What is your view of the world? How bad the damage is and how are you looking at a complete reboot?
In 2008, the world had a big problem because of too much debt. Since then, the debt has skyrocketed everywhere, even in India and China. Ten years ago China had virtually no debt. Now they have got a lot of debt. Everywhere does. The next time we have a problem and we are having it now, it is going to be the worst in my lifetime. It is a simple statement. The debt is much, much, much higher now. It has to be worse. We have these problems every few years. The next is going to be horrible.
markets are then
reacting as if nothing has happened in the world? I looked at Nasdaq last night, it is in the green; how remarkable is that?
What do you mean nothing has happened? what are you talking about? The US is spending trillions with the T and printing trillions of dollars; what do you mean nothing happened? The Bank of Japan, the guy goes to work, turns on the printing presses, print as fast as he can. All over the world, all these central banks and governments are printing and spending and borrowing as much as they can. Of course, the market is going up.
Do you think given the
way how markets
have gone up both in India and internationally, there is a huge disconnect between the ground reality and the market levels?
Yes, of course, there is. But remember what I just said. Nearly every country in the world is printing and spending lots of money now and that money has to go somewhere. It is going into the markets and that is what has happened. They say the excess money goes into markets. Remember there is an election in the US in six months in November and all those guys want to get re-elected. They do not care about you and me and our kids. They care about November and getting re-elected. So, all sorts of good things will keep happening and the markets will be okay for a while. However, the debt is going through the roof everywhere, the money printing is everywhere and eventually, we are going to pay the price.
It is often said that you should never fight the Fed. Would you apply this again?
All this money is going to go somewhere; the Federal Reserve in the US started it. Do not fight the Fed but eventually, we are going to pay the price.
When I spoke to
you a couple
of years ago, about 8-10 years ago, you said if you want to get rich you need to do one thing which is buying a silver spoon, stacking sugar in your pocket and starting eating rice. If somebody wants to make money in the post-Covid world, what is the secret recipe?
I own silver and I own gold. I stopped buying it for a while but have not sold. I have never sold any. In the summer of 2019, I started buying gold and silver again. Agriculture is still a disaster but it has probably got great opportunities. If you buy the commodities themselves it is hard to get rich in agriculture in India because the Indian government protects farmers. Oh! those poor farmers, they could be rich if the government would leave them alone. Agriculture, gold and silver, some parts of the world economy have been smashed, transportation, airlines, tourism, and anything to do with travel has been killed. I bought a shipping company in Russia last week, and a wine company in China last week. Some of these things have been really beaten down and probably even if the bear market hits again, they are probably not going to go down much I hope.
Are you fully invested in this market?
Fully invested? No, no. I am too lazy, much too lazy. I have bought some things and continue to buy. I own a lot of US dollars because when the turmoil gets bad again and it already is, people look for a safe haven. They think that US dollars are safe haven. It is not but they think it is for historic reasons compared to the euro and other things; so I own a whole lot of US dollars and it is going to get overpriced. I hope I am smart enough to sell them, it might turn into a bubble. I hope I am smart enough to sell it when that happens and put my money elsewhere, maybe in gold. Often when the dollar goes up a lot, gold and silver go down. Silver is much cheaper than gold right now on a historic basis. The ratio between gold and silver is the highest it has ever been in recorded history. So, silver certainly is not overpriced in 2020.
You have always said that in markets, the
thing keeps on repeating itself again and again; it is a cycle of fear and greed and you need to figure out which template is at play. What does the current medical crisis remind you of? When did we
see the economy
shrink like this before?
It may be at the beginning of the first world war, maybe in August of 1914. In Europe in 1914 everybody thought everything was okay and nobody expected a gigantic world war but no, it has been anything quite like this. The markets were overvalued. The US market has been going up for over 10 years, the longest in American history and it was sort of a bubble there, waiting to end. Everything was going straight up for a while because of all the money printing and the market was due for a correction or for something to happen and along came the virus, but something always comes along.