has been particularly successful in Europe. Through fear and guilt most governments have been able to convince formerly free citizens that their rights are conditional and not inalienable.
This is disturbing, but what worries me the most is not that the power junkies have tasted totalitarianism – and like man-eating tigers they will not try anything else. What worries me most is that many citizens have accepted and even applauded it, under the bizarre belief that tyranny works better. Maybe the many decades of the Welfare State have done their job, through blind faith in authorities, be it politicians or self-described “experts”, the lack of critical thinking created by statist education, and the acceptance of that treacherous barter that demands the relinquishing of liberty in exchange for the false promise of total security. This barter is now even trickier, as “saving lives” has been astutely included in the deal. The overuse of unintelligent social media – which leads to superficiality, unhappiness and a pathological dependence on the opinions of others, but also acts as a vector of fast contagion of passions – has also contributed to this impressive phenomenon. I honestly thought that we valued our dignity and freedom more. What we have witnessed proves me wrong, and power junkies around the world have taken note.
CG: Apart from the obvious economic devastation caused by the handling of the pandemic, do you also see social and political risks ahead, especially in Europe? Could all this financial uncertainty and the social isolation give rise to another wave of Euroscepticism and fuel support for anti-Euro and secessionist movements?
FdP: Social and political risks will differ, because there are wide cultural differences among European nations. We’ve seen some resistance toward government abuse and lockdowns in the UK, France and maybe Italy, For instance, but little in Germany and, sadly, none in Spain. Who knows if that will change. On the other hand, I hold ambivalent feelings towards the EU. I love Europe and feel at home in my continent much more than I do overseas. I also believe that we can feel proud of our shared history and impressive culture, but the EU is not the same as Europe, as a government is not the same as the country and the people it rules over.
Therefore, my love for Europe does not prevent me from criticizing the EU “elite” bureaucracy for trying to systematically uproot and destroy our deepest values, the European Christian foundations, the concept of natural sovereignty and many fundamental freedoms. I would like the EU to go back to its origins: free movement of people, goods and money, friendly cooperation, free agreements and little more. What I don’t like is an unelected huge bureaucracy, a socialist-leaning economy with high taxation and a disturbing, dark ideological agenda that goes against truth. On the other hand, it must be said that the fact that Spain belongs to the EU has shielded us to a large extent from the worst evils of our Social-Communist government, arguably the most dangerous foe of liberty and the rule of law that we’ve had since the 1978 Constitution was approved.
On the issue of the euro, I believe it is so obvious that it is a political construct, completely detached from economic reality that its demise seems to me quite inevitable, although it might take decades. Again, who knows! The euro has one huge advantage for Spain and maybe for other countries as well, tough: national governments cannot use the printing machine at will in order to fool voters with a short-term mirage, grasp totalitarian power thanks to that money-growing-in-trees temporary “miracle”, win an overwhelming majority and then close the doors to freedom, as we saw in Venezuela under Chavez (who also profited from the tailwind of perfect timing with the oil bull market).
Paradoxically, the fact that the guy in charge of the printing machine in the EU is not elected by any one country’s voters (through elected politicians) is a protection against chaos. Well, probably German voters have the upper hand with the ECB, but the protection here for the rest of us lies on Germany’s historical trauma, that is, Weimar’s hyperinflation that helped Hitler win popular support and rise to power. Because of this, of all European countries (together with Switzerland, at least until the Swiss Central Bank decided to become a hedge fund), Germany has historically been the staunchest custodian of sound currencies. They know that the desperation and the anger caused by a systemic crisis are extremely dangerous in democracies and may lead to huge errors of judgement by the people, who may vote for astute psychopaths that appear to be saviors or avengers. We should never forget the lessons from History and, in my view, central bankers and politicians (if there is any real difference) are playing with fire when they try to kick the can down the road with all these economic and monetary experiments that may well open Pandora’s box. Let’s hope that reason and common sense will prevail in the end, but the perverse political incentives in democracies certainly do not help.
CG: Drawing from the lessons you have learned in the private sector and in financial markets through the years, what would be your advice for individual investors and ordinary savers during these uncertain times? How do you evaluate the role of precious metals as a hedge and an insurance against political and monetary excesses?
FdP: The future is always unpredictable and, as I have said before, prudence and humility are key. I think we should probably be in survival mode, not in get-rich-quick mode, prioritizing sleeping well over eating well. It is important that each individual investor marches to his own drumbeat, without looking right or left to see what the other guys are doing.
Each one of us has a different taste for risk, defined, of course, not as volatility, but as not being able to achieve a reasonable return in the long term. In this sense, easy math will tell us that large drawdowns are the true enemies of reasonable long term real returns. The corollary is simple to state though difficult to implement, much like a stew with mixed ingredients: diversification, value orientation in global equities, uncomfortable cash and some gold.
Precious metals have different features and supply and demand dynamics, and sometimes one has the impression that arriving to anything remotely resembling an objective valuation seems quite impossible, but in my view, they deserve a stake in any asset allocation for a variety of reasons, especially gold. Let us call them the ultimate hope of defense in a crazy world of infinite money and financial recklessness, or the ultimate anti-central-bank-experiment asset.
Claudio Grass, Hünenberg See, Switzerland