South Africa

 

I've been to South Africa 10 times, seen almost the whole country, and have lots of friends there. The big question now, of course, is what will happen after the elections at the end of the month. I went over the situation in detail in Crisis Investing for the Rest of the '90s, and that analysis still holds. In brief, the new ANC government will turn out to be more benign than most think, but there's going to be plenty of random bloodshed among the eight major black tribes and two white tribes inhabiting the country.

There's widespread sporadic violence all across South Africa at the moment; much of it between Inkatha and ANC supporters, a lot directed against whites. There's no way to predict where it will lead. Certainly, there's a whole generation of black youth in the townships that's grown up in an atmosphere of hatred, and the ANC will find it impossible to keep them under control. But that's just an exaggerated form of the violence that occurs in America's own inner cities; it's not a civil war.

But the markets have a life of their own. The way I'd play it is to buy South African gold stocks now, and more on weakness. My rationale will be explained in full next month.

Until then, I think buying almost anything in South Africa, from wine farms in the Cape, to game farms in the Transvaal, to (especially) gold stocks will likely prove very rewarding over the next year. But they're a trade, not a long-term hold.

I think foreign companies, like Diamond Fields, that acquire assets in South Africa will be treated with kid gloves, and stand to be long-term growth situations that can capitalize on either good times or bad times.

Next month I'll have all the details. In the meantime, the following are the names you want. They are the country's highest-cost, shortest-life, lowest-market-cap gold mines. At $500 gold, all of them will pay at least 50% of their current prices in dividends. And, yes, those are South African penny stocks you're looking at, and all are current producers.

Name	Price
Benoni	.08
Blyvoors	1.50
Cons. Modder	.14
Durban Deep	9.75
ERPM	1.32
ET Consol.	.66
Grootvlei	1.80
Joel	.73
Harmony	5.40
Knights	.10
Leslie	1.22
Lindum Reef	2.00
Rand Leases	.04
Stilfontein	1.20
St. Helena	8.50
Unisels	1.75

The broker to work with is Rick Rule,
(800) 477-7853 or (619) 943-3939

 

Namibia

I also visited Namibia on this trip; my last visit was in about 1980, when it was still South-West Africa, in the midst of a severe bout of turmoil. At the time, Sam Nujoma's SWAPO was considered a communist terrorist organization, and South African troopies were battling the guerrillas. I say "considered" because there's a lot of truth to the aphorism "He's a terrorist, you're a rebel, I'm a freedom fighter." As it happened, our little group had lunch with Mr. Nujoma, who is now the country's president. I found him charismatic and good-humored; after a couple of beers, we all had a couple of laughs. It's possible to do this with most Third World leaders, and a lot more fun than schmoozing with Bill Clinton. After all, guys like Nujoma have actually lived a life-he was a political prisoner, fought a bush war, and has had a hundred storybook adventures that make for a strong character and interesting (and unguarded) conversation. What's Bill Clinton done, besides run for government office and play big-shot at the taxpayer's expense?

Namibia is one of the world's more obscure countries. Along the entire 1,000-mile coastline is the Namib Desert, with incredible dunes hundreds of feet high. The coast is unreal in its proportions; for hundreds of miles in both directions there is nothing - absolutely nothing-but a stormy sea in front of you and thousand-foot dunes in back of you, howling wind and blowing sand. But that's just the coast; Namibia is slightly larger than Texas; most of it is a high plateau and looks like Utah, Arizona, or Colorado.

In this gigantic area are only 1.4 million people, of whom about 80,000 are whites-mostly Germans. The place was a German colony until World War 1, whereupon it became a South African mandate. You may recall the Katzenjammer Kids, of comic strip fame; I believe this was their home after they were deported from Germany in 1914, probably for being too warlike. The Germans here are a strange breed, rather like those in Paraguay, if you know what I mean. If you don't, that's all the more reason to travel off the beaten track, as opposed to Europe - which I find crowded, expensive, constipated, boring, on its way down, and generally lame by comparison.

In any event, I really like Namibia - although I've rarely met a Third World country I didn't like. Windhoek, the capital, is a really mellow, civilized little city. Cost of living is very low. The climate is excellent. Real estate is very cheap; a 15,000-acre (that's about 25 square miles) farm with a nice house and plenty of water, a couple hours out of town, is offered for US$150,000. It might be an excellent opportunity to regale others with stories beginning "Once I had a farm in Africa..."

Namibia is certainly one of the most peaceful countries in the world, and is on its way to being one of the more prosperous in Africa. It's got problems, including way too many people on the government payroll, but a lot of unique advantages. Diamonds happen to be its largest single export.