Harry Schultz on the Power Elite, Free Markets, the Internet and Why Gold Is Going Much Higher

The Daily Bell is pleased to present an exclusive interview with Harry D. Schultz.

Introduction: Chevalier Harry D. Schultz, KHC, KM, KCPR, KCSA, KCSS, has written scores of books and is considered a founder of the investment newsletter business. Based in Monaco, and now in his 80s, he has been producing his newsletter, The International Harry Schultz Letter (HSL), for over 45 years. During his 65 years of publishing, Harry has lived in 17 different countries and published his work in many of them. He is truly an international man whose shoulders have rubbed with some of the top political, business and social figures of our time. He prides himself of being stridently anti-communist and anti-socialist. According to the international edition of the Guinness Book of World Records from 1981-2003, Harry Schultz was the highest paid investment consultant in the world fetching anywhere from US$3500 to US$4500 dollars per hour. Mr. Schultz is quoted – even emulated – on a regular basis in various financial books, articles and in interviews including other newsletters. The book, 'Moneychangers' by Lewis Dorsey is based upon Harry Schultz. Knighted five times, Harry is a man for all seasons and a true citizen of the world.

Daily Bell: This interview will review material that you've gone over in your books, but we hope you will answer the questions nonetheless as some in our audience are not aware of your works or point of view. A good place to begin would be to ask how did you get interested in finance in the first place?

Harry Schultz: I have a love affair with cause-and-effect. The financial world is probably the nearest you can come to discovering the answers to both cause-and-effect. And that leads on to how to benefit from that knowledge.

Daily Bell: When did you adopt a free-market orientation?

Harry Schultz: From my earliest ages, I produced a newspaper, via typewriter, then mimeograph, for my mother, then the neighborhood, then the family, then the school & college. I then bought real newspapers, of small size of course, but the principles were nearly the same as for big ones. Running newspapers brings you into close contact with all elements of society.

Daily Bell: Did you discover Austrian finance or come to conclusions on your own?

Harry Schultz: Cause-and-effect flows neatly from the Austrian approach. I was a friend of Fritz von Hayek, but that was after the event. He spoke at one of my seminars ¬- his first ever at any seminar. I sort of brought him out of the academic closet. he was a delightful good-humored man.

Daily Bell: When did you begin writing a financial newsletter and why?

Harry Schultz: Those who bought my first book about Bear Markets, published by Prentice Hall, urged me to write newsletters. I continued to write books & booklets, but the newsletters had a more immediate impact. They are faster to the public than books, obviously.

Daily Bell: Why do people pay you so much for a consultation?

Harry Schultz: Hard to reply without sounding like I'm blowing my own horn. My batting average & forecasts in the Harry Schultz Letter (HSL) have been first rate, so people were willing to pay first-class prices. By the way, I have retired from giving consultations now. At my age, it's enough already.

Daily Bell: You've been successful for a very long time – and you may be, indeed, the oldest active investment writer and consultant around. How has the world changed in your opinion?

Harry Schultz: It's gotten unpleasant morally, as everyone now realizes – but it's too late for the wakeup call. It's gotten speedier, but not better because of speed. There is scant benefit to speed, whether by car, plane, email or market facilities. Speed has forced people to act before they can think things through. Often speed means you don't weigh the risk/reward factors – as there doesn't seem to be time for it. High tech makes things easier in many ways, but causes more stress, partly because it keeps breaking down. You see this with computer glitches, crashes and viruses. Also, hi-tech goads you into making fast decisions.

When big corporations must keep a full-time team of techies on-hand to fix computers that fizzle daily, then tech is not, repeat not, working. Private citizens can't afford the cost or the time-loss to keep tech working. For every hour technology saves us, we lose 75-90 minutes. The stress is not measurable.

Typewriters don't break down, yet we are forced to accept computers that do. Autos no longer break down. The computer nerds only want to sell them (Microsoft, Dell, etc) and promote updates (which cause new problems). They aren't interested in making them as efficient as cars and TVs have become. They've had decades to get it right but have made near zero progress toward reliability.

Speed is not a worthy goal, nor is the size of the mega bites your computer can handle. Dependability should be the goal. The same goes for banking, rating agencies and derivatives. Everyone wants profits, not dependability. It's a new form of fraud, masquerading as progress. Morality, where art thou? End of soapbox.

Daily Bell: Has investing changed?

Harry Schultz: In some respects, the more things change the more they remain the same – which applies mainly to our emotions. And emotions are what make you or break you in markets. You must control them, be able to switch from long to short in a flash, without 'caring' whether your investment has changed direction. I can switch from long gold to short gold in a flash, without emotion. It wasn't always so. You need to learn emotional control. You can be a believer in the gold standard, as I am, but still sell it short during a gold market correction. It's the same with every market.

Daily Bell: Has the Internet made a difference in terms of information flow?

Harry Schultz: Yes, some good and some bad. The overload of information makes it hard work to sort the wheat from the chaff. There is more to read than you can cope with, so you need great discipline. Not everyone is good at discipline. Oddly your cultural background affects this. Germans are good at discipline. Latins are less interested in it. Weather also plays a role in this, by the way. The thinkers, the book writers, are mostly from cool climate countries. Almost nobody writes books in Africa. It's too hot.

Daily Bell: Has it made a difference in your life?

Harry Schultz: Certainly. But if I could go back a few years and say yes or no to the Internet being created, I would regrettably say no. It has cost more than it is worth. I think a new form of low-tech (cool-tech?) will emerge. It will be fresh, offering a slower, more thoughtful, dependable, and non-stressful mode of life – happier by far and healthier for certain.

Daily Bell: We think that the Internet is like the Gutenberg press and that it is ushering in a new and freer age. Agree? Disagree?

Harry Schultz: Freer? Not if you know that all we say in emails goes to the super computer called Echelon headquartered in or near Washington. It's stored there and available to governments. We may have fallen into a trap.

Daily Bell: Do you believe in a power elite that is trying to create a one-world order?

Harry Schultz: That there is a power elite is a given. Only a fool could not know of it. So, do they want a one-world order? Not all, but enough do to make the effort. We all know that power corrupts, and there is natural tendency to want to assure control. Some persuade themselves they want control for the good of others. That is rubbish of course, but self-delusion comes easily.

Daily Bell: You've written that the antidote to a one-world order is 1,000 tiny nations. Do you still believe this?

Harry Schultz: Absolutely. Big is generally bad – be it big business that loses touch with customers and then seeks a monopoly, or big bureaucracies that brush aside individualism, or big nations that by their nature can't logically know what is best for all parts of the country. After a time they don't really care.

Daily Bell: How did you come to these conclusions about global consolidation and money power?

Harry Schultz: History is bulging with examples that globalization, for example, causes more problems than it solves. Its original aim was not to help poor nations but to help international corporations increase profit. They achieved that aim, but created problems that I could happily explain on another day. So-called free-trade treaties are mostly just the opposite. Governments these days design names for laws to fool the public. The mega multinationals are the gainers, not the public.

Daily Bell: Is the world consolidating in your opinion?

Harry Schultz: It was until recently. Now, due to the financial meltdown, which is only in an early stage, that has come to a halt. We may now see a reversion to nationalism of various sorts.

Daily Bell: We believe the Internet has damaged the consolidation trend. Agree?

Harry Schultz: I would like to think so. But that presumes people who use the Internet have the power to threaten the elite. I'm not sure we're there yet. We can hope.

Daily Bell: Is there manipulation in the markets – especially the gold and silver markets?

Harry Schultz: Of course! There is no free market anywhere. Every commodity and all markets are manipulated, sometimes by government, often by mega corporations, or small but strong groups. Cheating comes easily to mankind. The closest thing we have to a free market is the bond market-because it is so big it's almost impossible to control.

Daily Bell: Where are the best countries to live? And why?

Harry Schultz: I've written on this subject for years, having lived in 17 of them. The "best" must be different for each of us. Much depends on your ancestry, your genes. We can only speak of the surface aspects and in generalities. Loosely speaking, the best countries are where literacy is high – Northern Europe, the UK, Ireland, Canada and South Australia. But there are exceptions to that.

Daily Bell: What are the best investments for the next few years?

Harry Schultz: I'm not going to give my views on that here. I would probably be wrong anyway, as the world is changing so fast it's not as predicable as it was 10-20 yrs ago.

Daily Bell: Where is gold going? Silver?

Harry Schultz: Much higher. Sky is the limit for gold. Governments are losing control of gold. They cheat, steal, lie, maneuver ... but gold will beat them and is already doing so, in stages.

Daily Bell: Will the world come out of the current financial crisis?

Harry Schultz: As a physical planet, yes. There is no global warming by the way. That was and is a con by the insiders, to gain more land control. Will society come out of the crisis? Yes, but not for at least seven years. People's attitudes will change 180 degrees as we go through very bad economic times and social upheaval.

Daily Bell: Will the EU survive?

Harry Schultz: Perhaps. Euro nations reverting to their pre-Euro currency days is certainly feasible. So is a new, smaller euro zone. I liked Europe when each nation controlled its interest rates & money supply. That was freedom. The euro zone was malformed by former German Chancellor Helmut Kohl who didn't understand money or markets. He only understood politics. The euro is elitist.

Daily Bell: Will we see a currency region of America, Canada and Mexico?

Harry Schultz: Odds don't favor it, but the criminal elements of the insiders will keep trying. It is an idiotic idea but great for the elite.

Daily Bell: What are some books and articles of yours that you would recommend to readers?

Harry Schultz: Most are out of print, although second-hand book-stores may have some. Bear market investment strategies is the only one still in print, I think – published by John Wiley & Sons.

Daily Bell: Thank you for your time and your free-market trailblazing.

Harry Schultz: You seem a dedicated, freedom-loving group. Good luck. We need a younger generation to carry the torch now.

We don't have much to respond to in this interview with Harry Schultz. Why would we disagree with the man who supposedly invented the newsletter business? Yes, Mr. Schultz, the economic crisis is going to drag on for a number of years and is going to get worse before it gets better. Gold (and silver) probably will continue to flash "buy" for a long time to come. Bigness is often bad in the private sector as in the public, in the sense that unless the bigness is inherently decentralized it tends to become unresponsive and even destructive.

Where we predictably would have a difference of opinion with Mr. Schultz would be in the area of the development of the Internet. He points out that the technology is generally a "stress maker" and that the Internet has in fact enabled the US Echelon program, which supposedly gathers emails and phone calls from all around the world. We did some additional research on Echelon and came across this quote in a book on NSA's Echelon recently published by Nick Bamford: "NSA will have the capability to store enough information to fill a 30 foot tall stack of books for every man, woman and child on earth."

We don't know about you, but that's an awful lot of information. The power elite without doubt – or at least portions of it – seeks some sort of expanded international governance. That much is obvious. But we are not so sure as Harry Schultz that we would trade away the Internet for a miraculous cessation of illegal and immoral government scrutiny. Governments scrutinize; that's what they do inevitably – and more of course, unfortunately with or without enabling technology. But the Internet has been midwife to a considerable knowledge, sociopolitical and otherwise. Knowledge is valuable, intrinsically, and also for its ability to support human action.

We've often rehearsed the changes that the Internet has wrought from the standpoint of making certain power elite patterns comprehensible. It is not difficult to see these patterns at play and one does not have to spend one's entire life scouting them out. As Harry Schultz himself says, "That there is a power elite is a given. Only a fool could not know of it."

We would never turn down the ability to learn more about our world, and the Internet has provided that opportunity. But we would maintain that there is a more concrete and practical impact as well. We would continue to maintain, as we have throughout the life of the Bell, that the Internet is increasingly exposing power elite dominant social themes and their implementation – with potentially deleterious results. Without detailing hundreds of examples, we shall point out only three of the most recent.

First is the email data dump that revealed just how the global warming debate had been shaped and how contradicting information had been culled and ignored. We think the evidence is clear that the exposures had a significant impact on the pursuit of this elite, fear-based meme and potential, planned ramifications.

Second, we recall the WikiLeaks video of the 2007 killing of civilians and two Reuters employees by the US military. The shocking video, which seems to show American military pilots in a helicopter mistakenly gunning down "targets" in a cold-blooded way has yet to fully play out in the court of public opinion. But if the war in Afghanistan has a single tipping point toward disengagement, this video may have furnished it.

Third, and most recently was a Boing Boing report (explored in this paper yesterday) about secret ACTA Internet copyright enforcement language now being contemplated in an international treaty that is being developed but has yet to go into effect. The PDF of Treaty language was downloaded to a Google user group and the resultant fuss may eventually prove reminiscent of the global warming furor itself.

Critics would point out that the elite's dominant social themes roll on anyway; they do not seem much shaken for their public exposure. This may be so. But there is a reason that the elite operates with extreme secrecy and wraps each of its fear-based promotions in justifications having to do with the larger global good. People generally don't like to be manipulated, and are apt to be doubly upset if they come to believe that this manipulation is of substantial benefit to others, and at their expense.

The point is – and we made it just yesterday in the article Internet Censorship Fear Campaign? – that there are only a few who function within elite circles and billions who do not. The whole idea was to manipulate people without their knowledge – why else go to the trouble of creating these social promotions to begin with? Yet we would argue that many of them increasingly stand revealed for what they are, naked grabs for wealth and power.

Yes, the knowledge is out there. On the surface all seems fairly calm. The themes function and results flow from them, usually authoritarian in nature. But the revelations continue to percolate. The credibility has been stripped away by the Internet. And actions have consequences – from both an investment and sociopolitical standpoint. Savvy observers (and Schultz is certainly one) watch very closely to determine the continuing interactions of increased mass understanding of elite strategies, and elite responses as well.

This phenomenon is both fundamental and consequential in our humble opinion. Indeed, we have often compared the Internet and its communications facilities to a stone dropped into a center of a still pond. Gradually, the ripples radiate outwards and reach the shore. The surface of the water is disturbed. Changes persist. Thus the Internet's truth-telling is a process and not simply a one-ripple phenomenon.