Andrew Racz
Director of Research
300 East 54 Street, Suite 26C
New York, NY 10022
Phone: (212) 319-6949
Fax: (212) 753-1944

Silver At $200

The resolute march toward $200 Silver began in August 2011 … that is the day when the U.S. Dollar lost its AAA credit rating. Gold was crowding $1,700. The likely scenario- Chancellor Merkel travels to Beijing. Germany and China call for a joint currency.

It was August 1939, that the Molotov -Ribentrop Pact was signed.

The currency war against the U.S. Dollar has began. Silver is on its way!

Silver At $200

The actual statement or we may call the actual concept that we can discuss silver at $200 doesn’t seem to be plausible in the ordinary course of precious metals history.

Most of us and certainly the generation that is currently at college consider silver as somewhat volatile commodity type of metal. We all know that silver fluctuates and it fluctuates on economics more than perhaps any other metal.

For the generation over 40, silver has not been considered a little bit glamorous but is thought to be a simple metal trading around $5 - $6. Glamour is singularly tied to the Texan born Hunt Brothers game some 30 years ago. One of the most remarkable people, a maverick was Bunker Hunt - whom I recommended for a Nobel price for Economics in 1980.

If, however, we start to study the situation in books and publications an interesting concept begins to emerge. Can silver go to $200? Silver at $200! Seriously!

  1. We have, fist of all, population growth, the very fact that in 1956 when the Hungarian Revolution liberated me, there were probably not more than 1 ½ billion people who worked. Today in 2011, the number is over 5 billion.
  2. There is quality improvement among working people and silver buyers. Apart from India and China which are big factors a large number of countries like Russia and Brazil, have joined those who have acquired silver for monetary value.
  3. The surprising thing is the vast increase of industrial applications that require silver. 34-40 years ago, we were considering industrial applications of silver in photography, a utilization which actually declined. Today the picture is different. There are a number of industrial applications consuming a growing number of silver and creating a floor for the yearly usage of the metal.
  4. Not to forget, the price increase. Only 10 years ago Warren Buffet bought silver at $6. Today silver changes hands between $35 and $40/45. The higher price is actually a trigger of a whole gamut of obligations.
  5. Silver is a very popular ETF. Dozens of ounces of silver disappear in bank vaults of the various ETFs .
  6. In general high priced silver which trades actively in New York, Chicago, Hong Kong, Singapore and Tokyo, is utilized as a store of value and has begun to be utilized as monetary value which increases among other monetary utilizations of silver. This is not a minor factor. When 7.5 billion people all over the world in various countries talk about silver and buy silver in one form or another from industrial applications to coins, ETFs and storage, their actions lead to financial transactions causing silver to be considered as a monetary asset. As a result, suddenly there could be a major jump in the price of silver.
  7. If any metal like silver is being considered as a monetary asset, the utilization and acquisition of silver jumps phenomenally. It is relatively simple to explain that if one ounce of silver is used in a camera, if one once of silver is used for Apple Computers and if silver is considered a monetary metal, the utilization rate goes up to 10,20,30 or 40. We are now entering a world where the monetary value of silver is recognized in India, China , Brazil and very soon Africa and such value from ETFs to coins to silver bonds or silver bullion is acquired by banks, individuals and perhaps governments.
  8. If it goes through this process we will realize that for the next 5 or 10 years there is path for silver to become a monetary metal and in that case the demand for its physical presence in the financial world would increase the demand 5 or even 10 fold and therefore a $200 price is practical reality.
  9. Additional factors in the growth of silver usage and the rise in price is transforming the profile of mining companies which are producers of silver. This change happened in the last two years. The cost of mining silver is still between $5 and $8 an ounce. At the same time the price of silver has increased to $40. A $30 gap – a $30 operating margin is transforming or rather creating companies with enormous cash holdings.
  10. We would like to bring up a few factors: First Majestic (AG) –projected that the company has a market value today after two years of boom, of $2.5 billion, but in 5 years the company could accumulate because of the operating margin $2 billion in cash. A rapidly growing medium size company, US Gold which is in the form of a vehicle of potential company projects by the year 2015 is forecasting production of 7.5 million ounces of silver. At the $40 price, we are talking $300 million value; at the $100 price the value is approaching $1 Billion. US Gold is by no means a large silver producer, but its performance and the storage of silver value in the corporation is meaningful.
  11. What we are stating between the year 2015 and 2020 maybe a dozen silver mining companies could have accumulated silver in cash form, close to ½ billion dollars. 10 such companies would account for a total surplus of $5 to $10 billion.
  12. 12. If a search for the concept silver at $200 – be happy to take into account the recent valuation of silver at least between $40 to $100. That enables the accumulation of silver values in mining companies of $10 billion, the $10 billion which has not been there.
  13. The silver companies joined a club of multi billion dollar cash surplus which brings them to the status level previously held exclusively by members of the Dallas Petroleum Club.
  14. This represents a changing world. We are in the year 2011, talking of countries going bankrupt. We are talking about Greece, Portugal, Spain and Italy in Europe and regretfully, we are talking about the $14.5 trillion deficit of the United States.
  15. In other words, we live in a world when countries have grossly mismanaged their economies and are now experiencing large deficits but at the same time, companies that mine silver or mine what we call by then, a monetary metal, accumulate vast values maybe in the tens of billions of dollars. In other words, the original question is silver a currency answers itself because we will see the movement of monies which includes monies from governments to a silver.
  16. What it means is that the stockholders of First Majestic, the stockholders of US Gold which started at $2 a few years ago and today are $7, are happy. We are living in a world in which those who backed silver as a currency are different from those who just blindly follow the regular routine of paper currency and paper transactions and find themselves as citizens of a deficit country as opposed to stockholders of a prime silver company such as Silver Corp. or First Majestic.
  17. The world has never seen such a transformation; the world has never seen such a major change.
  18. Mr. Paulson, the well known hedge fund manager who now has under his control some $35 billion, stated in January 2010, that he is buying gold, gold mining companies because he is betting against governments.
  19. He was right. Gold went up; gold mining stocks became profitable and governments went bankrupt.
  20. If this process is carried further and further, the result is that a different and higher value of silver is emerging and at some stage it will reach the $200 level; in that case maybe government bankruptcies will continue but the silver mining companies and new companies and marginal producers which may become major producers could have accumulated large quantities of silver and thus become very cash rich.
  21. Therefore, in our estimate the higher valuation of reserves, the high production and storage of reserves and the bankruptcies of government together create the atmosphere that silver could go to $200 and thereby change the relative values of other monetary components. I would like to reflect on the fact that the movement of silver from $6 to $200 is going to make a major change in our monetary values and currency valuations.
  22. The world has seen such a major change, always in the most unexpected moment and from unexpected sources.
  23. Professor Einstein while in Switzerland discovered the theory of relativity and changed the world.
  24. Franklin Roosevelt while solving the tragic events of the Great Depression put America back to work and created a US Army which defeated the German super power.
  25.  We live in a world where currencies come and go, where countries of great reputation and civilization go bankrupt; when individuals of no particular achievement almost control the White House and this is the world where one man discovered some 40 years that a white metal –silver is a monetary asset. This man was Bunker Hunt who conceived the concept, but the world actually punished him for his foresight. Bunker Hunt was the individual who foresaw the commodity boom, who foresaw the decline of paper currency, and selected silver to save the assets of his friends and his own family.
  26. We live in a world where there are Madoffs and Bunker Hunts – mining companies and imaginative entrepreneurs who create silver assets.We only hope that the next 10 years will see the utilization of monetary values of silver and silver would contribute to our currency system all over the world. People should benefit from strong currency even if it is not controlled by any government.

Silver may go to $200 because of the system of governments we live in is incapable to take the proper measures to solve the problems which we are facing.

The European bankers and governments have issued some $300 billion to cover Greek debt calling it refinancing and knowing perfectly well that Greece will never pay this money back.

The European governments and bankers go on the front pages and talk about refinancing other nations, postponing payments and do not even have the intelligence to admit that unless people start to work 12 hours a day, that unless nations tell their citizens that payments and entitlements are only going to destroy their currency, the value of the two metals, gold and silver, while becoming defacto currencies are not used to resolve national problems.

The most astounding example is unfortunately the United States of America. We have $14.5 trillion debt. We have a debate about limits of government borrowing in July, in the summer of 2011. Both the Republican and Democratic Parties talk about minor differences. The most startling example of shortsightedness and to some extend demagoguery is the expression of millionaires and billionaires.

My research indicates and Donald Trump mentioned that there may be 750 billionaires in the world. If 300 live in the United States and if they tax millionaires with double the rate of the average citizen, the United States couldn’t gain more than $5 to $10 billion which is a miniscule sum on an annual deficit of $1.4 trillion.

We are lying to ourselves.

If silver goes to $200 net worth the value for retired people would increase for those far sighted ones who bought silver when it was $100. 


Information contained herein is based on data obtained from recognized statistical services, issuers reports or communications or other sources believed to be reliable. However, such information has not been verified by us and we do not make any representation to its accuracy or completeness. Any statement non-factual in nature constitutes only current opinions which are subject to change. BERAL INC. or their officers, directors, analysts or employees may have positions in the securities or commodities referred to herein, and may as principal or agent buy and sell such securities or commodities. An employee, analyst, officer or a director of BERAL INC. may serve as a director for companies mentioned in this report. Neither the information nor any comment expressed shall constitute an offer to sell or a solicitation of an offer to buy any securities or commodities mentioned herein. There may be instances when fundamental, technical and competitive opinions may not be in concert. This firm may from time to time perform investment banking or other services for or which investment banking or other businesses from any company mentioned in this report.



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Andrew Racz. 300 East 54 Street, Suite 26C, New York, NY 10022
Phone: (212) 319-6949 Fax: (212) 753-1944. E-mail:

Copyright © 2011 Andrew Racz. All Rights Reserved.