BERAL, INC.
Andrew Racz
Director of Research
300 East 54 Street, Suite 26C
New York, NY 10022
Phone: (212) 319-6949
Fax: (212) 753-1944
E-mail: mlikar@aol.com

The Man Who Was Created by Gold

By Andrew Racz
July 6, 2012

History has recorded that the career of Winston Churchill couldn’t have happened without Hitler.  In the 3rd year of the war when Churchill celebrated the end of the African campaign he remarked thinking of history that 900,000 German and Italian soldiers were killed or captured in the desert war.  In size of the victory and defeat, Churchill always repeated the statement that the  corporal has gone far. 

Robert McEwen started in and dedicated his entire life to gold.  Whether we consider high or low in the early beginning, he was a broker who took over his father’s small closed end fund which he expanded over the years to  the most spectacular success in the Canadian mining industry creating Gold Corp. which was a legend in the international scene.  The small company got listed eventually on the New York Stock Exchange and the articles of the success of taking a $50 million market cap fund to $8 billion in a period of 20 years got the attention of the international press.  McEwen’s success couldn’t have happened except for his concentration on gold.  For years he always said he is concentrating and his attention was never diverted from the precious metal.  Apart from being the owner of the 3rd largest gold mine in Canada, he became a researcher, speaker, and promoter of the idea.  He lectured about paper currency.  He lectured and spoke at many meetings about gold related investments and he learned the theory of international money markets and their relationship to gold.

In fact he became a spokesman on international television, Canadian television and recently he was interviewed  by  Maria Bartiromo, the famous anchor and journalist.  Currently, as he passed 60, he became the spokesman for the precious metals predicting $5,000 price for gold and $200 for silver.  Eloquently at MSNBC he stated that somewhere along the line a new monetary system will surface and may prevail.

When he sold Gold Corp. and set up a newentity, mainly an  exploration company called McEwen Mining Inc. he has not only become an architect of gold, but a believer that he can build for the second time around, an even more intriguing company which in 5 years will be among the Fortune 500 in the United States. 

Considering that MUX, which is listed on both Toronto and the New York Stock Exchanges, has a market value of $1 billion, has reserves both in silver and gold, but in 5 years hasn’t had a major hit, his belief in his work became a belief in his mission and to some extent for people who have followed his career, he was reminding the world of Churchill in the 1930s.  Robert McEwen predicted a big rise in gold price and he has in fact predicted such big rise 10 years ago and he turned out to be right.  Gold went from $300 to $850 and actually higher.  The big victory for a man whose career has been made by gold, has not happened. 

Of course he was successful.  Of course he became a household word in the mining field.  But, the proof of greatness in his prediction in gold related markets and prices has yet to come. 

Maybe it’s happening now.  The theory was until very recently that when in Europe a few nations before agreed – Greece, Spain, Portugal, Ireland and so on – people will sell gold and other hard assets in order to raise money. 

When we calculate the deficits, Spain - $150 billion; Greece - $200 billion; Ireland - $50 billion; the availability of gold sales equaled the equation.  After all, 1 ton of gold at the price of $1,500 has already reached billions of dollars.  Here the numbers can equal out.  Selling of gold and recover the deficit. 

In the last two weeks a new factor entered the picture.  Various European nations with socialist governments like France recently, irresponsible governments like Greece, weak governments like Italy have noticed that enormous sums of money – billions – tens of billions of dollars left their country.  These numbers were bigger than the deficit numbers.  These numbers represented corporations and  as well as personal  wealth.  The flight from local currency historically ended in dollars, Swiss Francs, and British deposits.  The Swiss closed their doors to new money.  The British are less stable; hence the dollar. 

If however all the money flows to the dollar, it would represent no capital gain, no interest rates, and potentially a danger of even sequester ship.  The American government historically didn’t let the dollar be the playing ground for foreign money.  Even before the World War II, Roosevelt declared sequestership.  The famous book, “The Crash of ‘79” dealt with sequester ship.  The dollar became very cheap and the dollar became partially dangerous.

These enormous sums of money from Europe, Far East partially become owners of gold.  Many well-known American bankers and the investment analysts recently declared gold as currency.  If gold is a currency, the flight money will buy gold. 

We must also understand that the flight money is a round multiple of deficits of various countries.

If the newly declared gold as a currency absorbs very large sums of flight money, the price of gold goes up.  Let’s not forget.  If the new currency starts moving, the money accumulated in Far Eastern countries in India, do not want to miss the boat.  India has over $3 trillion.  Its gold ownership is not more than 1 ½ thousand pounds.  America has 8.  The Germans have 4.  The flight money can absorb probably 10. 

And here is when Robert McEwen comes into the picture.  He could foresee the currency flight will create $5,000 gold.  He foresaw $5,000.  And now his forecast is justified.

In the 1930’s not many people predicted a war where 100 million people would die.  Everybody however knew the word Hitler. 

Churchill may have been the only international politician who pointed out that the corporal represented a danger to the whole world. 

Did Churchill foresee the details?  Maybe yes, maybe no.  But that  is not really the point.

If we take on the speeches of Robert  McEwen.  He did foresee a big increase in the price of gold, but not its reason.  I had a few private conversations with him when he asked about my personal experience


about Zimbabwe or European countries after the war; after all I lived through hyperinflation.  He didn’t particularly know the German hyperinflation before Hitler, but he foresaw that the flood of paper which he repeated, repeated, repeated is going to create something very big in gold.

In a recent  interview with Maria Bartiromo , Robert McEwen stated on American television– gold is going to $5,000. 

If gold is going to $5,000 there will be gold backed bonds.  There will be a big boom in gold shares.  Robert McEwen will always live in the history of the  mining world with the success of his two companies – Gold Corp. and McEwen Mining and he probably will become one of the richest men in the world.    His memory however at least in my book is that of a  hard working, single minded man who constantly reviewed his theories, he constantly reviewed the fundamentals behind his theories and he forecast quite openly to anybody who cared to listen to him, that in gold we trust. 

Ten years from now if gold is over $5,000 there will be gold backed bonds on the New York Stock Exchange.  There will be fortunes made by those who had confidence in gold.  It may alter the financing techniques of governments and may create new industries by the very fact that the owners invested the money in gold. 

Robert McEwen captured my imagination as I lived through it when I was 6, 7, and 8 – a world in Hungary when gold was the only currency.  It is perhaps an irony that in the Western World in 2012 it requires eminent people to say “yes, gold is a currency”.  Gold at that time was nearly $12 an ounce i.e that was the price of gold Napoleons.  In backward Hungary however, after the war, when fortunately my family was 100% invested in gold and Swiss Francs there was no real currency other than the black market.

To close this article again I quote Churchill… facts are better than dreams!
 
Robert McEwen will never reach the height of Bunker Hunt , but he may learn from the history of Fred and Harry Oppenheimer .

However,  he predicted gold would become a currency and he lived to practice it.

Should Harvard Business School in the future study the monetary advance of gold in our time they would have to study the life and achievement of Robert  McEwen.

 

Disclaimer

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: mlikar@aol.com

Copyright © 2011 Andrew Racz. All Rights Reserved.

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