[PMR105] Richard Maybury | China’s Big Concern is History, Not Coronavirus
Recorded January 7, 2020
Richard Maybury is the publisher of U.S. & World Early Warning Report.
Contact: https://richardmaybury.com
SHOW TRANSCRIPT (EDITED)
Albert Lu: From Southern California, this is The Power & Market Report. I’m your host, Albert Lu. My guest today is Richard Maybury. He’s the publisher of U.S. & World Early Warning Report and, also, the author of the Uncle Eric series of books.
Richard, thanks for joining me once again on The Power & Market Report. How are you?
Richard Maybury: Great. Thank you for having me, Albert.
I always look forward to being on. You do a really great service, giving an alternative to the mainstream viewpoint. There are so few people out there doing that, and I, for one, thank you very much. You’re doing a great job.
AL: Thank you very much, Richard. A lot has happened since we last spoke, and this is going to be a very mainstream topic, but I’m sure that you’re going to have some unconventional views on that — and that is the coronavirus outbreak in China. There are a lot of economic consequences to this. You see it in the announcement from Apple today. You see it in the projections for Chinese GDP, as well as the knock-on effects in the supply chain. But one thing I thought was interesting and, I’m sure, you’re going to have an opinion on this, is [that] when you have these infectious disease experts come on, they talk about, on the one hand, how the government seems to be bungling the response.
One gentleman, for instance, last week was saying that we’re using ancient techniques — quarantine and those sort of things, ancient methods — to combat this outbreak when we have a hundred years of advancement at our disposal. The other thing that caught my attention was the fact that governments don’t appear to be cooperating very well together. You have these disease experts: They’re scattered (as in Hayek’s theory on knowledge), but knowledge is dispersed all over the place. We can’t pull this together and work in a coordinated way because governments don’t trust each other for other reasons. What are your thoughts on those two points, Richard?
RM: The idea that the governments aren’t working together is a no-brainer. Governments hate each other generally. There are some exceptions — there’s this so-called special arrangement between Washington and London, but basically human history is just full of governments hating each other and going to war each against each other. The proof is that since the year — try to grasp this because it’s so important — 3600 BC, there have been more than 14,000 wars. Governments, they hate each other. That’s it. These are power junkies. They go into government because these individuals are power junkies. They want power and other governments are in their way. This idea that, oh jeez, they’re not cooperating with each other — well, yeah, most of the time you’re trying to kill each other, so expecting them to cooperate is ridiculous.
AL: I thought it was funny that the person who was lamenting that fact wasn’t clued in that if you have someone who is essentially your enemy 99% of the time — even though you may make it appear that you’re getting along at times — when you are in trouble, as China certainly is now, the last thing you probably want to do is invite the United States government or some other Western government in to help analyze your data.
RM: Definitely, and I should point out I’m not saying that China and America are enemies. I don’t think in collectivist terms like that.
There’s no such thing as China or America. There are, in America, 320 million individuals, and every one of them have different needs, wants and desires — different people that they like and they don’t like. Same thing in China. It’s the governments that don’t get along with each other.
Generally, if you’ve done much traveling, you go to almost any country at all and the people will like you. They’ll be very friendly to you. They’ll welcome seeing somebody who’s different than everybody else. It’s the governments that hate each other. They are just like street gangs. They have the same mentality. They have turf and they want to keep control of that turf, and they don’t want some other gang to get ahold of it. So let’s be clear about that. It’s the governments here that hate each other.
Beyond that I don’t really know what to say. The important thing that’s being ignored is, right up until the moment that the coronavirus broke out, we had this revolt going on in Hong Kong and threatening to spread to the rest of China. If I was a Chinese ruler, I’d be scared out of my mind. I’d be looking at that revolt and realizing China has history that goes back thousands of years of the population rising up and trying to kill their leaders [and] we’ve got another one that’s apparently starting up. So if I was a Chinese ruler in Beijing, I’d be terrified, and I’d be looking for a way to make those people get out of the streets, go home and stop communicating with each other.
Well, how could I do that? My guess is that it had to cross somebody’s mind that it would be really nice to have some epidemic going on so these people will get out of the street and go home, and I have a suspicion that that is what’s going on over there. One of the main reasons I believe it is that all the doctors that I’ve heard, without exception, have pointed out that this disease has killed a very, very small number of people. The flu, every year, kills far more people than coronavirus. The flu, right now as we speak, is a much more dangerous disease than the coronavirus is proving to be.
So why is everybody so upset over this? I think it’s because the Chinese government is stirring up fear there. Their objective is to keep all the Chinese people scared to death so that they won’t go out in the street and spread the revolution.
AL: I was expecting a take that I wasn’t going to get in the mainstream, and I think you certainly delivered on that, Richard. That is a very interesting perspective and I think, going back to your first point, that is the governments being separate from the people. I think that’s at the core of why the regular person on the street is dumbfounded as to why we’re not working more closely together on these problems, because they see the world the way that you see the world — they’re individuals; they’re people over there; they’re interesting people you’d want as your friends. They don’t necessarily see it the same way that governments do.
RM: Right. It’s a very important thing to not buy into — this collectivization of the populations, that there is an America and there is a China, and that means there’s one Chinese mentality and there’s one American mentality and we all agree on everything. It’s insane, and I really blame the mainstream media for that.
In my newsletter, Early Warning Report, I am very careful to draw a line between the governments and the people. The mainstream media do not do that. You’ll see headlines all the time, something like, China decides to do such-and-such, Britain decides to do this or Germany decides to do that, as if the entire country is of one mind. It’s ridiculous. They’re all just individuals, and some of those individuals, a very small number, run the government and they make the decisions.
[It’s] not Germany that made the decision — it’s the politicians in Germany that made the decision, and that’s a very important thing to keep in mind. It’s one of the greatest, most important, preventatives for war. It’s easy to point to somebody like Hitler and say we have to do something about Hitler, but what the mainstream media do is say, no, we got to do something about Germany. So be very careful of who you are blaming when you’re looking at any kind of a crisis around the world.
AL: Let’s talk a little bit about the economic impact of this, because the government has responded pretty severely, in the sense that you have travel bans, quarantines and whatnot. This is going to have an effect on the economy and our investments.
Have you talked about this from an economic standpoint recently in your letter? What are you telling your readers or what will you tell your readers?
RM: I just finished an article about it and it will be in the March Early Warning Report.
Basically, I think that the Chinese rulers’ main objective is to avoid being overthrown. They are like all of the Chinese rulers before them, going back thousands of years. They’re afraid [of] being killed by their own people so their main objective is to stay alive. In order to do that they have to keep the Chinese population in fear so that the Chinese population does not all get together and overthrow them. I think that they will just keep ratcheting up the fear in order to make that happen.
There’s no telling really how many people have the disease, and how many people have died from it because those statistics come from the Chinese government, and they’re going to use statistics that do whatever they want done, whether they’re true or not. I think that the main thing to keep in mind is that the rulers in Beijing have a lot to gain by stirring up fear to prevent the Hong Kong rebellion from spreading, and because of that they’ll keep ratcheting it up until they’re satisfied that the rebellion is over.
So the stories that will come out of China will be increasingly scary and that will have an effect on investment markets and everything else. As long as people believe what the Chinese government is saying, then the level of fear all over the world will probably keep increasing. That will make people want to run to cash. It could materialize into a really great buying opportunity in the stock market.
I think there’s a very real possibility that the Chinese government will keep ratcheting up the fear until they trigger off a stock crash all over the world, and, man, that’ll be the time to come in and buy. So I would suggest all investors keep some cash handy because if the Chinese government continues ratcheting up the fear, there’s going to be some really great bargains out there.
AL: Let’s keep the topic on governments but shift gears from China to Japan, Richard. I don’t know if you follow California politics but in the LA Times the other day — California is considering offering an apology, an official apology, to Japanese-Americans for the internment which occurred in the 1940s. Apologies are supposed to be good things, Richard, so I guess I should be pleased with this, but at the same time you’re dealing with governments — I can’t help myself.
President Reagan issued a similar type of apology, I think in 1988, so what am I to take from this? — California just wanted another 30 years or so to think about it, just to make sure that they were doing the right thing? Or are Japanese-Americans the swing vote now in the gubernatorial or some other race? How am I supposed to look at this?
RM: Well, I think you’ve got it nailed down there. The California politicians want to get reelected, and so they’re trying to make a good impression on anybody. They will continue digging up causes that they need to do something about, and this is an easy one because they don’t really have to do anything about the internment during World War II. All they have to do is just say they’re sorry, and they’re expecting that they’re going to get some extra votes out of that. Although, I think they’ll probably be pretty disappointed because I guess anybody who’s Japanese in California is well aware of what happened in the ‘40s, and they’re probably much more knowledgeable than the typical citizen is. They will probably laugh at this more than anything else.
AL: At the same time, it’s some of these people who have probably been agitating for this so it’s interesting right? It must mean something to some people somewhere.
RM: I mean, if I had a chance to get a bunch of free money, I might take a grab at it. I think that’s probably what’s going on. The agitators are expecting some kind of payoff. I don’t know — was there ever any kind of payoff?
AL: There was, in 1988 attached to the Civil Liberties Act that Reagan signed. But that was, like I said, almost 30 years ago, so [I guess] they wanted to think about it and get it right.
Can we talk about gold for a minute here, Richard? it’s Tuesday and gold is on the move — ticked above $1,600 an ounce. What do you say is behind this, or is it impossible to say?
RM: I think it’s impossible for me to say. I can’t think of anything in particular other than all the things we already know — that the world is operating on this terrible paper money standard and only a fool really trusts the money. So that, all by itself, is enough to keep people interested in gold, silver and the other precious metals. When they start fearing the value of the currency — they’re afraid it’s going to go away — then that’s where they go first, unless they can find some other paper currency that they trust more, that earns income.
AL: Richard, I noticed that our mutual friend Brien Lundin was doing an interview recently. He’s an avid supporter of gold and silver. He says, if you love gold, then you absolutely have to love silver. I know that, from reading your books, that you’re an advocate of both. If you go back to your “What Ever Happened to Penny Candy?” book, you’re certainly a proponent of precious metals, but what is your investment philosophy when it comes to gold coins (bullion versus collectibles) versus silver coins versus mining and resource companies? Where do you fall on that mix?
RM: First of all, in my opinion, everybody should have some gold, silver, platinum and palladium coins — that would be bullion coins. That’s a, kind of, fundamental foundation for anybody’s portfolio. Then, after you’ve got as much of that as you want — and, in my opinion, you should not have more than 20% or so because you have to earn income from other things. Always be diversified — that’s the three most important rules, in my opinion of investing: diversify, diversify and diversify. So they would be part of your diversification. Then I think that the day will come when the world will be running away from paper currencies, and one of the things they’ll run to is collectibles of all kinds. I think, even things like Barbie dolls will go up dramatically in price. And the king of the collectibles is the collector’s coins, the really high-quality collector coins, and some of those too are good, call them, investments, very long-term investments.
After that I would suggest, if you want to invest even further, you get into the gold [and] silver stocks — the mining companies — but you have to really know what you’re doing there, and you need to work with a broker who’s very, very good at that. The one that I’ve always recommended is Rick Rule’s group at Sprott — the group of brokers that work directly under Rick. Now, I haven’t talked to Rick in quite a while so I don’t know, but I do know how much he knows about the mining industry and I’ve never met anybody better.
So does that answer your question?
AL: Yes, and I’m sure Rick will appreciate that recommendation. Regarding the coins, I’m curious, Richard, how do you look at platinum and palladium coins versus gold and silver? Gold and silver are the workhorse monetary metals. I’m interested in why you introduced platinum and palladium to that mix and [in] what proportion you like to hold them relative to your gold and silver.
RM: I’m comfortable with just one forth in each [of the four metals] now. I’m a little bit nervous about palladium because I first recommended that when it was at $157, and now it’s over $2,500. So I have readers of Early Warning Report that are asking, should they sell. It depends on how much you got in there. If you’ve got enough in there that the risk is important to you, then I would sell enough to cover your original investment plus the taxes — so you’re playing with the house’s money. Beyond that, in fact, I’ve got an article on that coming up in the March issue to the reason that palladium has been doing so well — it’s because 40% of the world’s supply comes down in South Africa, and South Africa is very heavily socialist and essentially their economy is pretty much a wreck. Their unemployment rate is 27%, which is worse than that of the U.S. in the Great Depression. So socialists have wrecked the South African economy, and that means they’ve wrecked a lot of the electric generating capacity, and the palladium mines are flooding. If they stay flooded very long then this shortage of palladium will just continue for who knows how long, decades probably. So I’m holding on to mine, but you never know.
There’s the threat of the electric cars out there — that, at some point, people will be buying so many electric cars that the palladium won’t be necessary for the catalytic converters, and then you might see palladium crash, or sooner. I don’t know. So that’s the one I’m the most nervous about. It’s the one my people have made huge amounts of money from, but I’m the most nervous about.
Now the others, platinum, I would say actually I’m maybe the most optimistic about, because [it’s lagged] the performance of the others. So if I were going to buy some precious metals today, I might go a little heavy on platinum. Gold and silver, both of them, [have] been valuable for thousands of years. When there is a currency crisis, it’s a pretty much inevitable thing that people are going to run to gold and silver. So, again, they are the absolute foundation. I think of everybody’s portfolio, for sure, you should have, oh I don’t know, 10-15% of your portfolio.
AL: All right, Richard, we’re out of time so we’re going to have to leave it there. But I want to thank you for coming on.
We’ve been talking with Richard Maybury, publisher of U.S. & World Early Warning Report. He’s also author of the Uncle Eric series of books. If you want to talk to Richard about his newsletter, the one I’ve been reading for probably 20 years now, you can find him at https://EarlyWarningReport.com and if you’re a collector of antique communication hardware, you can reach him at 1-800-509-5400 by phone.
Richard, beat you to the punch. Any last messages for our listeners and viewers?
RM: Learn all you can about these major events that are happening around the world. Study the history. The history tells you what’s going on, and just knowing about the events is not enough. You’ve got to understand them, and that’s why in Early Warning Report we emphasize history so much, so that you understand what’s actually going on. You can make wiser investment decisions.
Contact: https://richardmaybury.com
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