At a recent Munich seminar with keynote speaker of the “New Austrian School of Economics” Professor Antal E. Fekete, financial journalist Lars Schall met up with Sandeep Jaitly, the editor of the Gold Basis Service, for a Matterhorn Asset Management September interview. In it, Jaitly discusses in layman’s terms the permanent and rising backwardation in precious metals and gold as the universally acceptable ultimate extinguisher of any debt among other things.
By Lars Schall
The following interview was conducted for and published by GoldSwitzerland at:
Sandeep Jaitly was born in London. He attended Tiffin School and studied mathematics at Imperial College, London. On graduation, he began working in finance at Odey Asset Management, Ruby Capital Partners, and Soditic CBIP. Currently, he is an investment manager and strategist at First International Group PLC in London. Since starting to synchronize with Prof. Fekete’s work, Sandeep has concentrated on its application to practical investment with emphasis on the gold market.
He lectures worldwide on a broad range of topics related to Mengerian economics together with Prof. Fekete. He has established a unique bullion fund that allows investors to earn a return in gold upon their gold holdings. In August 2012 he received a PhD from the New Austrian School of Economics.
THE MATTERHORN INTERVIEW – September 2012
Sandeep Jaitly: “GOLD IS THE CONSTANT”
Topics of the interview:
- Backwardation in precious metals
Jaitly foresees a permanent and rising backwardation both in gold and silver, but when it will take place is hard to say.
- The intervention in the gold market
Jaitly explains a subtle form of price management of gold to keep it artificially low.
- The hypothetical price of gold if there was a true free market
Jaitly argues it’s impossible to say.
- Why the gold price isn’t in a bubble
Jaitly flips it on the head by arguing that credit is in a never ending depression, whereas gold doesn’t move at all.
- The geopolitics of gold
Examples: the gold policies of Russia, China, Iran and India.
- Stages to go on a gold standard
Jaitly calls for competing currencies; the most marketable ones will survive – and he says those will be gold and silver.
- Gold backed bonds in Europe (1)
He sees them as useful instruments.
- Digital and complementary currencies
If people want to use them, there is no harm in it, so let them use those forms of money.
- The Menger vs von Mises controversy
He brings it down to the different theoretical concepts of methodologies. Furthermore, he is perfectly happy with what he said as guest of the Keiser Report.
- An explanation of his statement in the Keiser Report:
“Money is the universally acceptable ultimate extinguisher of any debt and, as far as I can tell, fiat credit which is the system that we have currently, doesn’t fit that bill.”
- Paul Krugman’s recent critique of the gold bugs (2)
Jaitly says what Mr. Krugman wrote has little or nothing to do with gold; he rather confuses it with other reasons for the crises and shortcomings that he mentions.
- Market regulation
Jaitly talks about the concept of Common Law and incentives for noble behavior. He does not think we need more regulation.
(1) Compare Ambrose Evans-Pritchard: “Europe’s debtors must pawn their gold for Eurobond Redemption”, May 29, 2012, at:
(2) Krugman wrote that if we would have a gold standard “operating in this crisis, there would have been powerful deflationary forces at work.” Furthermore, he assumes “the gold bugs will no doubt reply that under a gold standard big bubbles couldn’t happen, and therefore there wouldn’t be major financial crises. And it’s true: under the gold standard America had no major financial panics other than in 1873, 1884, 1890, 1893, 1907, 1930, 1931, 1932, and 1933.”
Compare Paul Krugman: “Golden Instability”, August 26, 2012, at: