Sometimes a market in turmoil offers opportunity. Independent investment adviser Jayant Bhandari regularly sifts through bourses to find opportunities that maximize his reward for the least amount of risk. Bhandari currently sees two paths to value: companies that were either oversold in heavy tax-loss selling late in 2015 or in the “free upside” offered in arbitrage situations. In this interview with The Gold Report, Bhandari explains why much of the world’s populace is already chasing gold and why a smattering of junior gold equity names offer more than what a market in turmoil might suggest.
The Gold Report: So far in 2016, Saudi Arabia has severed diplomatic ties with Iran over a religious dispute, and several Saudi allies have followed suit. Meanwhile, China’s major stock exchanges started the year with a selloff, prompting the Chinese government to inject $20 billion into the system to help stabilize it. Which situation is likely to have a greater impact on the gold price?
Jayant Bhandari: It’s not only a problem in the Middle East. The problem is in Africa. The problem is in South America. The problem is in Central and Southeast Asia. There is a huge amount of political turmoil in these areas. The reality is that most of the countries outside the West, with the exception of China and some smaller city-states, look very unstable. This will contribute to gold chasing by the populations in these countries because the economies are stagnant in all these countries except China and some city-states.
TGR: If there is global instability, don’t rough waters threaten to sink all boats, even gold?
JB: These are not sinking ships, these are ships that are stagnating. The economies in these countries are stagnating, and some of the countries are politically unstable. In all these cases, people buy gold. Historically, most …read more