The call to prayer rings out from the Grand Mosque in Kuwait City.
The familiar melody echoes out from the tall minaret on to the shimmering Arab city of flat sandy roofs and white cars.
But this time, it’s different.
The call to prayer has been changed. In fact, this call to prayer is no call to prayer at all. It’s not a summons to attend the mosque – but an instruction to stay at home, and pray there.
Coronavirus is changing some of the oldest patterns of human behaviour. Saudi Arabia banned pilgrimages to Mecca late last month.
Here in Blighty, the Muslim Council has advised no congregational activity, as has the Chief Rabbi. The Church of England is shut – there will be no services. The last time something like this happened was in 1208 before the Church of England even existed, when King John was around and Pope Innocent III forbade the holy sacraments to our country.
Yes, that King John – the nemesis of Robin Hood! What a time to be alive. We’re witnessing history in action here folks – the world is changing before our eyes. What the world looks like on the other side of this crisis is currently up for grabs, and to a large degree being decided upon behind the closed doors, in the offices of the state. Our job here is to peer into the future and wonder what the world will look like on the other side of this crisis. That was the topic of discussion in our market update this morning
A couple of years back, I used to think of the current monetary regime as “Reverse Robin Hood Economics”. By socialising bank failures and then inflating asset prices (the majority of which are owned by the wealthy) the agents of the state steal from the poor, to give to the rich.
With American airlines companies seeking a $50 billion bailout after spending $45 billion on share buybacks (96% of their free cash flow) in recent years, it seems the inverse Robin Hood is still doing his best for his constituents. In the coming weeks you’ll see all manner of managerial failure and greed excused with “Nobody could have predicted the coronavirus. It’s a national economic emergency. Let’s just get things back to normal” accompanied with the corporate hand being extended, fingers grasping for bailout money.
However, this time around, Reverse Robin Hood Economics can’t be implemented the same way as ‘08. People are too switched on to how the game is rigged. Governments will need to bail everybody out this time – will finally bring inflation back in a big way.
Remember when I told you that Hong Kong is a forward indicator for what the rest of the developed world will soon experience (The CASH is coming! 27 Feb)? It seems that’s coming true even sooner than I imagined. Hong Kong’s strategy of just giving everybody money is coming west: the US government is pondering a delivery of $1,000 cheques to all adult citizens.
It’s no wonder that the everyman is seeking precious metals to protect their purchasing power against inflation. I told you yesterday how despite the price of silver collapsing, there’s a serious shortage of physical metal. The US Mint has run out of stock. So too, I hear, has the New Zealand Mint. If this keeps up, the Royal Mint will be running out.
I got this from JM Bullion, one of the largest bullion dealers in the US last week:
And:
Then there’s this from gold expert Simon Mikhailovich, who I had the pleasure of speaking to last year:
Source: @S_Mikhailovich on Twitter
While the spot price for silver, as set by the vast silver futures market, says the price of silver is $12, at APMEX (another massive US based bullion dealer), the price for Silver Eagles is over $20 dollars – even if you’re buying them by the thousand.
There’s always a premium for buying silver coins above the spot silver price. But 60%? There’s a supply squeeze going on here folks, as the everyman scrambles to protect their wealth.
Just like in the tales of Robin Hood, precious metals are in short supply, and those that have them, hoard them. As I said yesterday, though the spot price is plummeting now while there’s a rush for currency in the financial markets, I expect the price to soar once the dust has settled and all the money printing is priced in.
Notes from the roof
It’s not just loo roll, fresh produce and canned goods that are flying off the shelves: our stock of normality has completely run out.
It makes a certain amount of sense that the post-crisis norm that everyone was used to would end at some point – there were only so many 2010s, after all, and now we’re into the 2020s.
Our office on the Southbank of the Thames has been evacuated – all Southbank Investment Research employees are now working from home. I’m writing you this from the roof of my flat to get some fresh air. Looks like its gonna rain soon though, so I’ll have to go back in shortly.
We’re all cocooned in our homes at the moment, waiting for this storm to pass. When we finally emerge from the chrysalis of coronavirus, and open our doors to wander the world once more, it will have changed completely. Those that expect everything to be the same as the 2010s that we just passed are in for a serious shock…
All the best,
Boaz Shoshan
Editor, Capital & Conflict
Category: Market updates