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

No More Munich - The Mongolian Version of 1938

December 11, 2007

When the new cabinet of Prime Minister Sanj Bayar of Mongolia sits down with the Western mining companies, Rio Tinto and Ivanhoe, to ratify hopefully the long negotiated Investment Agreement, it is going to be the end of a year of extensive and cumbersome negotiation.

The cabinet basically has to assume the proper economic development of Mongolia, and like any other cabinet, must assure the maximum advantage of the mineral rights of this large country as well.

There is, however, more in the picture. History will report that there have been many Munich's since 1938. Munich agreed that there would be, as Prime Minister Chamberlain said, “Peace in our time.” The Mongolian version of this historical event must diverge to the European failure of Munich. Mongolia needs peace and the Mongol people prosperity, but what is more important is that there is stability on this unique land. About two to two and a half years after the agreement is signed, the money will flow from the mining ventures. The sudden increase of monetary wealth is always a target let’s say to everybody. Everybody means everybody who needs $1 billion – which means the whole world. The current negotiations must assure political and economic stability, and hopefully create a climate that six or seven years from now when the money has flowed for four years, there shouldn’t be a Chavez of Venezuela who will rearrange the cards, play with Mongolia’s money, give it away to other people, and in turn establish a so-called nationalist dictatorship.

Being neither a politician nor a negotiator at the table, I simply would like to remind the Mongolian cabinet, the Mongolian people, and indeed the world, that today in Venezuela inflation is 21 percent. More people are on the street that ever before. In the so-called nationalized nation of Castro, the misery has been the same since 1959, the ruler is the same Fidel Castro, and the other thing that has not changed is the economic decay which followed 1959-160 nationalization.

The world and Mongolia should not forget the sad lamentable events of history since 1938. We had the small nations of North Korea, the small nation of North Vietnam, Taiwan, and Kuwait. Each of these nations fell in one way or another at various times and periods into economic and political turmoil. The current negotiation may put a lot of strain on the Mongolian ministers, but the Mongolian people, like any other nation, do not want Mongolia to be another North Vietnam.

Incidentally, for the nations I mentioned, 100,000 American soldiers died. My old friend, Senator Mike Gravel of Alaska, a presidential Democratic candidate in the year 2008, said that every street corner in Vietnam has a Baskin-Robbins. This is why the suffering of 100,000 American soldiers and two million Vietnamese. It is in the negotiating table right now that we must bring about an agreement that does not create such a country out of Mongolia.

Mongolia is going to be rich. It could be one of the richest nations in the world on a per capita basis. It has four billion ounces of copper, uranium of unlimited size, coal, tungsten, and of course 32 million ounces of gold. Yearly production of gold is estimated to be 1,000,000 a year, which at the $1,000 level represents a billion dollar cash flow. It is 50 percent of the GNP of Mongolia today.

The temptation to interfere with Mongolia’s future is very great. The country could have an annual income of over $4 billion, maybe $5 billion, and if it doesn’t fall into the hands of reckless politicians and monetary mismanagement, there could be tremendous prosperity in the country. One and a half million Mongolians are the depository of a wealth equal to Kuwait. The educational system which is commendable will make sure that Mongolia will be an economically more diversified nation and a potential Mongolian economic miracle will bring tremendous prosperity to each and every citizen of the country.

I have recommended and I repeat it here that it is vital to build a modern stock market and make sure that companies that are active in Mongolia are listed there. It can be obtained in various ways, but I see nothing wrong with companies granting options to buy 10 or 15 percent of the mining companies active in Mongolia and list it on the Stock Exchange. There might be ten or fifteen publicly-owned uranium companies in the country. It is not desirable when the shares are held all overseas and when the Mongolians do not benefit immediately from the rise of those stock. If every company grants options for 10 percent to Mongolia, we are now going to talk about the sudden emergence of wealth, maybe reaching tens of billions of dollars before the decade is out.

Even before some money could flow. An article which I have written a few weeks ago shows that Mongolia can launch in London a company raising a billion dollars against the gold production coming on stream the second, third, or fourth year. A similar company was launched by Casanova, a division of JPMorgan Chase, raising $150 million. The offering was very successful. If such a company is established today, one billion dollars in a gold company and perhaps an equal amount of money in a copper indexed company, amounting to $2 billion, would be available immediately in the year 2008 for constructive development.

I lived through the second World War as a young child, but I remember the years 1945-46-47 when Hungary, before it surrendered to communist subjugation, developed its war-torn economy, and life in the school and at home became better and better. As a young child, I felt the progress and I was very happy and things got better on a month-to-month basis. This concept can be recreated in Mongolia beginning December, 2007. If the Investment Agreement is signed, if the details are ironed out, I am sure that Casanova would be very happy to negotiate the world’s first gold-backed billion-dollar company and the world’s first copper producing company. They would be, in fact, a stock market favorite. If such events happened, the current government can prove to the people that they care about the people, that they care about their country, and they became the parties who clearly say we live in the 21st century.

The Munich of 1938 created the biggest blood bath in history with a hundred million people dying. Wouldn’t it be a historical honor for Mongolia if from their meeting this week, if from the signing of the Investment Agreement, two companies would be listed in London, brining immediately money and the early phase of prosperity to Mongolia? The agreement of 2007 could be permanent, whereas the agreement reached in Munich in 1938 in Berchtesgaden did not survive more than six months. In that respect, if I may say so, I was born in 1938 and I want to celebrate the result of the Mongolian agreement of 2008.

Let me end on a cheerful note, while sticking to the spirit in which this article is written.

In the Almanac of 1938, there were two items. It said that Mr. Neville Chamberlain, the British prime minister, visited three times the German chancellor in Munich. The second item was a simple statement that Vivian Leigh had been selected to play Scarlett in “Gone With the Wind”.

70 years has passed since the Munich of 1938. Actually, there were three historical events in 1938:

  • Berchtesgaden if Munich

  • Vivian Leigh of “Gone With the Wind” 

  • I was born on April 22.

Chamberlain, Mussolini, Hitler, Vivian Leigh, and Clarke Gable, are now dead.

I am the only survivor, and I have a six year old grandson, Daniel.

There is no doubt in my work for Mongolia assures that there will be
“no more Munich.”

However, my first trip to America on the Queen Elizabeth in January, 1962 I met and danced with Olivier de Havilland. She was the escort of the Lord Privy Seal, Edward Heath.

I would like to make a contribution to the Mongolian people to back up these historical events. I own part of a video store on First Avenue in Manhattan, the New York Video store. We have “Gone with the Wind,” both on cassette and on DVD. On the day when the Mongolian authorities go to London to register the world’s first billion-dollar gold-indexed company, we will dedicate a very large supply of DVD’s of “Gone With the Wind” for the Mongolian people.

It is a new century. It is a century where 7 billion people are working. Mongolia has gold and copper, we have DVD’s.

I make a commitment: we shall deliver!!


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:

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