Investing in the Heart Of Darkness
by Matt Badiali
August 11, 2006
The Democratic Republic of Congo is an enigma to many Westerners who knew the country as Zaire until 1997.
More than a century ago, it lured Dr. David Livingstone, later followed by Henry Stanley, to trace the Congo River along its lashing course, past the shrieks of monkeys and watchful eyes of indigenous Pygmy tribes.
Joseph Conrad called it the Heart of Darkness.
Even today, only 18 miles of highway penetrate this country the size of Greenland – one quarter the size of the U.S.
This is a dangerous land. A 2003 peace treaty has buttressed the current government of President Joseph Kabila. But an array of militias has spent the better part of 10 years warring against former strongman dictator Mubutu Sese Seko - and then among themselves.
I’ve focused on Africa for a while because the geology is outstanding. There are countries rich in gold that haven’t seen a modern mining operation – ever.
Some will look at D.R. Congo with its political instability, rudimentary infrastructure, and thriving smuggling trade and decide investing there isn’t just risky – it’s crazy. But that’s what makes it such a great opportunity – when things can’t get any worse, they can only get better.
Regular DailyWealth readers, of course, recognize our fundamental principle: The best time to buy is when something goes from “bad” to “less bad.” It’s a lesson I learned from working with Dr. Steve Sjuggerud, and his track record of success speaks for itself.
D.R. Congo fits that scenario perfectly. The place was hell on earth through most of the 1990s. It began recovery in the early part of this decade, only to have assassination and war break out again. However, it just held a free democratic election and has significant world organizations backing it.
A little peace and democracy go a long way towards international credibility.
Organizations such as the World Bank, the IMF, USAID, and the European Union have all committed money for social and economic recovery of the D.R. Congo. Belgium, France, the United Kingdom, and South Africa in particular have committed aid money.
The country is clearly in an uptrend… oh yeah, and it’s got so much natural wealth it’s ridiculous.
D.R. Congo is sitting on 10% of the world’s copper resources and 50% of the cobalt. It also has significant deposits of cassiterite (tin ore), gold, and diamonds.
Once its government stabilizes, D.R. Congo’s business climate will boom. Mining companies from all over the world will be vying for claims.
It’s happening right now in Burkina Faso, Niger, and Ghana. Big mining companies, such as Newmont and Barrick, are moving into western Africa now that the climate is good for mining.
It’s only a matter of time before they begin buying mineral rights in D.R. Congo. For the brave investors who get there first, I predict some outstanding profits.
Good investing,
Matt Badiali
Editor's note: Matt Badiali is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.
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