Jayant Bhandari -The Third World, War, and Arbitrage

Jayant Bhandari the host of the highly acclaimed of ‘Capitalism and Morality‘ sits down with Maurice Jackson of ‘Proven and Probable‘ to discuss he latest article entitled: “The Future of the Third World”. Mr. Bhandari distinguishes the importance of bifurcation among the Third World and Emerging Markets for investors philosophically and economically. We also discussed democracy and political correctness and the implications that it has on influencing the public. Jayant also conveys his thoughts on the brewing tension escalating between India and China. Finally, we discuss Novo Resources and arbitrage opportunities that are capturing his attention.

To read ‘The Future of the Third World’ referenced in this interview click here: www.actingman.com

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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 for a conversation is the host of the highly acclaimed Capitalism and Morality and a highly sought out advisor to institutional investors, Mr. Jayant Bhandari. Mr. Bhandari, welcome to the show.

Jayant Bhandari:              
Thank you very much for having me, Maurice.

Maurice Jackson:            
Jayant, you wrote a piece last week entitled, The Future of the Third World, in which you highlight a number of talking points that I would like to discuss, beginning with the distinction you make between Third World economies and the so-called emerging markets. Why is it important for investors to understand this fundamental bifrication?

Jayant Bhandari:              
Maurice, emerging markets is mostly a misnomer. There’s only one country that I know of that is actually an emerging market, and that is China. Then rest of the Third World, was the Third World, is the Third World and will continue to be the Third World and in fact, virtually all these Third World countries, most of Africa, most of the Middle East, actually everything in Africa, most of the Middle East and all of South Asia and most of Latin America is regressing back to their medieval past.

And this is an interesting thing because for whatever reasons the world decided a couple of decades back that these countries had fundamentally changed themselves. The reality is that none of these countries have fundamentally changes themselves and actually they are getting worse by the day. There’s only one thing that has changed about these countries, the Third World and that is that their economies grew at a faster rate than that of the Western economies for the last 25 years or so.

Now, this has disoriented people. This has confused people, particularly given political correctness that dominates the intellectual space in the western countries today. Virtually all of the economic growth that took place in the Third World was because of extraneous events and that extraneous event was Internet. Internet enabled massive import of Western technology by the Third World and that was behind, that was the only thing behind rapid economic progress of the Third World, but otherwise nothing fundamentally changed about these countries. In fact, rapid economic growth meant that these countries have actually become over regulated, over governed, taxes have gone up, regulations have gone up and they are rapidly regressing to their medieval tyrannical pasts.

Maurice Jackson:            
You know, this reminds me of the discussion we were having offline prior to this interview in reference to the Third World economies in the emerging markets, is this politically correctness. Is that something you’d like to discuss a little bit further as well?

Jayant Bhandari:              
This is indeed a problem with political correctness, Maurice. We now have a globalized world. People, individuals, you and I, travel around the world and we experience different cultures. Multiculturism does not work. We know it from personal experiences. We know that different communities behave differently, but somehow in the Western civilization, particularly because of political correctness and because of the guilt, an erroneous guilt that Europeans are still feel, they want to deny the differences that today exists between the Western civilization and the non-Western civilization. The Third World is culturally very, very, very different from the Western societies. Western societies are primarily a result, a product of the concept of reason.

Those people in the West who have grown up in this concept of reason assume that the concept of reason is a given. It isn’t. Most of the countries outside the West actually, virtually everything outside the West except for East Asia, the exception that I make here, all these Third World countries are tribal, superstitious and irrational. They operate through a set of beliefs, faith, religions, and superstitions. That’s how their mind works. They’re tribal in how they operate. Might is right is the operating principle in these Third World countries. It was the case before colonizers came. Colonizers brought in, European colonizers brought in a huge amount of sanity in these countries. The result of which was that the populations of the Middle East, the population of Africa and South Asia increased rapidly because Europeans reduced tribal warfares in these countries. And these countries are a product of European colonizations. These were tribes fighting with each other.

Now because Europeans have been gone for 50 to 70 years, these countries are rapidly regressing towards their pre medieval tyrannical tribal past.

Maurice Jackson:            
You know, you also highlight how far behind these Third World economies still are without the use of leverage, with some of the simple things that we take for granted, such as wheels, piping and sewage. Expand on that for us.

Jayant Bhandari:              
You can travel around, drive around in Latin America, Peru, Bolivia, Brazil. You can do the same in Africa or in South Asia and you will see a consistent pattern. People carry heavy loads on their backs. Women carry big pots of water on their heads. Now imagine this thing. The wheel has been in existence for more than 5,000 years. We have proof showing that the wheel have been in existence for at least this much time. The concept of piping, lead piping, has been with us for at least 2,000 years. You can see lead pipes in Pompeii in Italy.

Now when those people could have the technology of piping and the wheel, why is it that billions of people even today haven’t really grasped the concept of the wheel and piping? Now these are just cases that I’m talking about. The reality is that this is the problem of the Third World. They’re still existing in a cultural, in a way of thinking that is extremely outdated, which is thousands of year oldish in its construct. These people go to Western schools and these girls in the school uniforms and carry pots of water on their head, and that tells you how wasteful that education has been because they somehow and the somehow is that because of the culture, they cannot really understand and implement the concept of even very, very simple concepts like the wheel.

Maurice Jackson:            
Jayant, you referenced Winston Churchill for a number of quotes and I found them to be quite interesting as we become entrapped in this political correctness environment, more increasingly in the West. What message are you trying to convey with Mr. Churchill’s quotes?

Jayant Bhandari:              
So Winston Churchill is often denigrated for what he said and the role that he played in several things during the Second World War time. He was the British Prime Minister during the Second World War. Now, he said a lot of things about Islam, about India, about Africans and what we now call as First Nations of the US and Aborigines of Australia, and he’s denigrated and he’s seen as racist. The reality, Maurice, is that if you sit back and read what he says, most of what he says is actually quite correct. It has proven to pass the test of time.

Now, he’s talking about the problems that Islam has. He’s talking about the utter and wretchedness, backwardness of India, a country that I grew up in and it has been proven consistently to be correct. And I just want to highlight this thing that do not ignore Winston Churchill just because what he says sounds racist today. The reality is that it took centuries for Europeans to understand that the Third World was culturally very, very, very different, which is irrational.

And we have because of political correctness mostly erased that wisdom from the Western society. With that erased wisdom, we have positioned ourselves for a catastrophe not only for the Western world, but also for these Third World countries because we are wrongly projecting the future. The future is extremely tribal, full of warfare and wretched and poor, whereas lot of people who call them emerging markets think that these are the countries that will lead us to economic progress in the future. That is a completely erroneous assumption. Again, I’m making an exception of China, here.

Maurice Jackson:            
Jayant, I have thoroughly enjoyed reading your article and for our listeners, we will provide a link to Mr. Bhandari’s article, The Future of the Third World, along with this interview post.

Switching gears, in the US media we’re focused on Russia and North Korea at the moment, but you see a potential escalation brewing in the Far East between India and China. Can you elaborate?

Jayant Bhandari:              
For the last couple of months, Maurice, Indian troops and Chinese troops are facing each other. They have actually even have had a physical fight between themselves, which means that when posted at the front, they were not given guns and rifles and machine guns, so they had to physically fight with each other with rocks and stones. Now, this situation emerged because there is a controversial area between China, Bhutan and India, and India is contesting road construction of China.

Now I don’t really care much about the details, the problem is that irrespective of who is correct and who is incorrect here, the problem is that the media and a lot of these very bored, middle class, so-called educated Indians who are terribly bored of watching the TV, now want some action. They want a war and they’re convinced that Indian Army is the best army in the world, and again, because these middle class people never have to go to the front and fight themselves, they can vicariously live, vicariously feel courageous on the back of those people from villages who will die at the front.

Now the reality is that Indians are not the only wrong people here. Chinese blogs and chat sites are now filled with similar kind of discussions. However, in my view, a Democracy makes war much more likely because these masses create a sort of trance within the society that want the society to go into a warlike situation because the mass psychology rules. And that is the situation if there is a shooting at the border, imagine these are two nuclear power countries and about 40% of the world’s population lives between China and India. Any war between the two countries could be horrible for India because China is more than five times richer than India.

Maurice Jackson:             Which leads to my next question, is India’s economy and their military prepared to fight with China?

Jayant Bhandari:               I’m not sure, Maurice. The problem is that no one really knows what is happening with the Army and the military. This institution is so glorified around the world that it’s almost impossible for an outsider to be able to critically observe this institution. The reality is that Indian troops are about half a million troops that are stationed in Kashmir, which is almost half or one third of the total Indian Armed Forces. They are problems in the northern part of India. They’re huge riots going on in two or three provinces right now because people are fighting against a great verdict that the Court passed, which is quite a strange thing in my view, from a civilized view, but anyway the reality is that Indian troops have been stretched too thin. They are very likely not very well-trained and they are not well-armed.

A the General of India a few years back saying that Indian troops had enough ammunition to last only 10 days. So I don’t know what the real situation is, but I would not be surprised if Indian Army is much weaker than the Chinese Army.

Maurice Jackson:            
Now I have a multi layered question here for you. Do you believe that the US will be involved? If so, to what extent and which side would the US favor?

Jayant Bhandari:              
In my view, Trump has taken the right position, which is to not get too involved in this matter between India and China. And this is the right thing for American taxpayers and Americans to do. However, we cannot escape American involvement in other countries. The reality is that these Third World countries are in a complete mess. Their institutions are getting degraded, degenerated and falling apart. All these Third World countries will fall into tribal units because that is what the cultural, the culture will lead them to. Without the fear of America and without the glue and sanity that America provides, all these Third World countries will destroy themselves.

But why should America pay for this, and why should America degrade itself for these people? However, the reality is that if 40% of the World’s population goes into a nuclear warfare, it will affect America and eventually America will be forced to get involved in any problem between India and China.

Which side, America will take? It all depends on what works at that point of time, but it seems that right now, America will be more inclined to take the side of India rather than that of China.

Maurice Jackson:            
Interesting. Now before we close, Jayant, speculators want to hear about issuers that have your attention. Let’s begin with Novo Resources, which has the entire space talking right now. What’s going on there?

Jayant Bhandari:              
Maurice, I have invested in companies of Dr. Quinton Hennigh for many, many years and I have extremely, extremely well investing with him. He’s an extremely good Geologist and I worked with him as an independent Director on the Board of Gold Canyon. He’s an extremely good financial person. It’s extremely hard to find this combination in this industry. As a result I invested in Novo Resources, which is actually by far the biggest holding I have today and they have recently acquired a project called Karrath Gold Project in Australia. And in this project they have found physical gold and they have found grades in the bulk sampling, which are as much as two ounces per ton. Now two ounces per ton in bulk sampling is almost unheard of in the industry. The grades are superb and a lot of people that have been to the sight, and I haven’t been unfortunately so far, but a lot of people that have been to the site, tell me and they have written about it, they have it in their radio programs, particularly on the website of 321Gold.

What you have is people writing about what they think is the potential of this property and this potential tells me, if that is true, there is a huge amount of upside still left in Novo.

Maurice Jackson:            
And we did want to thank Bob Moriarty, the Founder of 321Gold for making us aware of the value proposition as well as yourself on Novo Resources. Now is Novo currently overvalued or do you still believe it has a long way to go here?

Jayant Bhandari:              
As I said, I haven’t been to the project so far, Maurice, and I hope to visit the project sometime in October, the grades are absolutely amazing. I don’t know how big the project is, what kind of potential it offers to the investors, but let me tell you one aspect of the project that writers have not properly written on. A lot of people have speculated on the ounces the project might have and then they have multiplied it by dollar fifty, dollar hundred as value of per ounce in the ground of gold in the ground, now this extremely erroneous way of putting a value together. The reality is that if you have two ounces potent kind of grade, the value of ounces could be as much as 10, 20, 30 times what these people are assuming it to be on per ounce basis. Now, of course, this can offer you an extremely good value, but again I’m not sure how much ounces this project will have, we will only know as the company works on this project and proves ounces in the project.

Maurice Jackson:            
If you’re willing to disclose, are you currently buying at these prices?

Jayant Bhandari:              
I’m not. I’m neither buying or selling. I’m just a passive spectator right now. I watch Novo every day, I read everything possible I can on Novo so that I can make an educated guess about Novo when time comes.

Maurice Jackson:            
Now before we close, are there any arbitrage opportunities that have your attention at the moment?

Jayant Bhandari:              
Two companies that I might want to mention here, Maurice, both are listed in Australia. One is a company called Crusader Resources and it’s trading for 10 cents Australian. This is being acquired by a British company that is listed in London and the arbitrage upside here is about 20% or more. The big downside here is that the acquiring company is much smaller than the company being acquired, which is Crusader Resources, but at 10 cents, I’m quite happy accumulating Crusader Resources. Another company that I can think of is an Exterra Resources, the ticker is EXC in Australia, and at 3.7 cents, 3.7, 3.8 cents that it’s trading at, it is offering you about 10% or so arbitrage upside in the investment.

Maurice Jackson:            
Jayant on behalf of all of our listeners, thank you for sharing your knowledge and wisdom. Jayant if somebody wants to get more information about your work, please share your website?

Jayant Bhandari:              
My website is JayantBhandari.com and everything I do goes on my website.

Maurice Jackson:            
And last, but not least, please visit our website, www.provenandprobable.com where we interview with the most respected names in the natural resource space. You may reach us at [email protected] Jayant Bhandari, the host of Capitalism and Morality, thank you for joining us today on Proven and Probable.

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

Maurice Jackson:            
All the best, sir.

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1 Comment on "Jayant Bhandari -The Third World, War, and Arbitrage"

  1. Funny in this whole intelligent consideration going 5000 years back and considering a possible nuclear war between China and India, there is no mention what the conflict between these countries is about. Maybe it should be pointed out this is one of those conflicts where everybody forgot what the fight was about? Or is there a “good” reason for this potential nuclear war?

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