Why I’d buy the Aminex share price before Bitcoin

I think the potential of Aminex plc (LON: AEX) trounces that of Bitcoin.

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I haven’t been endowed with the steel gonads you need to speculate on an essentially worthless investment vehicle such as Bitcoin. Call me old-fashioned, but I like my investments to be backed with real companies running real businesses that own assets producing real cash inflows, or which have the potential to generate cash in the future.

Where’s the value?

For that reason, you’ll be unlikely to catch me speculating on any currency movements at all, even on ‘real’ ones such as the US dollar or the British pound. I think the pursuit of trying to predict the price movements of such ‘markets’ takes you way over to the gambling end of the investing/gambling spectrum.  But most of all, I won’t touch Bitcoin or any of the other cryptocurrencies, which all strike me as being extreme gambling propositions – you might as well bet on coin-tossing as on Bitcoin, in my view.

I can see how the cryptocurrencies draw people in. When a price moves from a few cents to around $20,000 dollars, as Bitcoin did, some people get rich and the stories spread like wildfire. But the arguments for the worth of cryptocurrencies are very thin and shaky. Some reckon that because only a certain amount of any given cryptocurrency exists, its value is bound to rise as demand for the currency rises. But who needs to use cryptocurrencies to actually pay for things and exchange wealth when there are so many conventional alternatives available, such as sterling? Then there’s the whole problem of competition. New cryptocurrencies are being launched at an alarming rate and competition almost always drives prices down.

To me, cryptocurrencies have got ‘speculative bubble’ written all over them, and the problem with bubbles is that they tend to burst. But we never know when, and sometimes it’s a shock when they do. My bet on cryptocurrencies is that I am far more likely to lose money than to make it if I participate, so I’m avoiding them.

Great potential

I’d rather go for a firm with a business that has lots of potential, such as Tanzania-focused gas and oil production, development and exploration company Aminex (LSE: AEX). The firm’s long-suffering shareholders have seen the stock slide more than 50% over the last year, but I think there are reasons to be optimistic about the immediate future. The farm-out agreement the firm recently signed with The Zubair Corporation is a potential game-changer that looks set to fully-fund development of Aminex’s Ravuma acreage to full field development and “material” cash flow. The firm is finding mostly gas, which is sold to the local market. If it achieves the target rates with the development programme Aminex could see revenue up to $40m per year.

However, the share-price weakness reflects a few uncertainties. The farm-out is due to complete by 30 November but requires approval from the Tanzanian Government. But Aminex is in dispute with the government’s energy arm, the TPDC, over payments for previously supplied gas, which is an uncomfortable situation. On top of that, production from the firm’s current gas producing well has stalled due to technical difficulties. I’m optimistic that the short-term challenges will be solved allowing the long-term potential to bloom and would rather bet on Aminex than on Bitcoin.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Kevin Godbold owns shares in Aminex. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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