Musings on Investing

Gold: To go up as the Third World Implodes

Nevsun Resources (NSU), etc.

Sophisticated investors often follow gold price in US dollar. This is despite the fact that the biggest buyers of gold for wealth protection purposes are in the Middle East, South Asia, and South-East Asia. These buyers do not think in US dollar terms.

It is hard to believe, but the Middle East peaked economically in the 1970s–it has been going downhill ever since. I call them the Third World, for they failed to change culturally despite having access to financial resources. In fact, in the Middle East (and recently in Turkey, and increasingly in Malaysia and Indonesia) fanaticism grew exactly when they were becoming rapidly rich.

Having failed to develop positive cultural underpinnings, the Third World’s growth rate is falling and social instability is rising. China is the only exception.

The real problem of today is not in the USA or its currency (which are clearly showing signs of improvement, for now), but the Third World. As the problems of the Third World become more recognized, I expect gold demand to rise.

I give my views on the reality of the economies, with charts and statistics, of the Third World in the linked article.

On investments…

A combination of the lack of faith in the junior mining business and the approaching tax-loss selling has resulted in another fall in share prices. Here are companies that I am hoping to buy:

  • FPX Nickel (FPX; C$0.08)
  • Amarillo Gold (AGC; C$0.25)
  • VR Resources (VRR; C$0.17)
  • Salazar Resources (SRL; C$0.11)
  • Chalice Gold Mines (CXN; C$0.13)
  • Renaissance Gold (REN; C$0.16)
  • Kangaroo Resources (KRL.ASX; A$0.12)
  • Nkwe Platinum (NKP.ASX; A$0.076)
  • Keras Resources (KRS.LON; £0.0031)
  • Avrupa Minerals (AVU; C$0.05)
  • Altus Strategies (ALTS; C$0.045)
  • Energold Drilling (EGD; C$0.24)
  • GFG Resources (GFG; C$0.25)
  • Nevsun Resources (NSU; C$5.70)

Some people might wonder why I am suggesting NSU. There is still >5% upside left in it. If I make 5% in two months, it amounts to annualized 34% profit (Expected closure date of the merger: 31st December 2018).

If for any reason the closure date of NSU merger gets delayed by even a single day, I expect the share price to increase on such a news and then fall again early next year. This pathology exists because of the way taxation is structured. Understanding this pathology might help make some extra money.

Warm regards,

Jayant Bhandari

Associate: Rajni Bala

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