{INTERVIEW} JAYANT BHANDARI – Zimbabwe, Arbitrage, and Tax Loss Sales

Jayant Bhandari the host of the highly acclaimed Capitalism and Morality sits down with Maurice Jackson of Proven and Probable to discuss events taking place in Africa, specifically Zimbabwe.  Jayant pulls no punches when he shares his experiences with the prominent names while there that will determine the political landscape for Zimbabwe.  Mr. Bhandari will address communism and nationalism in Zimbabwe.  Listeners will also discover an arbitrage opportunity that may provide 15% – 20% upside.  Finally, Jayant will provide us with a his personal shopping list of issuers!

www.jayantbhandari.com

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VIDEO

 

AUDIO

TRANSCRIPT

Maurice Jackson:

Welcome to Proven and Probable, where we focus on metals, mining, and more. I’m your host Maurice Jackson. Joining us is Jayant Bhandari, the host of the highly acclaimed Capitalism & Morality and a prominent, sought-out advisor to institutional investors.

Mr. Bhandari, welcome the show, sir.

Jayant Bhandari:

Maurice, thank you for having me again.

Maurice Jackson:

Jayant, since we last spoke, we have some interesting geopolitical events that are taking place in Zimbabwe recently, and I wanted to get your take on the situation. For listeners that may not be aware, can you give us an update?

Jayant Bhandari:

Maurice, a week or two back, Mugabe was removed from power. Mugabe was the head of the government in Zimbabwe. There was a coup in Zimbabwe, and he was forcibly removed. Now, Mugabe was initially put in place by the British, the British when they left Zimbabwe as a colonizing country.

Now, I have been to Zimbabwe. I have been arrested in Zimbabwe. I have spent time with Morgan Tsvangirai, who was at one point of time Prime minister of Zimbabwe, and I have spent a couple of days with one of the cousins of Mugabe, so I have some interesting experience in Zimbabwe, and all point me to the direction that the future of Zimbabwe is going to get much worse going forward rather than improve, unlike what a lot of people in the international media or international organizations think.

Maurice Jackson:

Was this move a surprise to you?

Jayant Bhandari:

Not at all a surprise because the international organizations and the media have been colluding to remove Mugabe. Now, Mugabe is a horrible tyrant, but the reality, Maurice, is that the culture of Zimbabwe is such that anything that they elect or select going forward will be much worse than Mugabe is.

I told you that about eight or nine years back I spent an evening with Morgan Tsvangirai, who later became the Prime Minister of Zimbabwe under the pressure of international organizations. It did not take me too long to understand that Morgan would be a much worse choice than Mugabe because the guy has no class, and the guy is a communist. When I discussed with him about private property and capitalism, he had absolutely no concept of it, and he wanted to basically create a communist government in Zimbabwe. If he becomes the head of Zimbabwe, which he might, and if he doesn’t, someone very similar will, Zimbabwe will be much worse than it has been under the rule of Mugabe.

Maurice Jackson:             That certainly is depressing to hear, as you and I are both profound advocates of liberty. You know, when you watch the news and you see the celebration in the streets, the question I always have is, is this really a benefit to the people, or to the new regime?

Jayant Bhandari:

The people are conditioned to think that they will get free stuff. For them, democracy and a change of regime means that they will get something for nothing. This is what exactly happened in Libya and Egypt and Syria. This was what Arab Spring was all about. People were not fighting for liberty. They were using the word freedom and democracy, but they were not really after self-responsibility. They were all after free stuff. This is what they have been conditioned to think. For them, democracy and so-called freedom equates to lack of self-responsibility and free stuff. This does not really add up in real life, and unfortunately people’s expectations will get crushed over a period of time, sooner rather than later.

Maurice Jackson:

Now, Jayant, I just have to interrupt you. You do realize we’re not talking about the United States.

Jayant Bhandari:

We are talking about Zimbabwe, Maurice, and the situation of Zimbabwe is truly, truly bad. The best people of Zimbabwe are now sitting in London. Zimbabwe simply does not have the skill base. Even if they get the right institutions and the right rulers, which is virtually impossible in a democratic system, even if they get all the right people to rule that country, they still have to bring in skilled people, and they have to train their own people, which is a process of several generations. The future of Zimbabwe is very, very grim.

Maurice Jackson:

You know, one of my concerns is whenever you have a regime change is this grab on power. Should leaders in the neighboring countries be on high alert?

Jayant Bhandari:              Not necessarily. I am no expert in South Africa, but I have been to that area many, many times. The countries next to Zimbabwe are Botswana and South Africa, and I don’t necessarily think that they want to occupy any part of Zimbabwe. Botswana is a relatively wealthy country. They don’t really want troubles next doors, so they will actually very likely want to have a stable government in Zimbabwe rather than an unstable government in Zimbabwe.

Maurice Jackson:

Jayant, you alluded to it here earlier, but what is your biggest concern regarding Zimbabwe right now?

Jayant Bhandari:

Well, what I see is written in stone. It’s an unchangeable future of Zimbabwe, and the unchangeable future of sub-Saharan Africa, and in fact unchangeable future of the Third World. The problem, Maurice, is that the Western societies ruled these countries and left Western institutions in the hands of the local people. The local people don’t really understand why those institutions were put in place, and all those institutions are getting degraded and are mutating to cater to the underlying tyranny and tribalism of these societies.

These societies are virtually everywhere collapsing, and that is exactly what is happening in sub-Saharan Africa, including in Zimbabwe. Mugabe was put in place by the British, and Mugabe, look, is a tyrant, he’s a horrible guy, but what comes next will make you nostalgic about Mugabe because at least Mugabe was put in place by the British, who were more rational thinking than the Zimbabwean society is.

Maurice Jackson:

Let’s put this into a junior mining perspective here. Zimbabwe is known for being one of the leaders, leading producers I should say, of platinum, but their mines were nationalized years ago. Do you believe that the new leadership will open up mines for foreign investment?

Jayant Bhandari:

Well, it is entirely possible that they might open up opportunities for foreign investors to invest in Zimbabwe. But investing in a country like that makes no sense to me in general, because the people who rule these countries can change, and they can also change their minds as time passes. Once you have invested your billions of dollars in capital in those countries, they can change their mind and expropriate your properties, so you have to really invest in jurisdictions where the society itself, the individual in the society, believes in the rule of law and respects private property, and that isn’t the case in Zimbabwe.

Now, that does not necessarily stop me from investing in Zimbabwe if the people running those companies are very closely connected with the rulers, and they’re closely connected with the opposition parties as well, which means that they get supported by the regime irrespective of which regime it is. You can see success stories in parts of Africa and parts of Latin America where companies are close to the regimes.

Now, this of course sounds very corrupt, but really, Maurice, corruption is the way of life in these countries. I mean, I have talked with you many times in the past that, in India, no one alive has not paid bribes. They all pay bribes on a regular basis. Every bureaucrat and every single politician asks for a bribe, and the situation actually gets slightly worse in sub-Saharan Africa.

Maurice Jackson:

Taking this conversation to a broader discussion, are there any other concerns that you have in Africa at the moment?

Jayant Bhandari:

Well, in my view the whole of Africa — maybe Tunisia is an exception, but Tunisian population is a fraction of population of Africa, maybe Botswana is a slight exception, although it is already past its peak — apart from a couple of very small exceptions, I think the future of Africa is grim. Africa is growing at the rate of 1.4% in GDP terms, but the population is growing at 2.8% per year, which is something that the international media will forget to mention, which basically means that on per capita GDP basis, the growth rate in Africa is negative right now.

In my view, the economy is not doing well in Africa, and institutionally, where the real problem lies with Africa, the institutions have continued to degrade in Africa since the time these countries got independence. I see no reversal back to stability unless Europeans or Chinese come to rule these countries.

Maurice Jackson:

Well, switching gears now onto issuers. Jayant, are there any arbitrage opportunities that have your attention at the moment?

Jayant Bhandari:

This is not really the best time for mergers to happen. This is December, and people are focusing on different issues, but there is one module that might be of interest. I am not very fond of this company, but there is an arbitrage of between 10 to 15% in owning NewCastle Gold. The ticker is NCA, and if you buy it around 72 cents, you might get about 15 to 20% arbitrage upside in owning this company. Remember, tax loss selling is happening, so at any moment of time it can fall to 72 cents or lower, offering you a nicer entry point.

Maurice Jackson:

Speaking of tax loss selling, it’s occurring right now. Are there any quality names that are on your shopping list?

Jayant Bhandari:

One company that I quite like, and a company that I have been buying, including buying today, is a company called Nevsun Resources. The ticker is NSU. I recently visited their project in Serbia three weeks back. I quite liked the company they have created and the project, the economic capabilities of that project. This is another company that I like.

Irving Resources, the ticker is IRV, came out with a very interesting news release yesterday. I’m still trying to digest the news properly, but in my view, at 70 cents that this company is trading at, I am a keen buyer.

Maurice Jackson:

That is Canadian. Is that correct?

Jayant Bhandari:

That is Canadian. IRV’s share price, around 70 cent Canadian would be a good price to buy at. Nevsun Resources at $2.60 would be a good price to buy at, and NewCastle at 72 cents Canadian would be a good company to buy at.

Jayant Bhandari:

Of course  Maurice, NOVO Resources, a company that I no longer had a view on when it was trading at $8, is now trading at around $4.50, and I am interested in buying this company again. NOVO is by far the biggest part of my portfolio, but I want to talk about a company, it’s only when I’m myself a buyer of that company, and NOVO is a company I’m interested in buying at $4.50.

Maurice Jackson:

You’ve mentioned two quality names, and we’re proud to have them as sponsors, and that is Irving Resources and NOVO Resources. We just came back from a site visit there last month in Australia. It was just amazing what we saw there. For all of our listeners, please take a look at that interview.

Jayant, before we close, can you please share with us where and when you will be speaking next?

Jayant Bhandari:

I will be speaking at an investment conference in Kathmandu, Nepal later next month, and then I am going to give my regular speeches in Mining Investment Asia in Singapore and Mines and Money Hong Kong in late March and early April next year.

Maurice Jackson:

Last question. Please provide us with the dates for Capitalism & Morality, and the link for us to get a preview of some of the speakers.

Jayant Bhandari:

The next Capitalism & Morality, and this is a seminar, Maurice, that this is my baby and I truly love organizing and running this seminar. It’s a philosophy seminar, and the next seminar will be held on the 21st of July, 2018. We have some great speakers in this seminar. Jonathan Roth will be speaking. Adrian Day, who a lot of your subscribers probably know of, will be speaking on the increasing short-termism in our societies. Simon Roche will be coming from South Africa to talk about what’s been happening in South Africa, a country where I think a civil war is slowly brewing. We will have Doug Casey and Rick Rule, and Professor Ian Plimer, people I’m very fond of, people I love, and I love to bring these people to speak at the seminar.

Maurice Jackson:

You know, we share a mutual admiration for all of those names. Give us the link for that, please.

Jayant Bhandari:

You can go to my website,www.jayantbhandari.com, and there is a tab, Capitalism & Morality, which gives links to all the past videos of the last eight years, and it also gives you registration page for next year’s seminar.

Maurice Jackson:

Jayant, give us that website one more time.

Jayant Bhandari:

www.jayantbhandari.com.

Maurice Jackson:

Last but not least, please visit our website, www.provenandprobable.com, where we interview the most respected names in the natural resource space. You may reach us at contact@provenandprobable.com

Jayant Bhandari, the host of Capitalism & Morality, thank you for joining us today on Proven and Probable.

Jayant Bhandari:              Maurice, thank you very much for the opportunity.

Maurice Jackson:             All the best, sir.

Jayant Bhandari:              Thank you.

Speaker 3:

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