What do you think are the hottest commodities right now?

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not yet reflected in its price, the reason I am bullish about gold. Which emerging regions interest you? China is the co
Jayant Bhandari is constantly traveling the world to look for investment opportunities, particularly in the natural resource sector. He advises institutional investors about his finds and is currently the Analyst for Anarcho Capital. Earlier, he worked for six years with US Global Investors (San Antonio, Texas), a boutique natural resource investment firm, and for one year with Casey Research.

What is your outlook for the mining sector in the next 12 months? I am very bullish about the prices of gold and commodities. The systemic—economic as well as political—risks of various sorts that exist around the world will push more people towards gold, as they try to protect their wealth from negative-yielding economies in many parts of the world, and from confiscatory governments hell-bent on increasing their control over people’s wealth through digitalization and other means particularly in the Third World. Also, commodities should do well; for China, which consumes 50% or more of all commodities, continues to grow, and will likely continue to in the foreseeable future. However, optimism about commodity prices and gold will not necessarily translate into improving the lot of the mining sector, which has a history of destroying wealth. Moreover, higher commodity prices also come with higher costs of extracting those commodities. That said, those who can identify good managements with good projects selling at discounts to their underlying values will profit—this is the lottery ticket that the mining sector offers to investors.

What do you think are the hottest commodities right now? At different times in the past there has been bullishness about REEs, graphite, oil, uranium, molybdenum, etc. None of the bullishness became a reality, certainly not in making investors rich. To be able to project the future pricing of a commodity, not only we have to understand the demand and supply situation but also understand how much of the “deficit” has already been priced in. While demand for cobalt will likely increase going forward, its price has also skyrocketed to cater to the expected supply constraints. I can benefit from investing in a commodity only if I know something that the market does not fully appreciate. That brings me to gold. We are in a very difficult era for fiat currencies. As governments around the world have given themselves free license to print currency and tax with abandon, there is a very legitimate fear among those who understand money, those who generate wealth and those who like to save. This

is partly behind the mania for crypto currencies. Some of this money is now already starting to over-flow into gold. Our un-backed, paper-based monetary system is broken. At some point of time, the larger society will recognize this and will take an increased interest in gold. This value of gold is not yet reflected in its price, the reason I am bullish about gold.

Which emerging regions interest you? China is the country I am most excited about. China continues to do the right thing in social, political and economic space. Also, I am a big fan of South Korea, Japan, Taiwan, Hong Kong and Singapore. Vietnam is also continuing to do well.

You’ve been a strong critic of the current Indian government – have things got better or worse over the last 12 months? The situation in India continues to deteriorate. The international media has recently started to recognize India’s economic problems. But India’s problems are much wider and deeper, and mostly unsalvageable. Twelve million Indians enter the workforce every year, mostly with no hope of finding a job. 80% of Indian engineers are unemployable. Manufacturing has failed in India. Still Indian cities are among the most polluted in the world. Indian urban areas are unmitigated disasters, full of garbage and slums. The educational system is in tatters. On one hand there is huge unemployment, on the other companies cannot find skilled people. Even the IT industry of India is now under huge stress, with Indian companies losing business and Indians living in the US having to return back as the low-level software work is being increasing taken over by machines, and Trump continues to restrict immigration. The male to female ratio continues to worsen, and population growth continues. These are issues that no democratic government is interested in facing head on.

With or without democracy, India simply does not have the leadership skills to run the country. The institutions that the British left behind have continued to deteriorate over the last seventy years. Indians cannot maintain these institutions let along create them from bottom-up once they are gone. As these institutions—and hence the law & order—continue to fray, the underlying tribalism and associated conflicts of India are surfacing. Religious fanaticism, regionalism, linguistic chauvinism, etc. are continuing to become stronger. It is in the continuous degradation of the Indian institutions that the biggest risks exist, and I see absolutely no redeeming feature. Am I too pessimistic about India? Not enough. I watch India from the windows of my chauffeurdriven car. The reality as experienced on the other side is much worse than what my senses tell me.

What do you look for in a prospective investment? Which juniors have projects that excite you? I am always looking for the differential between the value that I get and the price I pay. A very well-known company with a great management might trade for higher than its value. Many people would continue to chase such a company if they focus solely on only one part of the equation: the value. One must also look at the price. I am happy to buy a company with bad, small, obscure projects if it is selling for less than its inherent value. Again, the key is the differential between the value and the price. I prefer to buy companies whose managements I trust and respect. It is best to stay away from bad managements, for they almost invariably destroy value. Novo Resources has an extremely interesting project in Australia. Irving Resources has exciting projects with very good speculative upside in Japan, which is emerging as a new market for exploration work. I am also very excited about the future of Fireweed Zinc and FPX Nickel. I like the managements of all these companies. (Disclosure: I am a shareholder in all these companies).

What do you think of the interest in cryptocurrencies? Blockchain technology will revolutionize our transactions and record-keeping. But I do not know how to profit from it. I certainly see no inherent value in cryptocurrencies. For me, money must be backed by something real. Cryptocurrencies have no backing, which means that I have no way of knowing whether the Bitcoin is worth zero dollar or a million dollars. A lot of people I have known have bought cryptocurrencies based solely on the herd-instinct. It makes me feel sad that in this age of information people fail to underpin their decisions with reason and analysis.

Finally, I remember you being one of the first people I met (January 2016) who argued that Trump had a real chance of winning the US Presidential Election. How well do you think he is doing? I can think of no politician in the recent past who tried to do what he promised to during his campaign. With time I have gained increased respect for Trump. Many people voted for Trump but could not speak about it for they risked looking racist, given Trump’s interest in controlling immigration. Political correctness has become such a big religion in the West that anyone who has a view on an issue that can be labelled as sexist or racist can have no hope of retaining his job or even friends. Freedom of speech is the very basic ingredient of a free society. If nothing else, Trump is challenging political correctness. If the West is to be saved, it must give up political correctness and start to value freedom of speech and freedom of thought.

Want to hear more from Jayant Bhandari? Jayant Bhandari joins the China Bull vs Bears Debate: Is China booming or pulling back in its demand for commodities? at the upcoming Mines and Money Asia conference in Hong Kong from April 3 – 6. Jayant will also join a panel discussion with Starboard Global Ltd Managing Director Rob Wrixon, Pan American Silver Chairman Ross Beaty and IAMGOLD President and CEO Steve Letwin to discuss Rethinking exploration - How well is the industry addressing the challenges of underinvestment and mis-investment in the mining industry from juniors, mid-tiers and majors? Now in its eleventh year, Mines and Money Asia is the largest gathering of miners and investors in Asia, with this year’s event expecting to see over 150 mining companies in attendance along with over 600 investors.