Musings on Investing

India Getting Worse, Faster by the Day

Tenbaggers in Junior Mining

A few days back I wrote an article “India: The Next Pakistan?”.

World Happiness Report places India at 122nd position. Pakistan gets a much higher 80th position.

Pakistan’s GDP on per capita basis is US$1,550. India’s is US$1,719. The difference is very small. Moreover, Pakistan has to spend a fortune to cater to refugees, to defend itself against problems from Afghanistan, and a much bigger foe, India. Pakistan must also suffer inherent instability as it spills over from Afghanistan and Iran. The result: Pakistan ends up spending a much higher proportion of its government revenue on the military than India does.

If the external conditions of the two countries were similar, Pakistan would be much richer than India is.

Now, I am no fan of Pakistan or Islam, but you must re-read the above a few times to comprehend that India is not much better than Pakistan, if at all it is. Western media and identity-lacking Indian lobbyists however have convinced people in the West that India is somehow much better.

India, like Pakistan, is a medieval country.

Let me acclimatize you to India. Here is a recent video:

Now, as time has passed Indians have become extremely nationalistic, narrow-minded, and arrogant. Most of India’s economic growth can be attributed not to its smartness but to the free-gift of western technology that India got at a rapid pace via internet over the last three decades.

But culturally, India is regressing.

Today in India, you can be arrested not just for being with a girlfriend, but even for being with your sister. You could be taken to the police station and be required to prove that you are a family. Courts will go along with the police, despite that there is absolutely no legal provision for it. Culture always trumps institutions.

Indian society is getting sick rather rapidly.

My interest is to counter the bullishness about India that I hear so very often among investors in the West. Indian economy is stagnating–do not believe the fake GDP growth numbers.

If I were sure of one thing it is that India will within years be seen as the next Pakistan, a police state.

My view is that India within years will start to disintegrate into smaller countries. The reason is that the institutions left by the British—now after 70 years—are mere hollow structures. They will start to fall apart sooner than I can imagine.

An update on why India is not the next China


India’s failed demonetization scheme

Why have I suddenly started to write so much about India? Because India is a major humanitarian disaster waiting to happen. Something very similar is happening in most of these so-called emerging markets. For me the only exception is China.

My attempt is to correct the misunderstanding that people in the West have about the emerging markets, using India as an example.

The cocktail of medieval cultures and modern technology is not working out.

While the West is facing problems, the problems that these emerging markets face today are much worse. And these problems will indeed spill over into the West, a symptom of which is the migrant crisis.

On investments:

  • Irving Resources (IRV) has fallen to $0.68. They are keeping a very low profile. I have known Akiko Levinson, CEO, for a very long time. She is very well-connected in Japan. As Japan becomes better known as the new destination for mining, IRV should become the go-to name for Japanese exploration. In my view it is one of those very rare companies that has the potential to be a tenbagger. I would look for any weakness to buy.
  • First Point Minerals (FPX; $0.10) is a company I have written about in the past. I like their CEO, Martin Turenne. This is a Nickel play. Like all development Nickel projects I know, it is uneconomical at the current Nickel price, but I can see that they might be able to redesign the project, and by reducing its size make it economical at today’s Nickel price. My reason to invest in FPX, however, is as an option on Nickel price. If Nickel price improves, FPX should go up quite rapidly as it is tightly held and has no warrants outstanding. Tenbagger? It has indeed traded at that level in the past.
  • Novo Resources (NVO; $0.70) is one of my two largest positions. They have a relatively small project, the reason why market does not give it much attention. I do not invest for sexy-sizes of projects. I invest for the differential between price I pay and the value I get. I see a nice differential between NVO’s current share price and the value in its projects. Dr Quinton Hennigh, CEO, is very well-respected in the business. They have just added a new project to the portfolio, which has the potential of turning NVO into a much larger company, but I am happy to have this as a free upside. NVO is very likely not a tenbagger, but in the short-term it will likely do the most good to my portfolio.
  • Aurion Resources (AU; $1.81) is another company that could be a tenbagger. I prefer to talk about a company once my clients and I are already well-invested in it. That unfortunately isn’t the case here. If it weakened I would accumulate. One of the main backers of AU is extremely smart, knowledgeable, and well-connected. I am too cheap to buy at the current price, knowing fully well that I will likely regret as I see it going up, as it did in the past. I certainly suggest taking a small position for now and more if it weakens.

I will be speaking in at 121 Mining Investment in London on 11th May 2017. I just hope that I don’t face problems at Heathrow Airport again. When I was there in November 2016, they held me up for 2.5 hours without a reason. I had no access to water or toilet. The immigration officer was desperately trying to get some brownie points by finding something bad about me. She poured over everything, even my gym schedule. I formally reported to the UK Border Force (complaint no.: 133761), but after more than four months, they tell me that they are still investigating. And, well, the immigration officer was a black female. My guess is that despite so much that is against her, it will be very hard for the Border Force to take action. I have now escalated the case to the MP, Adam Afriyie. Let’s see who in the UK finds integrity do what is right. Not that I expect those in the government–even in GREAT Britian–to have integrity, but once in a while I like to test if it is possible.

Finally, early-bird pricing for registration of Capitalism & Morality ends on 15th April 2017. You will meet some of the finest philosophers at the seminar. Half the seats are already gone and we may have to close registration quite early.

Warm regards,

Jayant Bhandari

Associate: Rajni Bala



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