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

Ghengis Kahn Was Hungarian

The twentieth century was rightfully named the century of war. It started with the Kaiser in 1914 and the British Foreign Minister Sir Edward Grey on August 3, 1914 glanced out from his office at the Foreign Office overlooking Trafalgar Square. There and then he made his historic prediction: "The lights are going out all over Europe: we shall not see them lit again in our lifetime."

Few historians picked up the remark, or the long decline of Europe. History later proved that Sir Edward Grey was more than right.

In the twenty-first century there were originally no predictions. The leaders of the major nations seemed to be preoccupied with their own countries, and there was little interest paid to the gradually rising commodity prices and the shift of monetary reserves encompassing the whole world.

When September 11 happened, the American administration began to talk in the most hostile manner towards the so-called trouble makers. President Bush's "Axis of Evil" speech was greeted not only with hostility, not only with fear, but as we can now interpret, with contempt by the majority of the international political elite.

After all, there were seven billion people in the world, and as CNN began to reflect of the mentality of the inhabitants of the world, we began to notice that the trend is not chasing terrorists, but buying consumer goods, building hotels, starting airlines, modernizing restaurants and basically giving a colorful life, to some extent, to a colorful generation.

Granted, there were about 150 million trouble makers, as we can call the lunatic fringe in the world, and they got more than proportionate interest from the cable networks and they have continued to make mischief. They represented less and less of the aspiration of the seven billion people who occupied the planet.

There were signs that some political leaders accepted the fact that this 150 million has to be kept in order, that their attitude is not acceptable to the international community. At the same time, the feeling spread that by the economic strengths of the leading nations in the world, including the western world, can moderate the Axis of Evil while maintaining the steadily increasing standard of the inhabitants of the planet.

When Mrs. Merkel became chancellor of Germany, she simply terminated the $180 million in annual aid to the Palestinians. What happened? Absolutely nothing.

When the Palestinian delegation, at the invitation of President Putin, visited the Kremlin they were given a memorandum to sign whereby the acknowledged the existence of Israel. When they refused to sign they were kept waiting. Subsequently an aide of President Putin appeared who told them they can have free dinner at the Kremlin, look at the Kremlin, and the following day free transportation would be given to them back to Palestine.

What happened? Absolutely nothing.

There was, and there is, a tremendous increase in what are called suicide bombers. The suicide bombers basically have never been spread in the world. They are not to liberate anything, they are not to put forward some political philosophy. They are exactly what they are—suicide bombers, and they are part of the universe that the seven billion people occupy. History will probably prove that they will die out, disappear, and will stop hindering the daily life of ordinary people who go out for a drink after work, who go to supermarkets, who travel in buses. They will disappear for one major reason. Lack of money, and hopefully lack of TV coverage. Remember Abby Hoffman? He died poor and forgotten.

Well, I read a book maybe four days ago, a humorous book that said it all started in Europe. It had a feature article of the leaders of the second world war picturing Winston Churchill with a big cigar and a glass of brandy saying that the British were going through their finest hour but let's face it, it lasted well over a year.

Coming to the twenty-first century, I have to put it in historical perspective. It all started with money.

I first noticed with a company called Cleveland-Cliffs. The stock was $20. A year later the stock was close to $180. They produce iron ore.

Now, this was in the year 2002 and the year and a half before most American steel makers, including Bethlehem Steel had filed for bankruptcy. Cleveland-Cliffs owned ten percent of International Steel, the company Wilbur Ross had put together from bankrupt American steel makers. After it had gone public the valuation of the ten percent was $450 million. In the year 2002 Cleveland-Cliffs market value was about $30 million and then Wilbur Ross turned around and sold International Steel which was by then listed on the New York Stock Exchange for $4.5 billion to Mr. Mittal who was an Indian. And the question comes out, how can an Indian have so much money that he can buy in a single day $4.5 billion worth of American steel assets?

Then we discovered that the Chinese are consuming very big quantities of steel. That led from steel to nickel. Nickel has gone from $3 to $22 per pound. Recently Xstrata, a Swiss company, and Norilsk, the largest Russian mining company, were bidding for a Canadian nickel company, LionOre, offering $5.5 billion.

And, the first reaction was we have to buy gold, because if there is so much money then the value of gold is cheap and gold did run up to almost $700 an ounce from $250. Silver from $7 to $15 and it was not inflation hedge, it was really money hedge.

Now, what did all this mean. If the seven billion people, and let's face it, we are all equal, if the seven billion people all start to consume steel, they all want automobiles, they all want hotels, they all want hospitals, they all need money.

Then the world discovered that there is plenty of money. In fact the world is awash with money. The oil prices, which, of course, have gone up with steel and other metals filled up the pockets of the United Arab Emirates, Abu Dabi, Norway, China, Saudi Arabia, and created what is called Super Inval Funds that amounts to $2.5 trillion in 2007 but estimated to run to $12 trillion by 2015.

So, there was plenty of money to finance new homes, condos, vacation resorts, airplanes, everything that basically people want.

No country ever elected a trigger-happy dictator. No country ever permitted its citizens freely to practice suicide bombing, and as the world is now seeing, even if a country like Venezuela elects a man like Mr. Chavez. Actually, his country is collapsing like Cuba 45 years ago.

There have been many resort hotels in the last five years, and the people all over the world, the seven billion, want to go on vacations. As a result, the number of airlines in the world, even with the high oil prices of $65 a barrel, up from $20 a barrel five years ago, the number of airlines have more than doubled for a simple reason. Every airline can fully fill up its seats at any price. The seven billion people want to travel.

Now, to live at the level people want, and I dare to say that I can analyze and understand how the seven billion people living in the year 2007, but quite frankly I am not good enough a sociologist to predict how they will live in the year 2030 or 2050. All I can say, they probably want to live better. Has anybody ever analyzed how much more oil or feedstock is required when every middle class person has a second home? Has anybody ever analyzed how much more energy is needed when people live to 80 or 90? I hope they do, because I am not so far, so frankly I would, for the world of seven billion people, that there are no suicide bombs, no Hitlers, no communist dictators, no Cold War. I am very happy in my house in the Hamptons, going to Sag Harbor Theater and meeting Alec Baldwin before the performance. I like to work. I like to write. I don't see why I don't want to live to an age bracket I have mentioned 75, 80, 85, 90 and further.

However, that means medicine. That means energy. That means money.

The bright leaders of our world have finally realized that ethanol may add a little bit to energy supply, but besides oil there is only uranium.

Uranium actually has run up from $20 in 2001 to $140 on the futures market in June 2007, and the number of power stations being built defied the parliaments of every civilized country. In China it is government ordered, three more electric power stations a year. In Russia the government doesn't even discuss. Putin decided—we're going nuclear. In Germany no dictator could be stronger than Mrs. Merkel—we go nuclear. America is hesitating. America is examining legal rights to legal ramifications, but America is not any more the center of the universe. And it is definitely no longer the center of the energy universe. France is different. France has been nuclear for decades, and the new prime minister, Mr. Sarkozy, has already announced that he will continue the nuclear power program for his country.

Granted we have problems too. There are countries like North Korea, Iran and several others who want to acquire nuclear weapons. Dangerous? Yes. Can we stop it? We can try.

President Putin made a speech that we cannot go back to the era of the Nazis when we simply bomb a country because she develops nuclear weapons. However, everybody is frightened of a nut going nuclear.

Little attention was paid, and it was done to some extent in secrecy, when the new French president, Mr. Sarkozy undertook to form a pool of some $400 billion. Such large amounts of money could only come from the Abu Dabi Investment Authority, which obliged.

The pool, which is called The Uranium Pool, went around the world actually through four countries, Australia, Canada, South Africa and Mongolia and purchased the current and 10-year future production of uranium with The Uranium Pool. It was done quietly and hardly effected the futures market in uranium, which is listed in NYMEX in New York. It is an inefficient market in any case.

There was also money deposited with the respective mines to break certain future contracts with what are called trouble making nations, so as a result, they were suddenly without uranium production in the coming years.

Since uranium production has to be guaranteed for 10 to 15 years to keep a power station going, the undesirable nations, or the trouble making nations were caught short on the uranium market. Now, they could still get uranium on the futures market, but that would bid up the price to $300.

No country was effected more than Mongolia, which only has a population of 2.5 million, but a number of uranium mines, and an increase on the open market price of uranium to $300 was a major monetary benefit to Mongolia. The story hit the front pages. There was great celebration. Most working couples in London, in Paris, in Rome, had an extra drink after work. The fear of nuclear annihilation receded, and that in turn effected the decline in suicide bombing. It was like VE Day in Europe, on May 8, 1945.

The guest of honor in Mongolia, which arranged a major celebration, was Mr. Sarkozy who engineered The Uranium Pool.

The Prime Minister of Mongolia, who was educated in the West, speaking in a double-breasted suit, commented on the large gathering of heads of state and leading intellectuals of which the Chinese prime minister was the most honored guest, began the most important speech of his lifetime.

He said that Mongolia negotiated with Ivanhoe, a Canadian company, with Rio Tinto, a British company, and a smaller entity Entree Gold, and he tried to express all through the negotiation in his desire to incorporate in the largest financial contract of Mongolia's life the desire of Mongolia to be closer to the western world and develop its country. This process got an injection when Entree Gold announced that the Right Honorable Michael Howard, an old-time friend of Mongolia and a friend of the prime minister, would become vice chairman and will be dealing with the Mongolian matters and channel money and talent to make Mongolia a modern nation. Quietly this British statesman brought along confidence in Mongolia that Mongolia is again part of the civilized world.

After all, then he turned to his guest of honor,
Mr. Sarkozy, "You sir, have brought political and economic strengths to our country. Political because of your presence, economic because of the uranium industry.

"But Mr. President we always respected you, and we respect you more because your father was born in Hungary. This celebrated meeting should good stand that we in Mongolia have a particular affiliation with Hungary.

After all, "Ghengis Kahn was Hungarian."

After all, "Ghengis Kahn was Hungarian."


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.