Philip Manduca needs no introduction to those Maltese investors who are Bloomberg and CNBC watchers. Money not cared for will be spirited away. It must be admitted that the financial world, especially the present one, is full of perils, and investors had better be wary of them. One has only to follow the subpoena, or criminal investigation, to which Goldman Sachs, the greatest Wall Street trader bank, is being submitted.
If anything serious happens to the world financial scene the trouble will be greater than that provoked by the collapse of the Lehman Brothers almost three years ago. If we dare use a mixed metaphor we have to say that before the subpoena file of Goldman Sachs is safely put away in some lawyer’s archive, the whole financial world, or all the world’s great investors will be dancing on thin ice.
The EU economy is performing in a stuttering way, for no fundamental non-monetary economic reason whatsoever. The world has acquired, thanks to the research of the American military – the internet – a sectoral boom. The Maltese people earned money from the internet boom through the Malta Development Fund. This archipelago can play successful great financial games or lose them.
The past must be carefully studied to be a guide to the future.
The right man to give the money of Malta a well-researched financial direction on the basis of a track record could well be Philip Manduca. He has established world fame in successful gold trading. He has been invited to state unambiguously more than once on Bloomberg and CNBC that gold is a currency and consequently vital for the survival of mankind.
There have been in recent days, momentous developments as regards the dangers in which investors’ money and in particular Malta’s money is running, especially as regards investment in equities and bonds.
This sort of money will be the first to taste the whiplash of a double dip of the world recession. The first economic dip started three years ago with the fall of Lehman. We have hardly recovered from it in spite of the QE1 and QE2 (printed money) poured into the American economy. The US had long embarked on a world dollar inflationary policy in order to finance its deficit. This is being caused mainly by the US having, as Jim Rogers plainly stated, troops in 150 of the world’s countries.
American political power is being overextended and as a corollary of all this the dollar is being watered down. This is what happened to the Roman Empire from the time of the Antonines forward. Roman soldiers ceased to be paid with gold. The Roman Empire fell first of all because it was gnawed internally by inflation. The full gold standard lasted from 1870 to 1914. Its effect on the world was deflationary.
A mismatch in the UK between a declining industrial economy and the full gold standard developed in the early 20th century, a mismatch Winston Churchill exacerbated further when as Chancellor of the Exchequer in 1925 he took Britain back to gold. God forbid if the world were to go back to 1870, but present financial difficulties call attention to the currency role of gold.
At the present time there is no gold backing whatsoever for the dollar. The Special Drawing Rights of the IMF based on a basket of currencies have proved to be an insufficient underpinning for the dollar. A recent Financial Times article by Nobel Prize winner Joseph Stiglitz has emphasised the need of a substitute. He did not mention gold, but it could not have been pebbles at the bottom of the sea. Fatuous words like those of Martin Wolf, the Financial Times economist, that the power of America to print money is infinite make one think of the financial counsellors of King Louis XV. Jacob Rothschild, scion of the famous financial family with a spotless record, has finally spoken of the unacceptable ratio between derivatives and the real side economy they are supposed to project.
Samuel Brittan, the prominent Financial Times economist, has echoed Rothschild in his bitter words, stating “The free movement of artificial electronic money across frontiers is not on a par with that of goods and services.”
Manduca has been on Bloomberg and CNBC with his stentorian voice pointing out over the last three years that gold has higher heights to scale. He was at that time, as I said in this newspaper, staking nothing less than his whole reputation.
His fundamental point was that gold had better receive full recognition as a currency as evidenced by the growing demand for it. This demand was originating, although Manduca was not explicit on this point, in US world power overextension.
Roubini, the economist who is claimed, by many, to have foretold the first dip of the world recession, is now saying that a “perfect storm” may converge on the world economy in 2013.
Roubini’s prediction is nothing but a vindication of all Manduca has been saying, all these years. A “perfect storm” in the world economy will lead many to seek a safe haven which can only be gold.
The author is an advisor to DBR Investments Ltd.