Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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It’s Official: The Chinese Are Selling U.S. Debt… and Buying Gold

The latest news is in… The Chinese are selling U.S. government debt… and they’re buying gold. So let me ask you… In your opinion, what will the signs be that the U.S. dollar’s heyday is ending? What will the signs be that China is giving up on the U.S. dollar as the world’s reserve currency? Specifically, we learned this week that the Chinese government shrank its holdings of U.S. government debt by $ 47.8 billion in December 2013, the most in two years. One message from this is that the Chinese government doesn’t want to hold any more dollars than it has to. In separate news, China imported, consumed, and produced more gold than any other country in 2013. China overtook India to become the world’s largest importer and consumer of gold, importing over 1,000 metric tons of gold that year (a truly massive amount). China is also the world’s largest producer of gold… nobody else comes close. Amazingly, China’s gold production is still increasing… while the countries in the next three places (Australia, Russia, and the U.S.) are comparatively stagnant in their production. So what does all this mean? Here’s what it means to me:  •   The data shows more and more that the Chinese prefer gold to U.S. dollars. Chinese buying like this could help create a new price floor for the price of gold.      •   It’s time to diversify some of your savings OUTSIDE the dollar and into China’s currency.      •   It’s time to add to your gold holdings now – and hold for the long run. I hope you don’t take this advice as extreme. I’m simply describing prudent (and potentially very profitable) actions… based on the latest facts. The new facts are important. And true. It is finally time to acknowledge these facts and prudently position yourself. You could potentially make a heck of a lot of money along the way… So don’t wait. Take action. Get some money out of the U.S. dollar and into gold and China’s currency… today. Good investing, Steve It’s Official: The Chinese Are Selling U.S. Debt… and Buying Gold Share and...

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The Fed Can’t Print a Brighter Future

Stock indexes are making new highs. With share prices surging the collective mood must be ebullient. After all, stock prices are the collective present value calculations of investors’ guesses as to future earning streams. Future profits and prosperity equalcurrent high stock prices. But this isn’t your ordinary market. While stock prices portray exuberance, at no time in history have American adults feared more for the futures of their children. Americans answering a survey from Pew Research aren’t wild about the present economy and see trouble ahead. Only 33% think the economy is good now. More importantly, the very same percentage (only 33%) of respondents believe their children will be better off than their parents. …two experts said the Fed is now primarily in the business of increasing stock prices. The numbers from Rasmussen Reports are even more negative — only 15% of American adults believe their children will be better off. The overwhelming majority, 61%, disagree, and 24% don’t know. There is no more negative indicator of the public’s collective mood than that. It’s one thing to believe things are tough at the moment. However, giving up on the future is drastic. The mood is even worse in Europe. Only 9% of those polled in France believe kids will be better off than their parents. In Italy, that percentage is 14%, and in Britain, 17%, while the rest of Europe this percentage is in the 21-28% range. Forty percent of Russians believe children will be better off than parents. Meanwhile, stock markets in these countries have been up, up and away the same as the U.S. markets. So what accounts for high flying stocks? It’s not their optimism about the future. But maybe the Fed has something to do with it. Bob Pisani, CNBC’s roving reporter on the NYSE floor, told viewers recently the common answer he gets when he asks what the Fed’s quantitative easing has done for the market. It’s usually something around 1,000-2,000 points on the Dow Jones Industrial Average. For the Fed’s 100th birthday, PBS promised a debate about the merits of the central bank on Consuelo Mack’s Wealthtrack program. What happened was two experts said the Fed is now primarily in the business of increasing stock prices. “New thing — it is in the business of talking up the stock market… The Fed is manipulating prices, especially on Wall Street,” said Jim Grant of Grant’s Interest Rate Observer. To another question from Mack, Grant says: “The Fed has presided over the decay of finance.” Grant’s “opponent,” Richard Sylla, the Henry Kaufman Professor of the History of Financial Institutions and Markets at NYU’s Stern School...

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Philip Judge on Phase Transition in 2014

The town of Lugano lies on Lake Lugano nestled in the Swiss Alps in Italian-speaking southern Switzerland, arguably one of the most beautiful old towns in all of Europe. Dinning in Lugano one evening last month with Alex Stanczyk and Jim Rickards, the conversation turned to ‘Complexity Theory.’ Jim spends several pages describing details of the Theory in Chapter 10 of his excellent bestselling book Currency Wars: The Making of the Next Global Crisis (1). One thing I learned from the dinner is that Complexity Theory is complex. However, the theory could be summarized as follows: Complex systems continuously produce surprising results. When systems are highly complex, emergent properties are far more powerful and unexpected. A great example Jim points out is climate which is one of the most complex systems humans can study. Despite thousands of years of observing and studying climate and weather patterns, and despite all the science and tools we have at our disposal today, it is still not possible for us to accurately predict the weather more than four days in advance due to its complexity. Another important aspect of Complexity Theory is what is known as ‘Phase Transition.’ Phase Transition describes when a complex system changes its state. Again, Jim uses two good examples from nature. When a volcano erupts, there is a Phase Transition in the state of the volcano from dormant to active. A second example would be an avalanche. Snow may fall on a steep incline for a long period of time; however, eventually the snow field will reach a critical state. Finally, one single snow flake will trigger a Phase Transition called an avalanche. Phase Transition demonstrates how catastrophic effects can be triggered from small causes; a single snow flake can cause a village to be destroyed through an avalanche. Yet another feature of Complexity Theory is the frequency of ‘Extreme Events.’ Conventional wisdom suggests that small events happen all the time, while extreme events happen rarely. Manmade systems grow in size and complexity all the time, while more manmade systems become connected and interconnected. As the group of manmade systems grow in size and complexity and as a whole move toward critical state, the risk of catastrophic Phase Transitions grows exponentially. “If the size of the system is doubled, the risk does not merely double – it increases by a factor of ten. If the system is doubled again, the risk increases by a factor of one hundred. Double it again, and risk increases by a factor of one thousand, and so forth,” states Jim. This leads to a point where Extreme Events are no longer happening rarely...

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Keiser Report Talks Silver – Jim Rickards – Dollar Collapse – E525

In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss the melt down in the art market as the filthy rich scramble for safe havens from the taxpayers angry at the billions in free money they’ve been given. They also discuss financial irrigation, amputated gold and a special mince meat pie and Jamie stew for Christmas. In the second half, Max interviews Jim Rickards, author of Currency Wars, about central bank vaporware, straws in the dollar wind and about how Janet Yellen is to Ben Bernanke as Miley Cyrus is to Lady Gaga – trashier than the original. Share and...

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More Nails In The U.S. Dollar’s Coffin – Mike Maloney

Government shutdown? Inefficient politicians? These things are nothing new, and pale in comparison to the real story developing quietly behind the noise and hoopla we receive from the press. The death of the U.S. dollar as the global reserve currency is the elephant in the room that nobody wants to acknowledge. It’s only been a short while since Michael Maloney delivered his keynote speech ‘Death Of The Dollar Standard’ in Singapore, where he showed the events that add up to conclusive evidence of a global move away from the U.S Dollar Standard. Bilateral trade agreements, avoidance of the U.S. Dollar in trade, repatriation of gold — Michael Maloney deemed them all to be ‘nails in the coffin’ of the dollar standard. You would have seen in Mike’s presentation that these events are speeding up. By the time Episode 3 of Hidden Secrets Of Money was released to the public, there were even more events that qualify as nails in the coffin. So to get up to speed with the big picture, please watch the accompanying video for a preview of Michael’s exclusive Bonus Presentation ‘Latest Nails In The Dollar Standard’s Coffin’. In this video Mike presents some jaw-dropping information that picks up where the timeline from Episode 3 finished. Share and...

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Final Plunge in Gold and Silver is Underway

Final Plunge in Gold and Silver is Underway Commodities / Gold and Silver 2013 Nov 22, 2013 – 11:40 AM GMT By: Jordan_Roy_Byrne Two weeks ago we penned Gold Bear to end with a Bang, and noted the increasing probability that precious metals could be headed for a plunge to new lows ahead of a final major bottom. Two weeks later we continue to hold that view. The forthcoming charts present levels at which the more than two year old cyclical bear market could end. At the least, these support levels can provide a point at which short positions and hedges could be liquidated. The chart below shows that Gold has major trendline support just above $ 1100. Also note that the 50% retracement of Gold’s entire bull market is $ 1087. Keep these strong targets in mind. Like Gold, Silver has major trendline support which could come into play in the coming days and weeks. Keep an eye on $ 17. Silver is currently underperforming Gold so pay more attention to Gold. It’s the “granddaddy” of the sector as some like to say and the most important component of the precious metals sector. Meanwhile, gold stocks are approaching what amounts to be nearly 12 years of support. The GDM index below, is the forerunner to the GDX ETF. Don’t be fazed if the metals and the shares make new lows. As you can see, the precious metals complex has very strong support nearby. Ignore the financial media and mainstream thought and get yourself in position to take advantage of this bottom. It’s the very smart money that is looking forward to buying this bottom. I suspect the coming bottom will be the one the typical huge rebounds originate from. Final Plunge in Gold and Silver is Underway Share and...

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Peter Schiff Says Beware of Bitcoin!

In his latest video, Peter Schiff shares his thoughts on the bitcoin mania that is sweeping the world. After rising from less than $20 to more than $600 in one year, many investors are wondering if bitcoin might be worth the risk. Early adopters pitch bitcoin as “gold 2.0″ – a digital currency that cannot be manipulated like fiat money. Bitcoins are even “mined,” similar to physical gold and silver. However, Peter explains why bitcoins still fail as a substitute for gold and strongly urges investors to avoid this risky new currency. Bitcoin could very well have already hit its top, but Peter is confident gold is still well below its future record highs. Share and...

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The Single Biggest Reason Most Investors LOSE Money

It’s almost never openly admitted in public, but the reality is that few if any investors actually beat the market in the long-term. The reason for this is that most of the investment strategies employed by investors (professional or amateur) simply do not make money. I know this runs counter to the claims of the entire financial services industry. But it is factually correct. In 2012, the S&P 500 roared up 16% including dividends. During that period, less than 40% of fund managers beat the market. Most investors could have simply invested in an index fund, paid less in fees, and done better. If you spread out performance over the last two years (2011 and 2012) the results are even worsen with only 10% of funds beating the market. If we stretch back even further, the results are even more dismal. For the ten years ended 1Q 2013, a mere 0.4% of mutual funds have beaten the market. 0.4%, as in less than half of one percent of funds. These are investment “professionals,” folks whose jobs depend on producing gains, who cannot beat the market for any significant period. The reason this fact is not better known is because the mutual fund industry usually closes its losing funds or merges them with other, better performing funds. As a result, the mutual fund industry in general experiences a tremendous survivor bias. But the cold hard fact what I told you earlier: less than half of one percent of fund managers outperform the market over a ten-year period. So how does one beat the market? Cigar Butts and Moats. “Cigar butts” was a term used by the father of value investing, Benjamin Graham, to describe investing in companies that trade at significant discounts to their underlying values. Graham likened these companies to old, used cigar butts that had been discarded, but which had just one more puff left in them. Like discarded cigar butts, these investments were essentially “free”: investors had discarded them based on the perception that they had no value. However, many of these cigar butts do in fact have on last puff in them. And for a shrewd investor like Benjamin Graham, that last puff was the profit potential obtained by acquiring these companies at prices below their intrinsic value (below the value of the companies assets plus cash, minus its liabilities). Graham used a lot of diversification, investing in hundreds of “cigar butts” to produce average annual gains of 20%, far outpacing the S&P 500’s 12.2% per year over the same time period. So when I say that you can amass a fortune by investing in Cigar...

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Fiat Money Quantity hits new record

   QE3 is running at $ 85bn, and directly increases FMQ by double that amount, or $ 170bn, indicating that other factors contributed $ 57bn to the FMQ total. This suggests that the current rate of QE was insufficient to provide the liquidity required in money markets consistent with current interest rates, at least for the month of September. However, bond yields are still high, despite the deferral of tapering, as shown in the second chart, which is of the US Treasury 10-year note yield. Since 30th October the Treasury 10-year note yield has increased from 2.5% to 2.75%. During that time it has been more widely acknowledged that tapering has been deferred for the foreseeable future. This being the case, the rise in yield indicates that underlying tightness in bond markets has returned after a brief pause, despite the Fed’s bond purchases and the liquidity this provides. Therefore, QE3 may need to be supplemented by other measures if interest rates and bond yields are to be maintained at current levels. Note: the methodology and construction of FMQ was published by GoldMoney. Fiat Money Quantity hits new record Share and...

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The United States: A Third World Economy in 20 Years

According to the Bureau of Labor Statistics (BLS), September brought 148,000 new jobs, enough to keep up with population growth but not reduce the unemployment rate. Moreover, John Williams (shadowstats.com) says that one-third of these jobs, or 50,000 per month on average, are phantom jobs produced by the birth-death model that during difficult economic times overestimates the number of new jobs from business startups and underestimates job losses from business failures. The BLS reports that 22,000 of September’s jobs were new hires by state governments, which seems odd in view of the ongoing state budgetary difficulties. In the private sector, wholesale and retail trade produced 36,900 new jobs, which seems odd in light of the absence of growth in real median family income and real retail sales. Transportation and warehousing produced 23,400 new jobs, concentrated in transit and ground passenger transportation. This also seems odd unless the price of gasoline and pinched budgets are forcing people onto public transportation. Professional and business services accounted for 32,000 jobs of which 63% are temporary help jobs. So here you have the job picture that the presstitutes, hyping “the jobs gain,” don’t tell you. The scary part of the September job report is that the usual standby, the category of waitresses and bartenders, which has accounted for a large part of every reported jobs gain since I began reporting the monthly statistics, shows job loss. Seven thousand one hundred waitresses and bartenders lost their jobs in September. If this figure is not a fluke, it is bad news. It signals that fewer Americans can afford to eat and drink out. The unemployment rate that is reported is the rate that does not count as unemployed discouraged workers who are unable to find jobs and cease to look. This favored rate, the darling of the regime in power, the presstitutes, and Wall Street, also is not adjusted for the category of “involuntary part-time workers,” those whose hours have been cut back or because they are unable to find a full-time job. Obamacare, as is widely reported, is causing employers to shift their work forces from full time to part time in order to avoid costs associated with Obamacare. The BLS places the number of involuntary part-time workers at 7,900,000. The announced 7.2% unemployment rate is a meaningless number. The rate can decline for no other reason than people unable to find jobs drop out of the work force. You are not counted in the work force if you are discouraged about finding a job and no longer look for a job. The phenomena of discouraged workers shows up in the measure of the...

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