Doug Casey Was the Only Foreign Investor Still There… | |||||||||||
| by Nick Giambruno | July 06, 2016 | |||||||||||
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If you were in a window seat, you’d pull down the shade to reduce the risk of anti-aircraft fire hitting the plane.
At least that’s what flight crews used to tell tourists to do when landing in the African country of Rhodesia (now Zimbabwe).
The year was 1979. Rhodesia was in the midst of a civil war. On the ground, it was like a scene out of the movie Mad Max…soldiers, armored vehicles, danger and confusion everywhere.
Doug Casey was perhaps the only foreign investor still there.
Doug took a bus across the country, trying to avoid the Rhodesian Army and the rebels they were fighting. He kept asking what he should see while he was in the country, and he kept hearing about the Leopard Rock Hotel. So there he went.
What he found was a grand castle complex that Italian prisoners (captured by British forces) had helped build during World War II.
By 1979, the owners had converted it into a fantastical luxury hotel. It had 12 enormous suites, oversized fireplaces, crystal chandeliers, broad terraces, miles of horseback trails, a nine-hole golf course, 200 acres of garden with vast mountain views, and 50 acres of coffee trees. It was beautiful and huge. It had everything you would want in a luxury resort hotel.
Leopard Rock Hotel
It was the crisis and fear that generated such a dirt-cheap price. Investor sentiment couldn’t have been worse. In 1979, Zimbabwe was the last place most people wanted to put money into…which made it the best place in the world to go looking for bargains.
If Doug had bought the hotel in 1979 and sold it six years later, he could have made 150 times his original investment. These are the kinds of returns you can make by investing in crisis markets and only by investing in crisis markets.
You don’t have to trek through a civil war battle zone or dodge bullets to find these kinds of colossal returns.
I recently spent 10 days in Zimbabwe with Doug. And like in 1979, it has huge potential for profit.
If you’ve ever seen Zimbabwe in the news, I’m certain it wasn’t positive. If you’ve ever seen Zimbabwe in some sort of international competitiveness rankings, I’m sure it ranked at or near the bottom.
There’s good reason for that. The country is in an economic and political crisis. Hyperinflation has totally destroyed the local currency. There’s been some bad press, and rightly so. But there’s a lot more to the story…
Zimbabwe is rich in natural resources…gold, platinum, diamonds, and fertile farmland.
The geological potential of the country is huge. Zimbabwe has production upside in platinum and other minerals that few can match.
The bad press has conveniently (for us) camouflaged the opportunities in Zimbabwe. And that’s part of what makes it so appealing for us as contrarians.
Zimbabwe currently has a severe cash shortage. ATMs are running out of money, liquidity has dried up, and there’s panic selling. Plus, Zimbabwe has absolutely dismal public relations. You’ve probably heard only bad things about Zimbabwe, if you’ve heard about it at all.
Zimbabwe has enormous wealth. It has some of the largest platinum, diamond, and gold reserves in the world. It has an educated population, relatively decent roads and other infrastructure, and an abundance of productive farmland.
The country should be one of the richest in Africa…not one of the poorest.
For Zimbabwe to improve, the government must be less hostile to the country’s crucial industries. That could happen soon. President Robert Mugabe has basically run the show since the country’s independence. But he is 92 years old, and it’s only a matter of time before the country moves on.
There’s a real chance for things to get “less bad.” And because things are so dirt cheap, that could mean huge profits.
Nobody knows if the government will actually make the needed changes. But I think there is a plausible chance the country will turn around, even if it might get worse in the short term. And given how cheap some asset prices are right now, the risk-reward ratio is in our favor.
This is exactly the kind of contrarian situation I look for in Crisis Investing. It’s an environment where we can find huge bargains. Because the upside is so large, I think it’s a risk worth taking.
I’ve found the perfect way to profit from the current crisis in Zimbabwe. I think there’s a great chance it could deliver 100%-plus gains—and all you need to join the party is an ordinary brokerage account. This investment trades in New York like any other U.S. stock.
Doug Casey and I recently put together a video that gives you all the details. Click here to watch it now.
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Harare – Business activity and confidence levels in Zimbabwe has taken a knock as protests over import restrictions and unrest in the public transport sector takes a toll on an already struggling economy, executives and economists said.
Zimbabwe is bracing for civil service protests after unions gave notice to strike over delayed pay on Tuesday. The government said salaries for the month of June would be delayed and instead offered a $100 advance allowance.
But this has not gone down well with the government workers and the situation has worsened by violent protests that erupted at the Beitbridge border with Zimbabwe over the weekend. As many as 70 people had been arrested over the protests, which resulted in service delivery disruption at the port of entry.
Business leaders told Fin24 on Tuesday that the economy was taking a further pounding from the civil unrest and protests by workers. They said “escalation of the situation might force businesses to close down operations” as infrastructure and equipment could be destroyed.
“Businesses in the affected areas such as service stations, shops and other companies had to partially close down yesterday because of the protests by the public transport operators. For the transport industry this has been a major disruption because there was no business on Monday,” said a business and industry leader, declining to be named.
Zimbabwe is facing constraining cash shortages that have affected business operations. With the economy now mostly informal, business has also been affected by import restrictions imposed by the government.
Zimbabwe Industry Minister Mike Bimha has however insisted that the restrictions will remain in place despite the protests at Beitbridge over the weekend. The Zimbabwe Republic Police (ZRP) on Monday said it would deal with the protesters.
Zimbabwe’s economy is expected to decline further this year amid slowing productivity in industry, manufacturing and mining – where companies are in distress. The United States issued a caution over the protests in Zimbabwe while tourism industry players say the resort towns have not yet been affected.
“The Zimbabwe Republic Police would like to warn all those who are inciting and engaging in violence that such misconduct will be severely dealt with,” said Charity Charamba, police spokesperson and a senior assistant commissioner.
Civil servants had given notice that they would strike on Tuesday, but most offices were open. However, some teachers and nurses were reported to be on a go-slow, according to Fin24 witnesses.
Acting Public Service, Labour and Social Welfare Minister Supa Mandiwanzira was quoted by state media on Tuesday saying the government was facing a “desperate situation” regarding payment of the civil servants.
Social media platforms have also been spreading word that all workers in Zimbabwe will down tools on Wednesday in protest over corruption by government officials, delayed salaries and the current cash shortages. The police force however says it is aware of those behind the civil unrest and that these would be arrested.
Another business leader said the import restrictions had been cut by more than half the revenues that the government was getting from import duties. He said “the government will run out of money and this situation of delayed salaries for public workers will worsen”.
The introduction of local bond notes in October is also fuelling a decline in business confidence in Zimbabwe, according to economists. The bond notes will be paid out as incentives to exporters, Finance Minister Patrick Chinamasa said on BBC’s Hard Talk on Tuesday.
“Exporters are not complaining (about the local currency bond notes) because this is to benefit exporters and we want to incentivise bond notes,” Chinamasa told the BBC.
Zimbabwe is bracing for civil service protests after unions gave notice to strike over delayed pay on Tuesday. The government said salaries for the month of June would be delayed and instead offered a $100 advance allowance.
But this has not gone down well with the government workers and the situation has worsened by violent protests that erupted at the Beitbridge border with Zimbabwe over the weekend. As many as 70 people had been arrested over the protests, which resulted in service delivery disruption at the port of entry.
Business leaders told Fin24 on Tuesday that the economy was taking a further pounding from the civil unrest and protests by workers. They said “escalation of the situation might force businesses to close down operations” as infrastructure and equipment could be destroyed.
“Businesses in the affected areas such as service stations, shops and other companies had to partially close down yesterday because of the protests by the public transport operators. For the transport industry this has been a major disruption because there was no business on Monday,” said a business and industry leader, declining to be named.
Zimbabwe is facing constraining cash shortages that have affected business operations. With the economy now mostly informal, business has also been affected by import restrictions imposed by the government.
Zimbabwe Industry Minister Mike Bimha has however insisted that the restrictions will remain in place despite the protests at Beitbridge over the weekend. The Zimbabwe Republic Police (ZRP) on Monday said it would deal with the protesters.
Zimbabwe’s economy is expected to decline further this year amid slowing productivity in industry, manufacturing and mining – where companies are in distress. The United States issued a caution over the protests in Zimbabwe while tourism industry players say the resort towns have not yet been affected.
“The Zimbabwe Republic Police would like to warn all those who are inciting and engaging in violence that such misconduct will be severely dealt with,” said Charity Charamba, police spokesperson and a senior assistant commissioner.
Civil servants had given notice that they would strike on Tuesday, but most offices were open. However, some teachers and nurses were reported to be on a go-slow, according to Fin24 witnesses.
Acting Public Service, Labour and Social Welfare Minister Supa Mandiwanzira was quoted by state media on Tuesday saying the government was facing a “desperate situation” regarding payment of the civil servants.
Social media platforms have also been spreading word that all workers in Zimbabwe will down tools on Wednesday in protest over corruption by government officials, delayed salaries and the current cash shortages. The police force however says it is aware of those behind the civil unrest and that these would be arrested.
Another business leader said the import restrictions had been cut by more than half the revenues that the government was getting from import duties. He said “the government will run out of money and this situation of delayed salaries for public workers will worsen”.
The introduction of local bond notes in October is also fuelling a decline in business confidence in Zimbabwe, according to economists. The bond notes will be paid out as incentives to exporters, Finance Minister Patrick Chinamasa said on BBC’s Hard Talk on Tuesday.
“Exporters are not complaining (about the local currency bond notes) because this is to benefit exporters and we want to incentivise bond notes,” Chinamasa told the BBC.
